We’re now in the middle of the spring and summer selling season and it’s time to look at recent trends and make some estimations of what we might expect in the near future. With Q2 now coming to an end and with four months of economic data released both by the New Jersey Association of REALTORS and the New Jersey Department of Labor we have some statistics that look to bode well for the Montgomery Township, Somerset County and the State of New Jersey as a whole. Let’s take a look at some of the numbers.
New Jersey Association of REALTORS
Statewide, the number of single family home sales decreased by 14.1% with 4,292 single family sales reported when comparing April of 2013 with April of this year. Townhome and Condo sales also reported a decline. The number of new listings across New Jersey is up slightly by 4.1% in April compared to the same time last year at 20,089 while pendings are down slightly.
Yet if you look at the year to date numbers for the state, the differences are as dramatic and in fact the YTD closed sales are only down 4.3% when combing single family, condominium and townhome sales. It should also be noted that both the median sales price and average sales price for YTD figures is up 3.5% and 4.1% respectively.
Closer to home, both Somerset County and Montgomery Township showed a nice increase for sales over the past 12 months. Somerset County tallied a 16.2% bump in closed sales while Montgomery was nearly identical at 16.8%. Looking at April of 2013 and April 2014 the median sales price fell from $607,000 to $403,000 in Montgomery. At first glance that’s quite a decrease but month to month numbers can be deceiving. When looking at the previous 12 months, the median sales price actually showed an increase to $625,000.
All in all it appears the local real estate market is “steady as she goes” with inventories slightly down and days on market lower as well. Yet if data from the New Jersey Department of Labor continues its trend regarding employment, higher median home prices could continue their upward path.
New Jersey Department of Labor
The key to driving any housing market is the economy and what drives the economy is consumer spending. And of course, consumers spend when they’re comfortable with their job security as well as more people being hired.
The most recent employment numbers are for April of 2014 and it paints a healthy picture. Comparing April of 2013 and 2014, New Jersey added 4,500 more jobs this April compared to last. The private sector also showed gains with 3,300 added to the payroll. That pushed the unemployment rate from 8.5% in April 2013 to 6.9% April 2014, very close to the national rate of 6.3%. The number of unemployed fell as well as fewer filed for first time unemployment claims.
Combine steady growth in housing with continued economic strength, it’s a good time to be selling a home if you’re a property owner and if you’re a buyer it’s a good time to buy before prices go up even more as mortgage rates are still near historic lows.
According to Freddie Mac’s most recent mortgage survey, the 30 year fixed rate is 4.20% as of June 12, 2014 and very near the same rates we saw one year ago. The lowest 30 year rate for the year according to Freddie Mac is 4.12%. Mortgage rates in general have been on a gradual decline since the first of the year and appear to be settled in this range for some time.
It’s odd because just over a year ago then Fed Chair Bernanke announced the eventual end of the current QE program which at the time was buying $85b in mortgage bonds and Treasuries. At the announcement, mortgage rates shot up by more than a full percentage point from May to June 2013, the sharpest rate of increase in 26 years. Yet as QE is slowly being retired, the current monthly purchase is down to $45b per month, interest rates have yet to react. Rates have been artificially low due to the QE program yet higher rates have not yet appeared.
At present, most believe the Fed will sit on the sidelines at least until the second quarter of 2015. Rates should increase somewhat until then but if the current trend continues, anything above 4.75% would be a surprise.