I poured over the statistics today for Northern Bergen County to see why it’s been so difficult for some my buyer clients to find the right house this year. The well priced homes go fast. Houses are selling over list price. There are bidding wars. It’s been a frustrating year for buyers, as it is a sellers' market here in Bergen County. Home prices have not really shot up in our area though like in some other parts of the state. It’s not usual for towns like Upper Montclair for homes to sell $100 to $150k over their list price (probably a bubble)!

Let’s take a look at the stats.

 

I am going to compare Jan 1st to June 14th time period for the past 5 years in Northern Bergen County

 

               Total Sales         Total Listings        Days on the Market

2012            499                    1552                          108

2013            597                    1552                           88

2014            590                    1602                           82

2015            563                    1840                           80

2016            693                    1843                           75

 

These stats are all for single family home sales. The days on the market has decreased a remarkable 33 days since 2012. 

The amount of new listings aren't keeping pace with the total sold. So basically the market isn't keeping with up the demand. Inventory levels are only very slightly up over 2015, but total sales are up by 130 houses! 

The market isn’t quite making sense though. Even with demand up, the average and median single family home price is down 3%! 

There is one other barometer we use in real estate called absorption rate. Absorption rate is the number of months it would take to sell the currently listed homes in the market.

Absorption rate less than 5 months = seller’s market

Absorption rate equals 5-7 months = balanced market

Absorption rate greater than 7 months = buyer’s market 

The current absorption rate for Northern Bergen County is 3.41, so it’s an extreme seller's market, yet home prices in the area went down. It’s a strange market this year. We still have a high inventory of foreclosures here in New Jersey, high property taxes, unemployment/under employment, and homeowners still under water which is likely causing the stagnant and even declining home prices in some towns.

 

So buyers, hang in there and don't get discouraged. It's not you, it’s the current market!

2008 is the year where we saw the real estate bubble burst both nationally and locally here in Bergen County, New Jersey. The real estate market is making modest gains since we hit the bottom in the 1st quarter of 2011. However, most towns in Bergen County are still below 2008 levels. There is a small group of towns that have actually seen the average single family home price increase or stay flat though in 2015 since the housing bubble in 2008. Here are the top ones:

1. East Rutherford         +10% (although only based on a limited # of sales, 13 sales in 2008 and only 10 in                                               2015)
2. Ho-Ho-Kus & Tenafly  +8%
3. Alpine                       +7%
4. Glen Rock                 +5%
5. Ridgewood                +3%
6. Oradell & River Edge  +2%
7. Paramus & Wyckoff    +1%
8. Carlstadt                   +0%

Bergen County as a whole, has experienced a 10% drop in the average single family price. Practically every town in Bergen County saw a big jump in total sales comparing 2008 to 2015, with a 39% upturn. The thing that most of these towns have in common, are reputations of having a quality school system. Glen Rock, Ridgewood, and Tenafly are always among the towns that are the most desirable to live in by buyers in Bergen County, so their appearance on the list wasn't unforeseen. 

The remaining towns in Bergen County are all still below 2008 levels, with these being the worse offenders:

1. Edgewater                                           -39% (Edgewater has limited supply of single family homes and this is only                                                          based on 8 sales in 2008 & 9 in 2015)
2. Franklin Lakes                                      -30%
3. Mahwah                                               -23%
4. Bogota & Old Tappan                            -20%
5. Hackensack, Oakland & Palisades Park   -19%
6. Little Ferry                            -               18%
7. Ridgefield Park                                     -15%
8. Montvale & Ramsey                              -14%   

This list is interesting because its a mix of towns on the lower end of Bergen County house values like Hackensack, Bogota, Little Ferry, Ridgefield Park, & Palisades Park and towns with $1 million+ homes like Franklin Lakes, Old Tappan, Montvale, and Ramsey. Franklin Lakes, Montvale, Oakland, Old Tappan, and Ramsey all have well regarded school districts, so its bewildering to see them on the list. The high end market has taken a huge hit and the lower, first time home buyer ranges have been driving the local real estate market.

It couldn't have been a lot worse, as some parts of the United States might take decades to fully recover from the housing bubble in 2008.

Note: Statistics are derived from New Jersey Multiple Listing Service and are deemed reliable, but not guaranteed.

It is New Year's Day of 2016 as I write this. Some real estate agents are getting really giddy right now. December 31st is when a large amount of house listings expire without selling. If you are one of these unfortunate house sellers, be prepared to be inundated with phone calls from agents! Even worse, they might even knock on your door!

Why do agents do this? They are trained to do this by their brokers and real estate coaches (yes weird, some agents have coaches!).  You are considered low hanging fruit. You have already identified yourself as wanting to sell. Your listing expired, so you are now up for grabs and desperate agents are salivating to get your listing. Real estate author and marketer, Ryan Fletcher, calls these type of agents 'Low Information Agents'. They just follow what real estate gurus, brokers, and coaches say, without thinking for themselves or truly trying to help be a protector and adviser for their real estate clients.

Where are they getting your phone number? Well your agent might have included it in the listing (DOH!). There are also free and paid services that agents use to get your phone number. Some even use auto-dialers to dial multiple people at once and pick up on whoever answers first. Are you on the Do Not Call List? Some agents don't even check it and call anyway because they think they know some loop hole around it.

Look what happened to this poor lady in Denver:

Do they sound like a robot when they call you? Its because agents have been taught scripts on what to say to you and handle any objections. They don't have to actually think, they can just memorize or read from a script. If you are like me, I don't give telemarketers the time of day and just hang up on them or don't even answer their calls in the first place.

In a recent Gallop poll, real estate agents ranked towards the bottom of 'Honesty/Ethics in Profession'. Real estate agents are in a negative reputation industry. What ranked even worse than real estate agents? Well telemarketer was one of them. 

I don't claim to be the #1 agent in anything. You know what I am talking about. Agents and brokerages brag about being #1 in Sunday morning newspaper ads and postcards in the mail that most immediately chuck in the garbage.

I try to be a protector for my clients and give them honest, realistic real estate advice. Not advice that only benefits me and my bank account. If its not the right time to list your home, I'll tell you that. One of the reasons why listings expired, is the agent suggested an over inflated list price, just to get your listing. I never do this.

I would like to improve the reputation of agents and I often cringe at some of the tactics my colleagues use. I can only control myself though and my business. Don't fall for the telemarketing agent's tactics, and use a real professional this time, so your house doesn't end up on the expired list again!

Looking back at 2015, most of my predictions for the year came through. Many towns saw modest gains, mortgage rates remained stable, and however housing inventory levels remained low. This should loosen up as more and more home owners who bought during the real estate bubble (that ended locally in 2008), start to see appreciation in their homes and are finally able to sell. With housing inventory low, rental prices continued to increase. Maybe some renters will come to the realization that buying is better than paying exorbitant rents in Bergen County.

Overall in Bergen County, single family home prices were basically flat, with only a 1% increase from 2014 to 2015. However, total single family homes sold were up 10%.

  

These were the towns with the largest gains in the average single family home price in Bergen County. I excluded any towns with less than 20 home sales like Alpine. Alpine saw a 70% increase in the average price, but there were only 19 total sales and the numbers are skewed by 3 sales that closed from $7.905 million to $13.9 million.

1. Norwood           +22%

2. Cliffside Park     +21%

3. Fairview            +17%

4. Carlstadt           +16%

    Wallington         +16%

5. Teaneck            +14%

6. Lyndhurst          +12%

7. Rutherford        +10%

    Woodcliff Lake   +10%

8. Wood Ridge      +9%

 

There were no repeat towns that made 2014's top list. However 4 of the towns from last year's list came back down to earth and were among the towns that saw the biggest decreases in the average sale price.

1. Saddle River       -27% (was up 20% last year)

2. Cresskill             -16% (was up 39% last year)

3. Haworth             -12%

4. Bogota               -8 (was up 17% last year)

5. Washington Twp  -6%

    Demarest           -6% (was up 20% last year)

6. Old Tappan         -5%

 

Note: Statistics derived as of 1/1/2016 from New Jersey Multiple Listing Service. Statistics are considered accurate but not guaranteed.

There was more good news for Bergen County homeowners in 2014. The gains were modest, but still in a positive direction. The average single family home price was up 0.6% from 2013 to 2014 and 4.3% since 2012. The median home price in Bergen County was up 1.1% from 2013 to 2014 and 7.1% from 2012.

These were the towns with the largest gains in average single family homes price in Bergen County. I excluded any towns with less than 20 total home sales in 2014.

Top 10 Improving Bergen County Towns in 2014

 

1. Cresskill              +39.2%
2. Little Ferry           +21.5%
3. Demarest            +20.6%
4. Saddle River        +20.2%
5. Bogota                +17.7%
6. Englewood Cliffs   +17.2%
7. Garfield               +15.7%
8. Ho-Ho-Kus           +14.6%
9. River Vale            +13.5%
10. Montvale              +11.5%

 

Taking a closer look at the list, its interesting mix of towns. Bogota, Garfield, and Little Ferry are at the lower end in price range in Bergen County with the remaining towns all higher end towns. Little Ferry (-20.1%), Garfield (-11%), Montvale (-12%), Cresskill (-8.8%), and Demarest (-2.3%) saw a nice rebound year after being down from 2012 to 2013.

Predictions for 2015

With most real estate and economic experts agreeing that 2011 was the bottom of the real estate market, we should see more modest gains in 2015 for most towns in Bergen County. New Jersey overall still has a very high inventory of foreclosures and underwater homeowners before we can truly say the local real estate market is healthy again. New Jersey currently ranks as the #2 state in the nation in foreclosure rate. This can partly be attributed to the extensive length of time the foreclosure process takes in New Jersey.

Mortgage rates should remain low for most of the year, with a chance they will increase towards the end of 2015. The mortgage rates will increase as the overall economy and job market improves. Increased mortgage rates give the buyer less buying power.

We should also see more housing inventory available for buyers in 2015 with more homeowners not underwater and ready to step up to larger, more expensive homes. Many sellers have been on the sidelines and may finally be ready to list their homes for sale. In 2013 and 2014, housing inventory have been low. This has resulted in properly prices/homes in good condition receiving multiple offers, bidding up the price. Overall in Bergen County in 2014, single family home sales were down 6.2% from 2013 to 2014 due to the lack of inventory.

FHA recently reduced the down payment requirement to 3%. This should help first time homebuyers in 2015 along with the low mortgage rates. The days of no-money down are gone, but 3% is achievable for many homebuyers.

I wouldn't exactly call this a real estate boom in 2015, but slow steady improvement is good and I see another good cycle for real estate ahead in Bergen County in the next 7-10 years in my humble opinion.