New Jersey Real Estate Trends – A New Way to Look at New Jersey Realty
Recent trends in New Jersey real estate market indicate that prices have evened out as buyer’s and seller’s negotiate a new understanding of the value of property in the modern economic climate. Between the end of 2011 and April of 2012, the average price for a condo or townhouse in New Jersey went from $285,000 to $290,000. Single family homes, both in and out of the city, averaged a list price of $472,000 at the end of last year and seller’s are now asking an average of $483,000. With approximately 71% of the market share, single family homes and townhouses/condos constitute the foundation of the New Jersey real estate market.
While the seller’s of single family homes and condos/townhouses seem to have agreed upon the correct price point for New Jersey real estate, evidence indicates that buyer’s still expect to get great value for their money. Over the past 5 months, the average sale price of a single family home in New Jersey has been $265,000, 27% below the average list price. In the condominium market, the average sale price is $348,000, almost 8% below the asking prices.
Home Prices are Now Rising at a Fast Pace
Home prices are now rising at their fastest pace since 2005. Housing bulls are running again, pointing to rising construction starts, rising home sales and falling mortgage delinquencies. Fears over the so-called “fiscal cliff” put a damper on some of that optimism briefly, but that quickly dissipated after the deal was finally struck. So why be cautious now?
“Low prevailing mortgage rates, the limited supply of existing homes for sale (either due to the few foreclosure completions or the number of underwater borrowers who cannot sell), and the anemic levels of new home construction are facilitating affordability and feeding demand,” noted analysts at Fitch Ratings. “These factors are offsetting weak fundamentals that would otherwise hinder home price growth, such as high structural unemployment and lackluster wage growth.”
Fitch contends that home prices remain overvalued and that price growth is not being driven by fundamentals but by technical factors that could easily change. As more homes move more quickly to final foreclosure, especially in states that require a judge in the process and have seen huge delays over the past few years, supply will expand, possibly dramatically in some regions.
Fitch analysts admit price recovery will vary widely depending on the local market conditions, but their case seems more bearish than most. Or is it?