NJ July Closed Sales Up, Pending Sales Up, Inventory Down

Inventory Drops Below 6-Month Mark

The shift to a predominantly seller’s market is mostly complete. Multiple-offer situations over asking price are commonplace in many communities, and good homes are routinely off the market after a single day. It is evident that a favorable economy keeps hungry buyers in the chase.

• Single Family Closed Sales were up 4.1 percent to 7,678.
• Townhouse-Condo Closed Sales were up 5.1 percent to 2,198.
• Adult Communities Closed Sales were up 5.3 percent to 709.
• Single Family Median Sales Price increased 0.8 percent to $330,000.
• Townhouse-Condo Median Sales Price increased 4.0 percent to $260,000.
• Adult Communities Median Sales Price decreased 6.3 percent to $180,000.
Although the New Jersey unemployment rate remains unchanged for the third month in a row at a favorable 4.1 percent rate, wage growth has not been rising at the steady clip that would be expected in an improving economy. Sales activity manages to keep churning along despite looming shortages in new construction.
Lower price ranges are starting to feel the effects of the supply and demand gap, as first-time buyers scramble to get offers in at an increasing pace.


Homebuilder Sentiment Rises

According to the National Association of Homebuilders, U.S. homebuilder sentiment has turned more positive.

This could play-out significantly in the current market, bringing some relief to the inventory-starved real estate market. The report from the National Association of Homebuilders sees a pickup in demand and positive expectations about further growth the rest of 2017.

A few other factors contributing to this more optimistic outlook are the sustaining sales of new U.S. homes staying ahead of last year’s pace as well as the 4.3% unemployment rate, which is at a 16-year low.

But it is not just the positive sentiment of homebuilders; it is also the homebuyers who are seeing some daylight.

Based upon a report by Black Knight Financial Services, homebuyers are putting ‘less and less skin in the game,’ when it comes to home buying and down payments. It looks like the improved job market and consumer sentiment is fueling consumer confidence.

Homebuyers are opting to put less money down when purchasing their homes, increasing their risk should the housing market falter yet again. Black Knight Financial Services reports that:

■  In the past 12 months, 1.5 million borrowers bought their homes with down payments of less than 10%, marking a seven-year high.
■  Today’s loans are less risky than those issued before the housing crash. They are mostly fixed-rate mortgages, as opposed to adjustable-rate mortgages.

“The increase is primarily a function of the overall growth in purchase lending, but, after nearly four consecutive years of declines, low down payment loans have ticked upward in market share over the past 18 months as well,” said Ben Graboske, executive vice president at Black Knight Data & Analytics.

On the bright side, the bulk of the growth has not been at the lowest down payment level; that is, 3% or less. It is more in the 5 to 9% down payment arena. In addition, the low down payment loans of today are nothing like the ones the precipitated the last housing crash.

This news, compounded by reports that mortgage rates have fallen to their lowest rates since the election, have buoyed sentiment.

According to the Mortgage Bankers Association, total mortgage application volume rose slightly by 0.1% from the prior week.

Yet as mortgage applications remained steady, U.S. home building unexpectedly fell in July as the construction of single- and multi-family homes declined, which could temper expectations of a rebound in housing market activity in the third quarter. This, of course, keeps the tight levels of inventory at a point that constricts the market.

Housing starts declined 4.8% to a seasonally adjusted annual rate of 1.16 million units, the Commerce Department. June’s sales pace was revised down to 1.21 million units from the previously reported 1.22 million units.

Where the Money Is and Isn’t

The National Association of Realtors® reported 23 metro areas in the second quarter saw double-digit increases in the median home prices, and overall, there were slightly more rising markets in the second quarter compared to the first quarter.

■  For the second quarter of 2017, there was a rise in the national family median income to $71,529.
■  To purchase a single-family home at the national median price, a buyer making a 5% down payment would need an income of $56,169.
■  To purchase a single-family home at the national median price, a buyer making a 10% down payment would require an income of $53,213.
■  To purchase a single-family home at the national median price, a buyer making a 20% down payment would require an income of $47,300.

The 5 Most Expensive Housing Markets
■  San Jose, California, with a median existing single-family price of $1,183,400
■  San Francisco, California, with a median existing single-family price of $950,000
■  Anaheim-Santa Ana, California, with a median existing single-family price of $788,000
■  Urban Honolulu, with a median existing single-family price of $760,600
■  San Diego, California, with a median existing single-family price of $605,000

The 5 Least Expensive Housing Markets
■  Youngstown-Warren-Boardman, Ohio, with a median existing single-family price of $87,000
■  Cumberland, Maryland, with a median existing single-family price of $98,200
■  Decatur, Illinois, with a median existing single-family price of $107,400
■  Binghamton, New York, with a median existing single-family price of $109,000
■  Elmira, New York, with a median existing single-family price of $111,600

In addition to the upward trend for median existing home prices and sales, metro area condominium and cooperative prices improved by 5.4% overall to $239,500 from $227,200 in the second quarter of 2016.

The Northeast
The National Association of Realtors® reported, “Total existing-home sales in the Northeast rose 1.3 percent in the second quarter and are 0.4 percent above the second quarter of 2016. The median existing single-family home price in the Northeast was $282,300 in the second quarter, up 3.2 percent from a year ago.”

NAR began tracking of metropolitan area median single-family home prices in 1979; the metro area condo price series dates back to 1989.


National Median Single-Family Home Prices and Sales Hit a New High

The National Association of Realtors® reported last week that the national median existing single-family home price in the second quarter was $255,600, representing a 6.2% improvement from $240,700 in the second quarter of 2016. The recent quarter also surpasses the third quarter of 2016 which was $241,300. The second quarter’s results reflect the median price trend for the first quarter of 2017, which showed an increase of 6.9% from the first quarter of 2016.

The figures support the unabated buyer demand colliding with inventory shortages nationwide.

The National Association of Realtors® reported that single-family home prices in the second quarter of 2017 increased in 87% of the markets tracked, with 154 out of 178 metropolitan statistical areas showing sales price gains. The market momentum was sustained due also to improvements in the job markets, low unemployment and a rise in household income. The report cites that, “The 2.2 million net new jobs created over the past year generated significant interest in purchasing a home in what was an extremely competitive spring buying season.”

There are many potential buyers who remain ready to make a purchase, especially as the mortgage rates have either stayed the same or dropped slightly. According to one report published by the Mortgage Bankers Association, mortgage rates have dropped to their lowest levels since the election.

Total existing-home sales fell by 0.9% to a seasonally adjusted annual rate of 5.57 million in the second quarter from 5.62 million in the first quarter of 2017. Nonetheless, sales remain 1.6% higher than the 5.48 million pace during the second quarter of 2016.

Inventory Squeeze
In the second quarter, the 1.96 million existing homes available for sale was 7.1% below the 2.11 million homes for sale at the end of the second quarter in 2016, putting the average supply for the second quarter at 4.2 months, which is lower than the 4.6 months reported in the second quarter of 2016.

New Job Openings Hit a New Record

According to the Labor Department’s Job Openings and Labor Turnover Survey, the U.S. reported a record 6.2 million job openings posted at the end of June 2017.

This is clearly a good sign that employers are looking to expand their operations.

Broken out, the number of job openings reached 417,000 in June for private employers and 44,000 for government postings.

It was back in April 2015 that the first job posting record was reached, and from that point the numbers have been steadily improving.

The report points to a surging in the number of available job postings; still, filling those jobs with the right candidates represents a challenge. The hiring for those positions has remained flat, which was unchanged in June, and has been flat since late 2014.

Fast Facts in June

  • Workers were slightly less likely to quit their jobs
  • Workers were slightly more likely to be laid off
  • The layoff rate in the U.S. has been near record low levels for several years
  • Companies are still slow to hire for new jobs
  • Companies are also reluctant to part with the employees they do have

The availability of job openings also differed substantially by industry

  • Job openings that have grown include the education and health-services industry
  • Job openings that have grown include professional and business services
  • Job openings that have not kept pace were in the construction and manufacturing industries
  • The manufacturing industry has about as many openings today as it did in 2007

NJ Best School Districts

Niche.com has published New Jersey’s the best school districts.

According to this recent list, the Princeton school district ranks number one in the state and while ranking 14th in the entire country.

In calculating these results, Niche examined data from the U.S. Department of Education as well as test scores, college data and ratings collected from Niche users.

The methodology for each category of ranking varied.

Niche assigns a standardized score for each factor, which is then weighted before an overall score is calculated for each school district. The overall scores are again standardized and some districts are disqualified from receiving a final letter grade if there isn’t enough data. School districts are then ranked numerically and assigned grades.

According to Niche, these are the 146 best school districts in New Jersey (national rankings in parenthesis):

  1. Princeton Public Schools (14th in nation)
  2. Millburn Township Schools (36th in nation)
  3. West Windsor-Plainsboro Regional School District (55th in nation)
  4. Livingston Public Schools (97th in nation)
  5. Summit Public Schools
  6. The School District of the Chathams
  7. Bernards Township School District
  8. Montgomery Township School District
  9. Tenafly Public Schools
  10. West Essex Regional School District, North Caldwell
  11. East Brunswick Public Schools
  12. Pascack Valley Regional High School District, Montvale
  13. Moorestown Township Public School District
  14. Montclair Public Schools
  15. Ridgewood Public Schools
  16. South Brunswick Public Schools
  17. West Morris Regional High School District
  18. Hopewell Valley Regional School District
  19. Glen Ridge Public Schools
  20. Haddonfield Public Schools

Sample Facts on School Costs
New Jersey school districts last year spent on average $20,385 per student to educate their students. Statewide, per-pupil costs ranged from a high of $60,129 in one small district, to $10,181 for a Jersey City charter school with 310 students.

1: Avalon | $60,129  [This is the state’s most expensive district]
Grades: K-8
County: Cape May
Average daily enrollment: 75
Revenue Sources: State: 12% | Local Taxes: 65.6% | Federal: 0.7% | Tuition: 9.7% | Other: 12%

4: Asbury Park | $35,636
Grades: K-12
County: Monmouth
Average daily enrollment: 2,380
Revenue Sources: State: 86.3% | Local Taxes: 8.6% | Federal: 4.4%

5: Bergen County Vocational | $35,568
Grades: County Vocational
County: Bergen
Average daily enrollment: 2,159
Revenue Sources: State: 17.5% | Local Taxes: 46.5% | Federal: 2.2% | Tuition: 33.7% | Other: 0.1%

Lux Market Sales Surges 22 Percent

Optimism + Demand + Low Mortgage Rates = Strong Sales

Redfin reported last week that, “Luxury sales were strong. Sales of homes priced at or above $1 million were up 22.2% from a year ago, while sales of homes priced at or above $5 million were up 19.6%. The strong growth in sales, especially paired with the falling supply, suggests that high-end buyers have confidence in the economy and see U.S. real estate as a smart place to invest their wealth.”

“This is the first time since the fourth quarter of 2014 that luxury homes had stronger price growth than homes in the bottom 95 percent of the market.”

According to the report, the average luxury home price rose 7.5% in the second quarter of 2017 compared to last year, to $1.79 million.

In general, the high-end luxury real estate market in NJ is beginning to see some activity from prospects who are seeking stability and growth from around the world. What is more is that New Jersey retains great access to strong metro centers such as New York, Washington and Boston.

And in some cases, in markets like New Jersey, properties are being bought by the affluent and wealthy.

In general, in many markets, the luxury market has not participated equally with the other market niches.

Even in the luxury real estate market, inventory is becoming a very real factor.

The average price for non-luxury homes was up 7% to $336,000 from 2016, based upon the analysis of the report, with one in four homes in the bottom 95%.

Fast Facts
■ The number of million-dollar-plus homes for sale dropped by 9.4%.

■ The luxury market is not as competitive as other markets.

■ Only one in 50 luxury homes sold above list price in the second quarter of 2017.


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