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Real Estate Market Report: Third Quarter 2016 – Bergen County, New Jersey
The Bergen County housing market plateaued in the third quarter of 2016, with sales and prices flat over the summer after a spike in spring activity.
Sales. Bergen sales were flat in the third quarter, rising less than 1% after a pretty robust period over the past two years. Indeed, even with that minimal sales increase, Bergen has now seen eight straight quarters of year‑on‑year sales growth. That sustained period of increasing buyer demand resulted in a rolling year where sales were up 10%, with the 6,657 sales marking the highest twelve‑month total in over ten years — at the height of the last seller’s market.
Prices. Unfortunately, we are still not seeing this sustained increase in buyer demand have any impact on pricing. For the quarter, prices were mixed, with the average down almost 2% and the median up 1%. The same was true for the rolling year, where the average price fell over 1% and the median was flat. As we’ve said before in this Report, Bergen County prices have been flat for almost eight years now, after the sharp correction in 2008‑09. It might be that the demand is simply stronger in the lower‑priced markets, which is driving the average and median price down by changing the mix of properties sold. If that’s the case, then it’s just a matter of time before prices start to go up.
Inventory. Bergen inventory continues to tighten, with the number of available single‑family homes falling 26% and the months of inventory now below the six‑month mark that usually denotes a “tight” market. Indeed, declining inventory might be contributing to the relative slackness in sales, if buyers are on the sidelines waiting for new homes to hit the market.
Condominiums. Bergen condo sales and prices were both up sharply, demonstrating that buyer demand in the county might be particularly strong in the entry‑level markets. Condo sales were up almost 7%, and pricing was up 4% on average and 5% at the median. This continues a long‑term trend we’ve been watching, with the rolling year average price up almost 5% and the median up 3%. Those are sustainable price increases, and probably foreshadow what we’ll see next year with single‑family homes.
Going forward, we remain confident that Bergen County is slowly moving into a strong seller’s market. Although we are not yet seeing price appreciation in the single‑family market, we expect that increases in buyer demand, coupled with a decline of inventory, will eventually drive modest but meaningful appreciation by mid-2017.
To learn more about Better Homes and Gardens Rand Realty, visit their website and Facebook page, and make sure to “Like” their page. You can also follow them on Twitter.
Real Estate Market Report: Third Quarter 2016 – Northern New Jersey Market Overview
The Northern New Jersey housing market plateaued in the third quarter of 2016, with sales flattening out after a torrid start to the year and pricing struggling to gain traction. With inventory levels falling throughout the region, though, we expect that the market might gain strength going into 2017.
Sales were basically flat throughout the region. After a strong start to the year, sales slowed during the third quarter, rising only about 2%. The good news is that if you look at the rolling year, sales were up almost 10%, continuing a trend we’ve been watching for about five years. Although we are not yet at transactional levels that we saw during the last seller’s market of the mid‑2000’s, sales are up about 40% from the bottom of the market in 2009 and are moving in a positive direction.
We are also seeing inventory continue to tighten. The industry measures the impact of inventory by calculating the “months of inventory” remaining on the market: i.e., the number of homes for sale divided by the average monthly transactions. According to industry standards, six months worth of inventory signals a balanced market: any less, and we are likely to see too many buyers chasing too few homes, which will tend to lead to multiple offer situations, then bidding wars, and ultimately higher prices. And that’s about where we are trending throughout the region, with regional inventory down over 25%. Indeed, Bergen is already below six months of inventory, and Morris, Essex, and Passaic are all below nine months.
Even with sales up and inventory down, though, average prices have been dropping throughout the region. We have been a little disappointed in the pricing this year, after what looked to be “green shoots” of price appreciation toward the end of 2015. Certainly, basic economics of supply and demand would tell us that after five years of steadily increasing buyer demand, we would expect to see some meaningful price increases. It might be that the market is simply stronger in the lower‑end than the middle‑ or higher‑end, which is changing the mix of properties sold and skewing the averages. Or it could still just be a matter of time before falling inventory and rising demand starts impacting pricing.
Going forward, we still believe that we are heading for a seller’s market. Sales have now been increasing for almost five years, which has brought inventory to the seller’s market threshold in much of the region. The economic fundamentals are all good: homes are priced at 2004 levels (without even adjusting for inflation), interest rates are still near historic lows, and the regional economy is stable. Accordingly, we continue to believe that better days are ahead, and that we are likely to see modest but meaningful price appreciation in 2017.
To learn more about Better Homes and Gardens Rand Realty, visit their website and Facebook page, and make sure to “Like” their page. You can also follow them on Twitter.
Real Estate Market Report: Third Quarter 2016 – Dutchess County, New York
The Dutchess County housing market continued to strengthen in the third quarter of 2016, with a moderate increase in sales coupled with an eye‑opening spike in pricing.
Sales. Dutchess single‑family home sales were up again in the third quarter, rising 8% from last year. This marked the eighth quarter in a row with year‑on‑year sales increases, closing a rolling year where sales were up over 17%. With over 2,400 sales over the past 12 months, Dutchess is now closing homes at a rate that rivals what we saw during the last seller’s market.
Prices. This sustained increase in sales activity is finally having its expected impact on pricing. Single‑family home prices spiked in the third quarter, rising an eye‑popping 9% on average. That’s not a sustainable increase, and is likely due to a few outliers in the data, especially when you see that the median and price‑per‑square foot metrics were up a more modest 2%. But even so, the rolling year average sales price increase of 4%, and the median price increase of 3%, are both positive indicators of where this market is likely going.
Negotiability. Dutchess inventory continues to decline, now down over 26% to 14.1 months of active single‑family listings. Although we are nowhere near the six‑month level of inventory that usually signals a “seller’s market,” we are certainly seeing some tightening that could support further price appreciation. The other negotiability indicators – days‑on‑market and listing retention – were mixed.
Condominiums. The condo market was also up, with sales rising almost 18% and prices also spiking. For the year, condo sales are up 21%, and pricing is up across the board, although the 9% increase in the average price is probably not sustainable.
Going forward, we continue to believe that Dutchess is on the precipice of meaningful price appreciation. With a stable economy, low interest rates, and homes still priced at appealing 2004 levels (without even controlling for inflation), we believe that Dutchess will finish the year strong and see even better days in 2017.
To learn more about Better Homes and Gardens Rand Realty, visit their website and Facebook page, and make sure to “Like” their page. You can also follow them on Twitter.
Real Estate Market Report: Third Quarter 2016 – Putnam County, New York
The Putnam County housing market surged again in the third quarter of 2016, with sales way up and prices stabilizing after a summer spike.
Sales. Putnam sales were up again in the third quarter, with single‑family home closings up over 12% from last year and now up almost 22% for the year. The market is just sizzling, with transactions up in nine straight quarters and 17 out of the last 18. Similarly, condo sales were up almost 12%, and have risen almost 20% for the year. Putnam demand is strong right now.
Prices. Even with all this demand, though, we’re not seeing a dramatic impact on pricing. Single‑family home prices were basically flat for the quarter, down a tick on average and up almost 2% at the median. Condo pricing was downright scary, falling almost 20% on both the average and the median, but we caution that the Putnam condo market is very thin and can be skewed by outliers. Overall, though, it’s surprising that sustained buyer demand over almost five years has had so little impact on pricing.
Inventory. The good news for Putnam homeowners was that inventory was down again, falling almost 43% to 7.3 months of active single‑family listings and 4.7 months for condos. Anything below six months usually signifies a tight seller’s market, which would tend to drive the kind of appreciation we’ve been waiting for.
Negotiability. The negotiability indicators showed that sellers continue to gain leverage with buyers, with the listing retention rate rising and days‑on‑market falling for both single‑family and condo sellers. We would expect homes to continue to sell more quickly and for closer to the asking price if the market heats up.
Going forward, we do believe that the fundamentals of the market are strong, with demand high, prices at attractive levels, interest rates near historic lows, and a gradually improving economy. Accordingly, we expect the Putnam market to close the year strong, and to eventually drive some meaningful price appreciation.
To learn more about Better Homes and Gardens Rand Realty, visit their website and Facebook page, and make sure to “Like” their page. You can also follow them on Twitter.
Real Estate Market Report: Third Quarter 2016 – Orange County, New York
The Orange County housing market surged again in the third quarter of 2016, with sales up dramatically and, more importantly, the first signs of meaningful price appreciation since the 2008-09 financial crisis.
Sales. Orange single‑family sales were up yet again, rising over 18% from last year and now up over 25% for the rolling year. This continues a trend we’ve been watching for over four years, with Orange sales now up eight quarters in a row and 17 out of the last 18. And the 3,400 single‑family sales for the rolling year marked the highest yearly total we’ve seen since the third quarter of 2006 ‑‑ exactly ten years ago, at the top of the last seller’s market.
Prices. These sustained increases in buyer demand are finally having a meaningful impact on pricing, with prices up across the board in the third quarter: up almost 4% on average, 3% at the median, and 4% in the price‑per‑square foot. This is all great news for Orange homeowners, who have been impatiently waiting for pricing to rebound since the 2008-09 financial crisis.
Negotiability. The number of available homes for sale continues to fall, with inventory dropping almost 38% and now down to about eight months for single‑family homes and six months for condos. According to industry standards, anything below six months of inventory indicates a “tight” market that usually drives price appreciation. The other negotiability factors were mixed, with homes selling for closer to the asking price but days‑on‑market relatively flat.
Condominiums. The Orange condo market was not as active, with sales down almost 8% for the quarter. But prices showed similar signs of rebounding, with the average up almost 2%, the median up 3%, and the price‑per‑square foot spiking 7%. If the single‑family market continues to heat up, we expect that the condo market will follow.
Going forward, we believe that the Orange County housing market is looking at its best year since the height of the last seller’s market. The fundamentals are strong: demand is high, prices are still attractive, interest rates are at historic lows, and the economy is generally improving. We expect a strong finish for the year, and meaningful price appreciation in 2017.
To learn more about Better Homes and Gardens Rand Realty, visit their website and Facebook page, and make sure to “Like” their page. You can also follow them on Twitter.
Real Estate Market Report: Third Quarter 2016 – Rockland County, New York
The Rockland County market surged again in the third quarter of 2016, with a dramatic increase in sales finally driving a meaningful yearly increase in prices.
Sales. Rockland single‑family sales were up yet again, rising almost 13% from last year’s third quarter and up 20% for the rolling year. We’ve now seen sustained rates of growth for over four years, with transactions up for eight straight quarters and 16 out of the last 17. Indeed, we eclipsed 2,000 single‑family sales in the rolling year for the first time in over 10 years, at the height of the last seller’s market. Sales were similarly torrid in the condo market, which was up almost 38% for the quarter and 15% for the year.
Prices. Rockland pricing is finally showing meaningful signs of price appreciation. As we noted in our last Report, the 10% spring spike in prices was not sustainable, and we saw pricing come back to earth a little bit in the third quarter: down over 2% on average, and up a tick at the median. But the rolling year single‑family prices are demonstrating the kind of appreciation that is sustainable over time, up about 3% on both the average and the median. Rockland homeowners should be happy with this trend.
Inventory. Available inventory continues to fall, with single‑family homes and condos both approaching the six‑month level that usually denotes a “tight” market. If inventory continues to fall, and buyer demand stays at its current levels, then we are likely to see continued price appreciation in the future as buyers chase fewer available homes.
Negotiability. Single‑family homes sold more quickly and for closer to the asking price, which is generally a sign that sellers are gaining negotiating leverage with buyers. The condo results were more mixed, with the listing retention rate falling slightly even while the days‑on‑market hit the six‑month mark.
Going forward, we believe that buyer demand in Rockland will stay strong through the end of the year, with prices still at attractive levels, interest rates low, and the economy generally strengthening. Indeed, we expect that Rockland will have its best year since the height of the last seller’s market.
To learn more about Better Homes and Gardens Rand Realty, visit their website and Facebook page, and make sure to “Like” their page. You can also follow them on Twitter.
Real Estate Market Report: Third Quarter 2016 – Westchester County
The Westchester housing market softened in the third quarter of 2016, with sales flat and prices continuing to weaken even in the face of falling inventory.
SALES. Sales activity was up, but not at the pace that we’ve seen over the past few years. Single‑family home sales rose, but only by about 2%. Similarly, coop sales were actually down by almost 3%, and condo sales fell just a tick. Transactions are still up for the rolling year, rising 11% in single‑family homes, 6% in coops, and almost 12% in condos. But we might be seeing a cooling of the sizzling buyer demand that’s been driving sales up in this market for the past five years.
PRICES. We continued to see some weakness in Westchester pricing, with single‑family home prices down 3% on average, 1% at the median, and almost 2% in the price‑per‑square foot. Pricing in the condo and coop markets was a little more mixed, but the overall takeaway is that sustained levels of buyer demand over the past five years have done little to drive price appreciation.
INVENTORY. Inventory levels continue to drop, now under six months of inventory for all property types. That might explain the relative slack in market activity, if buyers are still adjusting to the limited inventory available. But if inventory continues to fall, and demand maintains its current levels, we might see the price appreciation we’ve been waiting for.
NEGOTIABILITY. The negotiability indicators were relatively hopeful. Sellers seem to be gaining a little bit of negotiating leverage, with single‑family home sellers now retaining over 98% of their last list price. And homes are now selling in under six months, which is relatively quick by historical standards.
Going forward, we continue to believe that the fundamentals in the Westchester market are strong. With inventory tightening, pricing at 2004‑05 levels, interest rates near historic lows, and a generally improving economy, we expect that buyer demand will stay strong and eventually drive meaningful price appreciation.
To learn more about Better Homes and Gardens Rand Realty, visit their website and Facebook page, and make sure to “Like” their page. You can also follow them on Twitter.
Real Estate Market Report: Third Quarter 2016 – Westchester & Hudson Valley Market Overview
The housing market in Westchester and the Hudson Valley in the third quarter of 2016 defied the standard economic laws of supply and demand. Sales were up and inventory was down, but prices were flat across the board. Why? Maybe buyers are just leery of making a move during a tumultuous presidential election year.
Sales activity continues to increase throughout the region. Sales were up compared to the third quarter of last year in every county in the Report, ranging from a modest 2% increase in Westchester to a robust 18% rise in Orange. We’ve now seen sustained sales increases for almost five years, with regional year‑on‑year sales going up in 17 out of the last 19 quarters. And we’re reaching transactional totals we haven’t seen since the height of the last seller’s market, with the region hitting 15,000 single‑family home sales for the first time since 2016. We did see some signs, though, that the pace of growth might be slowing: regional sales were up only 8% for the quarter, relatively disappointing in a rolling year where sales rose almost 17%.
Inventory continues to tighten throughout the region. The supply of homes for sale is falling throughout the region, down in almost every county in the Report: dropping 20% in Westchester, 31% in Putnam, 17% in Rockland, and 21% in Orange. And if you look at the months of inventory available given the current rate of sales, we are already approaching the six‑month inventory level that usually signals a tight seller’s market. For single‑family homes, Westchester is already below six months at 5.8, and the other counties are getting close: Putnam at 7.3, Rockland at 6.4, and Orange at 8.1. And for condos, it’s the same story: Westchester at 3.7, Putnam at 4.7, Rockland at 7.1, and Orange right at 6.0.
So with demand up and supply down, why aren’t prices rising? Prices were down modestly throughout the region, and in most of the counties in this Report. We can think of three reasons.
- Disproportionate strength in the lower‑end markets. The fact that sales were up 18% in lower‑priced Orange and only 2% in higher‑priced Westchester might be a sign that demand is stronger at the entry‑level. That would tend to drive overall pricing down a bit.
- Buyers are still spooked by the financial crisis and meltdown of 2008‑09. Maybe buyers aren’t yet willing to give in to seller demands for higher prices – that would blunt the impact of declines in inventory, and might also explain why sales increases have tapered a bit.
- The impact of a particularly tumultuous presidential election year. It’s tough to get data on this, because we have so few presidential election years to use as comparison points. But real estate agents have traditionally complained about the difficulty of selling homes during a presidential election – and we expect that this election is especially fraught for home buyers (on both sides).
Going forward, we are hopeful that the market will close the year well. The fundamentals of our regional market are strong: demand is high, inventory is falling, interest rates are near historic lows, and the overall economy is doing fine. Accordingly, we expect that sales will continue to outpace 2015 levels, and believe it’s only a matter of time before these falling inventory levels start driving meaningful price appreciation throughout the region.
To learn more about Better Homes and Gardens Rand Realty, visit their website and Facebook page, and make sure to “Like” their page. You can also follow them on Twitter.
Are Home Prices in the Manhattan Suburbs Due? — The Big City Exodus Theory
Are home prices in the New York City suburbs on the rise?
We’re not seeing it in the data just yet. Even with home sales up pretty robustly for the past five years, home prices in the Manhattan suburbs have been relatively flat since their financial crisis correction back in 2008-2010. At some point, you have to think that increasing demand with a flat supply is going to drive prices up — just basic Economics 101.
And here’s another theory that bolsters the idea that the suburbs are due for some price appreciation. Conor Sen in Bloomberg View argues that demand for homes in the suburbs is likely to surge in the next few years, driven largely by the simple fact that big-city housing prices are out of whack. Indeed, he analogizes big cities to large cap stocks and suburbs (and smaller cities) to small-cap stocks (this is Bloomberg, after all — everything is about equities….), and thinks that the housing market is like the stock market in the late 1990s, when large caps were overvalued and due for a fall relative to small caps.
Why? Well, basically, two reason. First, home prices in the big cities across this county have soared in the past few years, and at some point people are going to decide that they just don’t want to pay that much to live in Manhattan or San Francisco or wherever. And second, he sees the internet driving job mobility:
The conventional wisdom that the internet would allow people and jobs to leave primary metro areas for secondary ones has run up against the fact that over the past 20 years the opposite has occurred. There are a few problems with this argument. First, at the height of the last housing boom the impact of the internet on daily lives was still quite small. The only people with smartphones were business users who had BlackBerrys. Cloud technology was still in its infancy. For most people, the internet was still a desktop-computer- and email-based experience. Now, with a labor market approaching full employment and the housing market nearing a normal recovery, it would be fair to evaluate the question of whether people will move. And the evidence suggests they will.
Certainly, this makes sense in the New York area, where Manhattan prices have risen dramatically in the past ten years compared to pricing in the surrounding suburbs. To give you an idea of how the market has changed, let’s compare the average sales prices for Manhattan and some of the surrounding suburbs in the past ten years.
First, Manhattan. According to the market reports put out by the Corcoran Group, the average Manhattan home is now priced about 60% higher than it was ten years ago in 2006. Here are the numbers, with links to the market reports:
- 2006Q2:$1,247,000
- 2016Q2: $1,994,000
- Difference: $747,000 (+59.9%)
Okay, so Manhattan is up 60% in the past ten years. Now, let’s look at what’s happened with pricing in some of the surrounding markets over that same time period. We have done a quarterly market report every quarter for about 15 years for the New York suburbs, so we can get the data there:
- 2006Q2:$938,825
- 2016Q2: $841,549
- Difference: -$97,276 (-10.4%)
- 2006Q2: $567,277
- 2016Q2: $465,795
- Difference: -$101,482 (-17.9%)
- 2006Q2:$351,538
- 2016Q2: $228,037
- Difference: -$123,501 (-35.1%)
- 2006Q2:$483605
- 2016Q2: $362,584
- Difference: -$121,021 (-25.0%)
In other words, while the average price in Manhattan is up almost 60%, the pricing in the New York suburbs is down between 10% (Westchester) and 35% (Orange).
And it’s the same in the New Jersey suburbs to the west of Manhattan. We don’t have market reports going back as far in that county, but we do have the calendar year average prices going back that far. So here’s a comparison of the average price for the past rolling year ending in June, and the calendar year price in 2006:
- 2006 (calendar year): $680,313
- 2016Q2 (rolling year): $569,484
- Difference: -$110,829 (-16.2%)
- 2006 (calendar year): $396,703
- 2016Q2 (rolling year): $312,000
- Difference: -$84,703 (-21.3%)
Same thing: while Manhattan is up almost 60%, Bergen is down 16% and Passaic is down over 21%
And how about the eastern suburbs — i.e., Long Island? We don’t cover that market, so I don’t have market reports handy, but if you look on Zillow’s median price index, you can see that the median prices (not the average) in Nassau and Suffolk Counties have done the following:
- August 2006 Median Price: $510,000
- August 2016 Median Price: $469,000
- Difference: -41,000 (-8.0%).
- August 2006 Median Price: $447,000
- August 2016 Median Price: $343,000
- Difference: -104,000 (-23.2%).
You have to be a little careful comparing averages to medians, but the trend is still pretty clear: Manhattan is up, and all the surrounding suburbs are down.
So does that bear out the thesis that home prices in these suburbs are due? Maybe. Certainly, it’s amazing how well Manhattan has done over the past ten years, rising almost 60% while the surrounding suburbs have still not recovered from the 2008 financial crisis. And it’s puzzling that this kind of rampant appreciation has had little or no impact on suburbs that are right on the border.
Think of it this way: back in 2006, the average price of a Manhattan home was $1,25M, which was 33% higher than the average priced home in Westchester. Today, the average Manhattan home is almost $2.0M, which is 137% higher than the average priced home in Westchester. That seems a little nuts, particularly when you think about what $2.0 buys you in Westchester.
Now, it might just be that the imbalance could be corrected in another way — Manhattan prices could just go down, rather than suburban prices going up. But I think that we have good reasons to be optimistic about suburban pricing. We have a strengthening economy, low interest rates, good employment, and a lot of twentysomethings who can’t afford a home in Manhattan and are likely to start looking outside the city in the next few years.
Second-Quarter 2016 Real Estate Market Report: Sussex County
The Sussex County housing market surged again in the second quarter of 2016, with sales up significantly even while prices continued to struggle.
Sales. Sussex sales were up sharply in the second quarter, rising 23% from last year and finishing the year up over 26%. This continued a trend that we’ve been watching for the past four years, with year‑on‑year sales up almost every quarter since 2012. Indeed, Sussex closings are now reaching levels that we have not seen since the tail end of the last seller’s market, with sales now up about 80% from their 2011 bottom. So the market is in much stronger shape than it has been at any time since the 2008‑09 market correction.
Prices. This spike in sales, though, has not yet had an impact on pricing, which has deteriorated even while buyer demand increased. Average and median sales prices were down again in the second quarter, falling almost 2% on average and at the median. For the year, prices are down even more, falling about 4% on average and at the median for the rolling year. It takes time for increases in demand to drive pricing changes, so we believe this will turn around if buyer demand remains at its current levels.
Inventory. The “months of inventory” indicator measures how long it would take to sell out the existing inventory of homes at the current rate of home sales. In the industry, we generally consider anything below 6 months as a signal for a seller’s market, where tight inventory leads to multiple offer situations, bidding wars, and ultimately appreciating prices. Sussex inventory remains well above that threshold, at 12.4 months, but that’s down over 26% from last year.
Negotiability. The negotiability indicators – the amount of time sold homes were on the market, and the rate at which sellers were able to retain their full asking price – were a little mixed. The days‑on‑market fell over 11%, indicating that homes were selling more quickly. But the listing retention rate fell, signaling that sellers were having difficulty getting buyers to accept their listing price.
Going forward, we believe that Sussex is poised for better things. Buyer demand has been strong for almost four years now, which is bound to eventually have a positive effect on prices. With an improving economy, homes priced at attractive levels, and near‑historically low interest rates, we expect buyer demand to stay strong through a robust summer market.
To learn more about Better Homes and Gardens Rand Realty, visit their website and Facebook page, and make sure to “Like” their page. You can also follow them on Twitter.
