2nd in a multi-part series on the State of the Bergen County housing market
Home prices coming down to earth in Bergen County, could signal a turnaround
As the article points out…
“If interest rates were any higher, there’s no way we would have been able to buy our house,” said Joshua Baris, a Coldwell Banker real-estate agent who bought a three-bedroom Dutch colonial in Tenafly last year. He and his wife, Hilary, locked in a rate just below 4 percent and a price — $660,000 — that was down dramatically from the earlier asking price above $800,000.
Contrary to what Realtors and the media believe, consumers have rejected the notion that low interest rates and decreased home prices, are what motivates them to purchase home. The sales figures prove that point.
The reality is, if interest rates were higher, this buyer still could have bought a home…though probably a less expensive home. But it wouldn’t have stopped them from buying a home…because their desire would have still been there to purchase. As we can see by the various charts in this series, we had a horrible market (or did it just return to normal) from 2006-200 (and some would consider that it’s lasted to the present)…yet thousands of homes and condos still sold in Bergen County.
There was a point a few years ago where you had to be pretty rich to afford a house in this area. Now, you don’t have to be so rich,” said David Blitzer, a housing economist at Standard & Poor’s.
The door has always been open to middle class buyers…but now the door has closed quite a bit, because less of the middle class can meet the new lending criteria that is now in place…especially of you presently own a home, because chances are, their homes are worth considerably less than what they paid for it…or owe on the home.
The fact is, more homes sold when rates were considerably higher than they are today, and when prices were considerably higher as well.
Here’s some additional facts:
The following tables show (data from njmls) that year to date, Tenafly home sales are down by 9%…but that only equates to a 6 some decrease in overall sales…and that the average sales price is down by 3%. In the article the reporter uses the median sales price as her control point. But neither number by itself is an indication that prices are increasing or decreasing.
- June sales were down 24% from June 2011…and that only equates to a decrease of 6 home sales
- 50% of the first six months in 2012 showed a negative decrease in home sales in Tenafly. Only 2 months shined an increase in sales and one month was a break even
So what does this really mean? Well it all depends what information you’re looking at. Here’s an example:
This is where the data gets interesting…and where the price decreases that are alluded to in the article become misleading: The following charts breakdown the various price points. And these breakdowns allow you to see exactly how each price point is performing in Tenafly, and how they pertain to one another, or work against each other when trying to ascertain what is really happening with home prices.
You’ll quickly notice that not every price point performs the same way. And that is why each price point has to be looked at by itself.
Every town is made of of numerous micro markets: some are doing incredibly well, while others are downright horrible…all in the same town at the same point in time. And not every town is performing to the same level (that discussion is for another post)
- The top box in green shows the all sales for every price range combined in Tenafly
- The next two boxes show the sales data broken down into 2 price points…below $1M and for more than $1M
Table 3: shows a further breakdown of the sales stats from chart 2
- The table shows an increase in sales of 33% for homes priced under $500,000. Though it’s only a 4 home increase, it’s a still a 33% increase
- the 2nd table shows an 11% decease of home sales from $500k-999k…but that’s still only a 4 home decrease in sales…but 31 homes have sold in this price range in 2012. That’s a big number!
Where it starts getting funky for Tenafly is for sales priced above $1 million (the luxury home market)…where the percentages have “tanked” compared to 2011…which was not a surprise. 2011 was just a lucky year for this price range. And even though the differences are small in volume, it does show a down good trend.
The market gets a bit unsettling is for houses that are for sale priced above $2 million in Tenafly, because that’s where sales have been the weakest since this time in 2011. And as you can see by the data, home sales sales from $1 million plus have decrease by roughly 40% in Tenafly.
From the date provided in the northjersey.com article, no one can state for certain that house prices have decreased in Tenafly. Nothing in the article was conclusive. In fact…the numbers shown on my charts point almost to the opposite…that prices for homes priced below $1 million have remained the same, when you take out the loss of many sales at the upper price ranges.
You have to look at the individual sales to determine price increases or decreases. because the average and median price points are false indicators of value
And when you compare these numbers to sales in the towns surrounding Tenafly, it still shows that Tenafly is the hottest market in the region…by a wide margin…even though sales at various price points have decreased…as they have for all the other towns in the area.
I keep saying it…Tenafly is a sellers market no matter what price range…just follow my previous posts on Tenafly for the backup data.
From my POV (which differs from the local realtors) most homes that are for sale in Tenafly, priced below $1 million are under priced, and should be raised to compensate for this.
Raising prices accomplishes several things:
- Creates stability
- Increases the value of everyone’s homes
- Forces realtors to push for higher prices
- Growth attracts and entices buyers
- Creates competition, and competition creates value
Tenafly has long bottomed out, and now is the time to climb our way out from the bottom. The “price it right” sales mantra is irrelevant in a town where demand is higher than in other towns…there’s no need to push prices lower.
Know the real facts before you look to sell or buy a home.
Next…a detailed breakdown of home sales in Tenafly from 2001-2012