I added another post to my series about the State of the Housing Market in Bergen County, because of an article that was just released in The Record and on northjersey.com…The return of the under $300k house in Bergen, Passaic counties…by Kathleen Lynn, that focuses on the lower price range of the market (in specific towns), and once again on affordability.
- is this really a return of lower priced homes?
- is it a temporary return?
- will this hurt sales of higher priced homes?
- or is this article all about nothing…because the sales figures for homes priced under $1 million hasn’t really changed all that much going back to 2009?
And to dig even deeper, is this the future for Bergen County home sales, because the lower price range is all that today’s buyers can afford?
In fact, it’s pretty easy to find a home for less than $250,000…
but not in the eastern part of the county!
This article seems more like a marketing piece for Realtors. And again, they make it all about price. But as the facts bare out, price doesn’t create more sales…it just makes it less expensive for people who are already in the market who probably would have bought a home at a higher price.
Sales of homes priced below $300k decreased in Tenafly by 88% in 2012…and that’s taking into consideration, all types of housing…not just single family homes…(8 houses sold in 2011 and only 1 house sold thus far in 2012). And there was a 17% decrease in this price range from 2010-2011.
Real estate is local!
As I’ve stated in previous posts, it’s impossible to properly assess the market at any price point unless you use comparison from a multiple of past years and price ranges. The shift to something is be more important than the shift to something. And this is the case for the articles in the above referenced publications.
The Record’s look at property records found that under-$300,000 homes were a majority of sales in many towns that have traditionally drawn first-time home buyers, such as Bogota, Bergenfield, Elmwood Park, Garfield, Hackensack, Lodi, Clifton, Wanaque, West Milford and Pompton Lakes. But properties under $300,000 also made up 42 percent of the sales in Fair Lawn, 27 percent of the sales in Mahwah and 23 percent of the sales in Waldwick.
I’m going out on a limb to say that a majority of the homes sold in Tenafly are also to first time buyer…but at higher prices than the towns mentioned above. Which means that the $300k price range is irrelevant, but for talking about an incredibly narrow price point.
Yes it’s true that the sales of homes priced below $500k (they use the weird figure of $300k…whereas I use more simplified figures in $500k-$1.0m increments, so it’s easier to understand) has increased by a whopping 31% in 2012…from 40% of all homes sold in Bergen County to 62% of home sales.
But what the articles failed to point out is that in 2011 the sales of homes priced below $500k, actually fell by an equally whopping 27% from 2010. So the return to the $300k home may not be such a radical move after all (or could it be incredibly radical).
And also not mentioned were the sales figures for homes priced from $500k- $1 million:
- sales of homes in this price ranged decreased by 36%…from 47% to 30% of all homes sold in Bergen County
- however, sales in the same price range increased in 2011 by 28%
What this really tells us about the market is something that we all need to be concerned about…and that is the trend that this portrays. Which is that if this is in fact the trend that the publications believe that it is, is that the market in Bergen County is going to be predominately positive only for lower priced homes. Because as they point out, most of today’s buyers are first time buyers…not move up buyers.
And if this is in fact the case, which it could be, then the trend for homes priced well above these figures will suffer, because there isn’t enough of a supply of these homes for sale. Which will then cause the price of the lower priced homes to increase in value. Which will then cause less homes to sell…and push more people to rentals.
Another problem that isn’t addressed in the articles is…what does this mean for towns like Tenafly, Cresskill, Closter and others in the more expensive eastern part of the County where the prices are considerably more expensive than in other areas of the County. Will the eastern towns get hurt if this remains the trend?
If there’s one thing to learn from this…it’s that real estate is very local. And if facts aren’t compared to other towns a price ranges, then it has no baring on anything other than to create distracting noise. But worse it misleads consumers into believing something that is broadly true, but locally not correct.
If I only read the headline…The return of the under $300k house in Bergen, Passaic counties…then I would believe that the $300k home sale was a trend everywhere in Bergen County. But it’s not.
But I do think that this highlights a serious problem that will affect us in the future…throughout Bergen County. If this is the price range that buyers can afford for the next few years, it creates a problem for sales and values everywhere in the county.
The article was great in that it brings to attention some potential future problems with our housing market, and by pointing out that some people are looking in specific areas for lower priced homes, but that has pretty much always been the case in Bergen County. But you didn’t know that.