The Real Deal

2009 Summer Market

2008 represented a period of unprecedented negative economic news, which has impacted consumer purchasing across the board, including real estate. However, in early 2009, the Federal Government took some unprecedented actions that are positively affecting the 2009 real estate market.

On February 17, 2009, President Barack Obama signed into law H.R. 1, the American Recovery and Reinvestment Act of 2009. Included in that legislation are modifications to the Homebuyer Tax Credit passed in July. First-time homebuyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009 can now take up to an $8,000 tax credit, reducing their income tax liability and effectively lowering the purchase price of a home.

In a recent year-over-year (2009 vs. 2008) comparison of sold and under contract (offer accepted by seller) statistics from Jan. 1 through June 19, the Bergen market is performing significantly better in 2009, with 3,793 homes sold or under contract in 2009, compared to 2,798 in 2008.

What About Declining Median Prices?

The first-time buyer tax credit legislation, attractive prices and historically low interest rates appear to be driving an increasing number of first-time buyers into the market. That fact is in turn, influencing the median price. The media has consistently reported a decline in the median price, but they’ve failed to give context to the actual activity in the market.

Over the last few months, the single-family median price in Bergen County has fluctuated in the low $400,000s. Why? Median price is the market mid-point, meaning 50% of homes sold sell for more and 50% sell for less. With an increasing number of first-timers purchasing in the more affordable sector of the market, the median price predictably skews downward. This doesn't mean that homes in other price sectors are not selling or are losing value.

In fact, the most recent 6-month data for 2009 shows an increase in the single-family median price for the four consecutive months March through June. But more significant, the number of homes sold and going under contract (offer accepted by the seller) has been increasing significantly since January. Realtors pay particular attention to the number of homes going under contract because that data provides the most up-to-date look at current market performance.

Consecutive Monthly Statistics (January 1 through June 2009) Source: NJMLS
Month, 2009	Single-Family Sold	Single-Family Under Contract	Single-Family Median Price
January	213	282	$465,000
February	170	341	$433,250
March	226	417	$385,000
April	258	555	$416,000
May	337	615	$429,000
June	507	672	$430,000

Today, continued low interest rates, attractive sales prices and availability of inventory should provide strong motivation for buyers who may have previously been reluctant to purchase. Realtors expect these factors to drive increasing interest by qualified first-time buyers, and by those seeking to trade-up to a new home.

It's a good time...