Mortgage broker trenton new jersey

Equation For Continued Housing Boom

A mortgage consultant called Rosalie Daniels and was quite upset.

"My house has been on the market for three days and I've only had two showings," he squawked. "Where's my agent?"

These are heady days for the real estate industry.

For the past five years, the real estate market in New Jersey has run out of superlative descriptions. Hot. Sizzling. Booming. Unbelievably strong.

"We are just spoiled right now," said Daniels, the president of the Mercer County Association of Realtors and the broker-owner of ReMax Tri-County. "This has been an absolutely crazy market, "

Crazy indeed. The housing market has been on a one-way track up - way up - for the past few years. Houses would go on the market in the morning and have three to five offers that night. Prices rose as fast as the demand.

But while realtors emphasize that the market is still strong, and should remain robust next year, there are subtle signs that hint of a potential change. If the market for the past few years has been a "boom-boom" market, they say, it now may be just a "boom" market. Still a great market, but perhaps not as unbelievably great as it has been.

"The general consensus is that there may be a slight slowing," Daniels acknowledged, while still noting the strength of the market. "But a slight slowdown in comparison to an extremely hot market is not a real slowdown at all ... it's all relative to what you are comparing it to, and we're not comparing this to an everyday market to begin with."

Richard A. Weidel, president of Weidel Corporation Realtors, said that while the

housing market has been "very consistent with last year," if there are changes, he expects them to be subtle.

"There is trepidation in the marketplace that the winds may be shifting, due to the overall economy," Weidel said. "But if I had a crystal ball, I think the market is going to continue to be robust. Our inventory has been totally exhausted because of the strong sales we've experienced in the last 5 years ... I think the indicator will be when the inventory begins to swell, and that's not appreciable at this point. We still have more buyers than inventory, so I still see a strong market."

The statistics seem to reflect both the strength of housing sales, and the potential for a shift in the marketplace. The National Association of Realtors reported that in the third quarter, the median home sale price for the Trenton area was $191,700, up 5% over last year. That percentage increase, however, was below the nationwide increase of 7.2%, and was not as strong as other areas in New Jersey. The Monmouth-Ocean counties area, in fact, registered the strongest growth in the nation, up 26% overall.

Weidel notes that in Mercer County, houses are being taken off the market at a faster rate than last year. The average time that a house stayed on the market was just 37 days in September, down from 40 days on market in September 2001.

But on the other hand, fewer units have been sold this year than last year. Weidel said that year-to-date through September, 3,070 units were sold, versus 3,143 at the same time last year. The listing supply is up: 1,097 in 2002, versus 910 in 2001.

September contracts for future construction in Mercer County may also hint of a change. According to McGraw-Hill Construction, there was a 30% decrease in total building contracts in September, led by non-residential construction, which was down 49%. Residential construction, however, was up by 19%. Year-to-date numbers are still quite strong - residential contracts are up 24%, and nonresidential contracts were up 32%.

There is little doubt that this has been a phenomenal time in real estate. Experts say the strength of the market has been spurred by low interest rates, combined with a strong demand for houses and limited supply.

"We are very fortunate to be in a marketplace that has a very diverse product," Daniels said, noting that her firm represents homes that sell across the spectrum, from $80,000 homes to multi-million properties.

One reason the real estate market in Mercer County is likely to remain strong, experts say, is that relocating businesses have brought new buyers into the market, which can help shield the area from any dips in the economy.

The most recent statistics from the New Jersey Association of Realtors show the growth of the market in New Jersey. Through the second quarter of 2002, there was an 8.8% increase in home sales. Housing prices also rose, up 17%, to $242,500, up from $205,800 in 2001. Perhaps even more telling, prices rose 14% between the first and second quarter of 2002. Third quarter statistics are not yet available.

That price increase can be seen dramatically in the price of luxury homes. According to a market report by Weidel Realtors, luxury homes in Princeton Borough, for example, soared 45% in one year, from $440,206 during the first half of 2001, to $636,294 this year.

In Mercer County, the market has been strong across all price sectors. But Daniels said that the luxury home market, for one, while still strong, has been slowing slightly in recent weeks, adding that sales of these homes are most sensitive to the economy. The luxury market report by Weidel Realtors also warns sellers that they should not expect double digit increases in housing prices to continue, as there has been an increase in the number of days that luxury properties remain on the market.

But this overall strength in the real estate market has also helped spark the interest of investors, who are looking for options other than the stock market. Daniels noted that the city of Trenton, for one, has become very attractive to investors.

"Instead of playing in the stock market, people are shifting their money into real estate," Weidel added. "Rental units, small shopping centers, income producing properties. But again, even here we have more buyers than inventory."

For next year, the National Association of Realtors is predicting slower growth in 2003. While they are projecting that existing home sales will rise 3.4% in 2002 to a record 5.47 million units, they are predicting sales to drop to 5.27 million sales in 2003. But to put that in perspective, that would still be the third highest sales volume on record. Similarly, they are expecting home prices to rise nationally by 4.2% in 2003, below this year's projected increase of 6.4%. New Jersey, it should be noted, has trended higher than the national average.

But in case there is a slowing of the real estate market - no matter how slight it may be - realtors say they will be prepared. Daniels, for one, is sending her agents to "back to basics" training as a refresher course on selling homes in a market that while still hot, may no longer be sizzling.

"It wasn't that long ago, I can clearly remember that if a house sold in 3 to 6 months, that was good," Daniels said. "Now we want houses to sell in 3 to 6 days, which is a little extreme. To have a house sell in 30 to 60 days is still a good market, but now we may be coming out of unrealistic expectations."

What is realistic, these industry professionals say, is to expect continued strong sales, but with a caveat.

"I can't find a factor that says that the market is appreciably different or changing," Weidel said. "Everything that we will experience next year will be subtle at most, unless something profound happens, like interest rates rising, but there are no indicators that is going to happen."