Looking Forward to 2010

Local Optimism

We are increasingly optimistic about the local housing market in the first two quarters of 2010, in spite of the the financial and employment woes that continue to plague the economy nationwide.

Potential homebuyers who have been standing on the sidelines are now feeling the urgency of record low mortgage interest rates, lower home prices and the expiration of the Federal Home Tax Credit, which expires in June.  These factors set the stage for a market surge in October, as the original tax credit was drawing to a close.

Unsold inventory is also furthering the housing recovery, as the number of homes being offered for sale in New Jersey has declined for the 6th straight month.  On January 4, 2010 the active GSMLS residential inventory in Livingston totaled 90 homes,  compared to an April 2009 high of over 160 unsold homes.  The trends of rising home sales and falling inventory represent the basic building blocks of a housing market recovery.

First-Time Buyers are Back!

Affordability is coming back into focus, and first-time buyers (FTB’s) are once again finding opportunity in the housing market.  FTB’s are the people that are needed to ignite the market.

For every first-time home buyer that closes a transaction, there are four more transactions that are a direct result of their purchase.  The money from FTB's purchase moves from closing table to closing table over the next 24 hours, as other sellers use it to move-up or downsize.

Because the stability of interest rates is uncertain and the Federal Tax Credit requires that buyers be in contract by the end of April, we expect the local housing market to begin percolating sometime in late January to early February.

It appears that the recent surge in home sales will repeat itself during the 1st and second quarters of 2010 as the home buyer tax credit nears expiration.   2010 holds the promise of seeing the first strong “Spring Market” for homes sales since the housing downturn began in 2005.  As a result, home prices should should remain stable in the coming year, and in some instances may realize very modest gains.