Top NJ Real Estate Trends for 2010
Although NJ Real Estate market recovery is unlikely in the coming year, it is still a buyer's market
Economists and NJ Real Estate experts predict the coming year to be inundated with a great inventory of homes for sale at record low prices. While this is reassuring for the home buyer, what exactly does it mean for the seller? In the event of another influx of foreclosures and distressed properties, sellers must realize that competition still exists from bank-owned properties at rock bottom prices. Homeowners wishing to sell in this challenging market must be creative and inventive in order to get their home noticed and sold quickly. Below are predictions for the movement of the NJ Real Estate market in 2010:
More buyers looking for homes
In an effort to address the economic challenges and to stimulate the US housing market, Congress enacted legislation granting a tax credit to first-time home buyers of up to $8,000 purchasing a home between January 1, 2009 and December 1, 2009. This is a guaranteed federal tax credit that directly reduces the tax amount owed for a year. After its success in bringing more first-time buyers into the market, the federal government extended the credit until April 30, 2010 and amended it to include current homeowners. These incentives were made with the expectation to drive up housing demands and stimulate the market.
Easier short sales
A short sale is a sale of NJ Real Estate in which the gross sales price falls short of the balance needed to satisfy all liens secured by the subject property. In this case, the lender decides that it would be more beneficial to sell the property at a reasonable loss rather than foreclosing which can incur many fees on the bank and further damage the borrower's credit. During the past year, short sales have become known to be a stressful and lengthy process usually ending in negative outcomes for the seller. Fortunately, NJ Real Estate companies such as RE/MAX have been educating their agents on how to better handle these specialized sales to result in better cooperation with lenders and ultimately make the short sale process smoother and more efficient.
Home values will remain steady
According to the National Association of Realtors, median home prices have risen in the past two consecutive quarters and predict a 4 percent growth in home prices next year. Although this recovery may take longer in certain areas of the country, it can still be seen as a sign of what is to come in the following years.
Increasing mortgage rates and stricter lending regulations
During the past year, the Federal Reserve acquired a considerable amount of mortgage-backed securities resulting in record low mortgage rates. However, those efforts are expected to end in the early part of 2010 leading to a sharp increase in rates as much as a full percentage point. In addition, lenders have learned from past mistakes and will continue to require borrowers to have nearly perfect credit and submit ample documentation for loan qualification.
More competitive foreclosure market
Experts foresee a second wave of distressed properties and foreclosures entering the coming market in 2010 due to rising unemployment rates and economic recession. With demand being so high for these types of homes with NJ Real Estate investors and average buyers, much competition will be seen. The best way to have the upper hand with any bid is to present the most appealing offer, preferably with cash.
Modified appraisal regulations
In May of 2009, the federal government enacted a set of laws pertaining to home appraisals, referred to as the Home Valuation Code of Conduct, with the objective of providing a fair, unbiased analysis of a NJ Real Estate property's market value. As a result, appraisals are now a more costly and lengthy process often performed by appraisers that are not necessarily familiar with the subject neighborhoods.
A troubled construction market
It was reported in October of 2009 that housing starts sank to the lowest levels in six months, implying builders halting any new development until assurance was granted for the first-time homebuyer tax credit extension. Although the credit has been prolonged, it can be expected to see housing starts rise in 2010, however stricter lending standards might still possibly affect housing supply.