“ARC is New Jersey and New York’s biggest investment in transit, ever.  It involves the construction of a second commuter rail tunnel that will connect NJ Transit’s existing rail network and Metro-North Port Jervis and Pascack Valley service with a new terminal station at 34th Street in the city.  ARC will double the number of trains that can travel every morning into the economic engine of the region from west of the Hudson River.  For several train linesthat currently terminate in Hoboken, Newark, and Secaucus, ARC will provide new, direct service to Midtown.  For those lines that already terminate at Penn Station-NY, ARC will significantly increase the frequency and reliability of service.”  (ARC Report)

It is expected that residents with commutes of under 50 minutes into the city with the new tunnel, the number of commuters will DOUBLE after ARC.  This will effectively cut down on pollution as well, a great benefit to the planet and Northern NJ.  For homeowners looking currently to buy, perhaps it would be a good idea to look closer to rail stations if you are looking for added benefits in the near future.  The ARC is expected to take up to 10 years to complete, but many in the industry are expecting closer to 7-8 years.  It is currently underway though and drilling through the Hudson River is taking place as we speak.

Here are some interesting stats to keep in mind regarding real estate:

• Homes near train stations significantly gained in value after Midtown Direct, Montclair Connection and Secaucus Junction.  The average home gained $23,000, with the highest gains coming within walking distance to the stations.
• Houses immediately adjacent to San Francisco’s BART sold for nearly 38% more than identical homes in areas not served by BART (Landis and Cervero, 1995).
• Homes within walking distance of stations on the Morris & Essex line increased in value by $90,000 more than homes farther away after direct service to Midtown was inaugurated in 1996 (Michaelson, 2004).
• In Chicago, the prices of single family homes located within 1,000 feet of stations were worth 6.7% more than similar homes in other communities (Armstrong 1995)

To read the entire ARC Report and to reference the writers of the report, quoted in this post, CLICK HERE.

Just to the right of the screen, you will notice our customized MLS / IDX tool.  This custom design allows you as the user to search all homes for sale using your specific criterias.  This system will allow you to narrow down your homes so you won’t get overwhelmed by thousands of homes.

As stated to the right, the MLS’s are area specific.  Be sure to use the MLS / IDX that is appropriate for your area.

Here is a useful pointer on MLS Options:

New Jersey MLS: This MLS is the most popular for real estate listings in Bergen County.  Also has most of Essex and Passaic County listings

Garden State MLS: This MLS is most popular for Essex, Passaic, Morris, and suburban counties south of Bergen County.  You can also use this MLS for a good alternative for Bergen County real estate listings.

Hudson County MLS: This MLS is self explanatory!  Gives you all real estate listings in Hudson County.

Once you find a home or homes that you like, be sure to give us a call for a tour of the home and information regarding the area.

New Jersey Real Estate Guys prides ourselves on providing you simple unintrusive ways to search for homes.

New Jersey Real Estate Guys also owns a very popular real estate firm in Ft. Myers, FL.  Aside from general real estate, we pride ourselves on diversification in our customers portfolios by becoming diverse property owners.  In a lot of areas today, buying real estate is favorable given the market conditions regarding pricepoints and rental rates.  Today offers unprecedented pricepoints and the time where most millionaires are made. 

In my opinion, leading the nation in appeal for second home buyers or investors is Southwest Florida.  Naples and Ft. Myers seem to be absolutely on an aggressive rebound.  The median home values are up nearly 20% since February 2009.  At its peak the median home price in Lee County (Ft. Myers / Cape Coral) was ~$345,000.  In February 2009, the market hit its bottom at settling on a median of $84,000.  Today, we are at $101,000.  Additionally, unemployment has dropped 1.4% over the last 2 months respectively.  Homes below the conforming loan limits of $417,000 are selling very quick and you can now buy a respectable house in a great area for less than $250,000.  In the past when investors and second home buyers thought they were priced out of Paradise, today offers historically low prices.  Compounded by low mortgage rates, homes are flying off the shelves.  I invite you to come down and see us.  I always fly in and out of Ft. Myers Int’l Airport.  Come down and see for yourself!

Another great area for opportunity is the Smoky Mountains region of Tennessee.  Purchasing a resort cabin and applying it to their rental program could be very lucrative to your portfolio.  The “Save Our Mountains Act” has applied a construction moratorium in the Smokies in order to preserve the environment and protect views of current development.  Recently, we assisted in restructuring the debt of a large resort.  Our intentions was to bring developer land price payoff down to favorably combine with the cost of construction of an unbelievable cabin.  If you are interested in looking into Tennessee, CLICK HERE to see the article and executive summary to one of the most favorable investment opportunities we have seen in a while.  Because of its severe lack of cabins, and Wahoo Zipline which attracts 100,000 visitors annually, the developer is putting his money where his mouth is and offering a developer guarantee of 15% ROI for each of the first 3 years based off the purchase price.  Our FL brokerage, who is also a licensed brokerage in Tennessee is acting as the exclusive sales and marketing firm for this resort.  We are reimbursing travel expenses with all deals closed.

As for New Jersey income property, Section 8 compliant multi-family homes are becoming very popular especially with the Housing Authority alleviating their waiting list by handing out an additional $10 million in rental vouchers.  Section 8 in Newark is most popular, followed by pockets of Passaic County.  CLICK HERE to see our article on Section 8.  Morris County has been a hot pocket for multi-family home investing.  Although most are not favorable for Section 8, higher rental rates are being realized as supply is lower than most areas of the county, and much less than Essex County.

If you are interested in discussing different real estate investment possibilities, call Scott at 877-688-7582 or Contact Us by e-mail.  Ask us about investing using your current or a future IRA account.  The benefits are unbelievable.

It’s been less than 24 hours since I wrote this article.  Early this morning the new PNC Financial projections came out, strengthening my opinion for a strong rebound over the next 12 months.  Let me retract “strong” and replace it with words like “satisfying”, “better than nothing”, or “shit, I’ll take anything”. Here’s some captions….Continue below to read our article.  Keep in mind, this report is for NORTHERN NEW JERSEY.  Other supporting article

Jobs

* PNC predicts northern New Jersey’s 2010 and 2011 unemployment rate will be 9.6 percent and 8.7 percent, respectively, amid increasing stability in the financial services sector.

* The region’s annual jobs growth rate was negative 4.6 percent last year and PNC forecasts a negative 1.5 percent pace for 2010. The trend is slowly turning and jobs will expand at a 1.3 percent rate in 2011, the economists predict.

Housing

* Northern New Jersey home prices fell 10.4 percent last year, according to the S&P/Case-Shiller index, and PNC forecasts prices will decline another 1.6 percent this year and rise 1.5 percent in 2011.

* Meanwhile, U.S. home prices dropped 11.5 percent last year. PNC predicts they will advance 2.1 percent this year and 2.6 percent in 2011.

Income

* The median northern New Jersey household income, which was $76,900 in 2009, will increase to $78,200 this year and $80,400 in 2011.

* PNC predicts northern New Jersey personal incomes, which fell 2.1 percent in 2009, will rise 2.2 percent this year and 3.8 percent in 2011.

* U.S. personal incomes slid 1.7 percent last year. PNC predicts they will gain 2.9 percent this year and 4.4 percent in 2011.

New Jersey Real Estate Guys Article

I speak to dozens of people per week that are browsing homes for sale and try to answer questions on when and why to buy real estate. Most noticeably is the skepticism that everyone has because although they WANT to buy, they are unsure and scared if this is the right time to buy real estate. My first response is that the worst is over. The subprime mess is almost history and even though sellers/homeowners may be under water, the short sale process has become a more condusive approach since last year.

That said, real estate is still moving at competetive prices, indicative from our charts that we update every month in our updates. I recommend that with the inventory out there, it is smart to be picky. You have every right to be so. Low mortgage rates is one reason that you should buy. Mortgage rates should stay low well into 2011. I refuse to speculate beyond a year, but after 2011, who knows what happens. What I do know is that the job reports are coming back positive and economic growth should continue. The housing market leans almost entirely on job growth.

Right now, there is a lot of pent up demand. Buyers on the fence waiting are joined by millions of others. As long as job growth continues, real estate demand will continue to climb. Don’t forget about the baby boomer era we are in. The baby boomers children are now entering the age of home ownership. This will add on to the demand that is out there.  This pent up demand will explode in 2011.

One factor that most people are not aware of is the “shadow inventory” of homes that banks are either holding or the number of delinquent mortgages. In NJ at the moment, almost 10% of mortgages are in some type of default stages. Of that 10%, it is likely that not even half of those people lose their homes. Lenders today are more inclined to work with these homeowners to make their payments easier, whether that is a principal, payment, and/or interest rate reduction.  It’s inevitable that this happens.  It is far cheaper for a lender to do this than to foreclose on the home.  Believe me, the LAST thing a lender wants to do today is foreclose.  It is also cheaper to offer a short sale on a home.  A short sale is an agreed upon sales price less than the amount of the current payoff amount.

A perfect example I can make for an improving housing market is a recent experience.  I have access to a couple of lenders and asset managers that I buy REO’s from.  I either buy REO’s personally for investment or I offer them to my network of investors.  I was getting homes at about 25% discounts from current appraised values.  I barely get a call from those lenders and asset managers anymore.  My most recent conversation with a local asset manager was why should they sell to me anymore at 25% discount when they can list their homes on the retail market and get 20% more for their homes within 90 days.  Too bad for me, good for them.  Ultimately, its a good sign that real estate is moving quicker today when priced competetively.

I whole heartedly believe that 2011 is going to be a mini-boom for real estate, especially in areas like Hoboken, where we are directly impacted by the financial market in NYC that continues to improve every month.  Hiring freezes are being lifted as more and more investors play the different markets.  Although real estate prices may not skyrocket, prices will not free-fall and homeowners will be enticed by a “missing the boat” feeling, low rates, and more favorable financing options.

So for Northern New Jersey real estate, my suggestion is this:  If you find a home you LOVE, buy it today.  Love it though.  Don’t THINK you love it.  If the housing market drops another 5% for instance, your longer term gains combined with today’s low interest rates should negate that loss in a short amount of time.  Most importantly, you still have the home you love.  If you don’t buy it, you will be in competition with many more people next year and your opportunity cost is not having the “home of your dreams”.   You heard it hear first.

New Jersey Real Estate Guys

As indicated, we are the top dogs in the market as far as marketing and reputation.  New Jersey Real Estate Guys is proud to be a member of the family at Liberty Realty and we look forward to many more months of continued success.

Remember, if you are looking to buy or sell, look no further than the #1 guys at New Jersey Real Estate Guys.  Contact us by e-mail or call us at 877.688.7582.  Free consultations for anyone and everyone.

I’ve been asked by several investors recently to share my take on Section 8 multi family investing.  My partner is a landlord who owns a 22 apartment unit building.  Of those 22 units, 18 of them are rented to Section 8 tenants.  He has owned this building for almost 7 years and has only had to evict 3 tenants. 

The biggest benefit in investing in Section 8 is that you get paid by the third of the month.  The check from the Section 8 office comes to you by mail by the 3rd, and by the 5th of the month, the tenant pays their share.  Their motivation to pay is that they know if they don’t comply with the lease payment schedule, they will lose their Section 8 privelege.  This is one of the big reasons we like Section 8.  Tenants have a huge motivation factor to abide by the lease and respect your property.  The loss of Section 8 priveleges are PERMANENT if loss of privelege occurs.

The Housing Authority or Section 8 office will inspect your property before the tenants move in.  Additionally, they inspect the property annually.  There are typically minor repairs, but considering the payment schedule with practically no effort, these minor repairs are of no consequence and is rather inexpensive.

A few areas that Section 8 and the Return On Investment (ROI) is favorable is Hudson, Passaic, and Essex County.  Any home can qualify for Section 8 under specific conditions.  In our experience, a Cerfificate Of Occupancy (C of O)  inspection is more challenging than Section 8 approval;  C of O’s are not difficult to achieve either.  Another benefit is that Section 8 has a “Fair Market Rent Table”.  This table, which you can find HERE, states the maximum Market Rent that is due to the landlord, specified by number of bedrooms the property has. 

You can list your property for free by contacting the local Housing Authority.  They will give you a “listing sheet” that you need to fill out.  Hint:  The more info, the better.  All of this information is implemented in their book/database where tenants look for their preferred property.  Some landlords have found immediate occupancy by including a small and used furniture package.  Some include TV’s.  This all could be put into the listing and is likely to stick out to tenants.

As the landlord, it is up to you to screen the tenant and maintain your property.  If you are not up to the task, you can hire a property manager to do this for you.  You are also responsible for collecting any Security Deposit agreed upon between the tenant and yourself. 

The housing agency will pay a check to the landlord during the first couple days of the month for the difference between the jurisdiction payment standard and the tenants total payment.  The tenant would pay the difference between the total rent and the voucher amount. 

Damages to the property must be agreed upon between tenant and landlord.  If there is damage that the tenant is responsible for, you may enforce your lease and go after him for the damages or work something else out.  The Housing Authority does not provide compensation for any property damage.

If you have repeated issues with the tenant, you may enforce the lease and take the necessary actions against the tenant.  Keep in mind, that when making a complaint against a tenant, you must follow your local regulations.  If you write a “warning letter” to your tenant, you should send a copy as well to the Housing Authority.  In some cases, and depending on severity, the Housing Authority could take action and evict the tenant for you immediately.

As stated above, before the tenant moves into the property, the Housing Authority sends an inspector to preview the property.  Here is a list of the most common factors they look for:

• No chipping or peeling paint anywhere on the INSIDE of the property.
• No chipping or peeling of paint five feet and under on the exterior of the property.
• Cooking stove must be clean and in working order
• Refrigerator must be clean and in working order
• Heating system must be in working condition
• Must be hot and cold running water in kitchen and bathrooms
• Shower or bathtub must be useable
• Toilets flush with no leaks
• Bathroom must have a window to the outside OR and exhaust fan.
• No plumbing leaks
• Ground floor windows must have locks and exterior door must have working locks and deadbolt
• Outlets must have cover plates
• No missing, cracked, or broken windows
• No rook leaks
• Must be GFI outlets around all sinks
• Flooring cannot be torn which can cause tripping
• Smoke detectors must be in working condition
• Stairs and railings must be secured. 

In conclusion, Section 8 makes great investments.  The ROI on multi family dwellings can be much higher than a normal traditional rental.  You can’t beat getting guaranteed rent checks from the Housing Authority!   Contact us if you are interested in hearing more about Section 8 or looking to purchase Section 8 property.  We always have condusive buildings we look at for this matter.

CLICK HERE for article.

Click here to view all West Orange NJ Homes for sale

As summer gets into full swing, so does the housing market in West Orange.  Sales are picking up and by looking at the charts below you will see the trend over the last 36 months have been consistent in terms of sales volume and its timing.  Summer months are always more active for many reasons.  Prices seem to be leveling off, but there is a glut of inventory out there.  It is still a massive buyers market but there seems to be very little disconnection between buyers and sellers which offsets some factors for declining markets.  The average sales price has been between $350,000 and $400,000 this year.  Additionally, the assessed values of homes reflecting property taxes needs a big looksie.  Property tax appeals are becoming much more popular and could mean a great deal to potential home seekers.

In regards to property taxes, the Otteau Valuation Group has the following to say: “The monthly tax bill on a $350,000 house in West Orange would be $286 greater than in Livingston. The yearly tax bill would be $3,432 greater — $10,012, as opposed to $6,580. Assuming the house had a 30-year mortgage, that would mean $48,000 more in taxes over the life of the loan.”  This further strengthens my suggestion to the Tax Assessors office to start negotiating assessed values.  APPEAL APPEAL APPEAL!!!

According to the Garden State MLS, there are currently 416 active listings in West Orange.  296 of those are single family homes, 120 of them are Condos.  The average asking price of an active condo is $419,889 and the average asking price for a single family home is $498,485.

The current rate of absorption is about 8 months right now.  In comparison, the national average is about 6 months.  An absorption rate in short means the amount of months it would take at the current monthly rate of sales to sell all of the active listing inventory on the market.  FYI, speculative builders typically wait until the rate of absorption hits 4 months.

For the purpose of this real estate report, we have combined condos and single family homes.  Due to the inventory, we anticipate the average price of homes sold to drop about 5% before the market reaches an equilibrium.  That said, and knowing it is a buyers market, now is the time to search and be picky for the house that you love.  I tell people all the time.  The worst is over.  If you have plans on living in your home more than 5 years, your long term gains on your house combined with today’s low mortgage rates should make up for any unforseen loss in equity during any value correction.

To see our full month over month and year over year statistic report in West Orange, CLICK HERE

If you are a homebuyer or looking to sell your home in West Orange, contact us for an immediate consultation.  We offer a free comparative market analysis on your home to determine its estimated market value and offer buyers a full introduction to West Orange.  We would value an opportunity to discuss West Orange real estate with you.  You can contact us through e-mail or by calling me direct at 877-688-7582.  We do more research than any firm out there and know how to protect and represent you best!

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February Round Up – Home Sales & Inventory

I love West Orange.  For most of you that know me know that I am from Montclair, practically the W. Orange border.  In my research, West Orange is in a little bit of a bind as far as inventory goes.  I think the overall appeal to West Orange is higher than most areas of Essex County, so our prediction stands that 2010 will see further declines, but not to be scared off.  If you find a home that is priced right and you absolutely love it, let’s sit down and look at the value where we will find an aggressive bidding price.

So inventory in West Orange stands high with 223 Homes for sale as of March 1, 2010.  The average listed price of a home is $514,654.

In January, 2010 there were only 13 homes sold with an average selling price of $430,438.

In February 2010, there were even fewer sales.  Only 9 homes sold with an average selling price of $439,944.

An Absorption Rate is the time an area will sell out of homes at the previous months’ sales pace.  That being said, the Absorption Rate for West Orange was 24.8 Months, above the national average.  This is not a healthy sign of inventory / absorption.  We predict values will continue to drop in West Orange until the buyers and sellers out there reconnect on what a fair price for the homes are.  With the amount of homes versus the amount of sales, we predict there will be a drop in values of 8-10% in West Orange in 2010.

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If you are looking for homes for sale in West Orange, NJ, chances are you have run across our website.  We specialize in West Orange real estate and would value an opportunity to work with you on your real estate needs. Contact us for a consultation.  Ask for Scott, that’s me.  Scott is a former All-American baseball player /alum of Montclair State University (1997-2001) and spent his college years bartending in West Orange.  Ya just might know me!!  After my 4 years at MSU, I went on to play with the NJ Jackals.  I am a local guy and everyone’s friend, but very experienced real estate pro when it comes down to business!

Before I forget, you can click here to view all available homes for sale in West Orange, NJ. Be sure to call us to set up a showing appointment.

Well, let me start by saying Happy New Year, West Orange, NJ!!

It’s been a rather interesting year in the macro economy and as a result, real estate values, prices, and inventory has fluctuated greatly.  Let’s see how West Orange did in 2009.  Be sure to read the entire article for our West Orange 2010 real estate predictions.

2008

• 456 SINGLE FAMILY HOMES sold in West Orange during 2008
• The average sales price of a single family homes sold during 2008 was $420,036
• 26 Multi-Family Homes sold in W. Orange during 2008
• The average sales price of a multi-family home sold in 2008 was $341,891

2009

• 398 SINGLE FAMILY HOMES sold in West Orange during 2009
• The average sales price of a Single family home sold during 2009 was $383,867
• 31 Multi-Family homes sold in W. Orange in 2009
• The average price of a multi-family home sold was $254,929

The statistics above show that Single Family Home sales volume dropped 12.8% in 2009 when compared to 2008.  They also indicate that there was an 8.7% drop in the average sales price of single family homes.

The statistics above show that Multi-Family Home sales volume in West Orange increased by 16.2% in 2009 when compared to 2008.  They also indicate that there was a significant 25.5% drop in the average sales price of multi-family homes.

Considering the circumstances, a drop in Single Family home values of 8.7% is rather good compared to other parts of northern NJ.  Prices on multi-family homes have dropped to very favorable prices.  While prices have dropped, rental rates have remained nearly the same, making the pro forma for an owner occupied dwelling or income property that much more attractive.

See volume and average selling price charts below.  Click graphs to enlarge.  Click Here to download the full W. Orange PDF Report

2010 Real Estate Prediction for West Orange

As of January 4, 2008, there are 296 homes for sale in West Orange.  During the month of December 2009, it was reported in the charts above that 33 homes sold.  This puts the current rate of absorption for West Orange at just under 9 months.  Note:  Builders use the number 4 as an indicative rate of absorption when looking into favorable construction markets.  Under 4 months of absorption is favorable to build.  Over 4 months is considered not favorable.  This is the case with most of the country, however.

During the first half of 2009, 155 homes sold in W. Orange.  During the second half of the 2009 year, 243 homes sold in W. Orange, an increase of 63.7% in sales volume.  Inventory levels have shrunk and prices are beginning to stabilize.

We believe that West Orange has experienced the bulk of any real estate correction.  In consideration of the 9 month rate of absorption, we believe that W. Orange property values will fall an additional 5-10% due to the large amount of inventory.  The expiration of the First Time Homebuyer Tax Credit will likely create a bounce affect.  Sales volume will likely decline slightly, however low mortgage rates ought to provide for extra buyer motivation.

That being said, we believe that any drop in real estate values that we predict could be negated or alleviated by utilizine the First Time Homebuyer Tax Credit, as well as taking advantage of historically low rates.  We believe that West Orange will see a general stagnation in values over the next 12-15 months, however we encourage those looking for homes to begin shopping now.  There are great deals out there and if you love a home, this year may not be the year where you can hope that it will “be there tomorrow.”  West Orange has a high turnover ratio with an average of over 33 homes per month selling.

Remember!!  A nice home, priced correctly sells quickly.  If you find a house you love, look into making a bid on it.

I wanted to write a post to thank the thousands of monthly visitors who have helped make our website the way it is today.  I take great pride in providing up to the minute information on New Jersey real estate.  We achieved numerous goals in 2009 and plan for our website to dominate the global industry in online real estate marketing for New Jersey.  For those of you who haven’t met me, my picture is in the thumbnail!  You will get much more of my ugly mug as 2010 progresses as we plan on going more “video” on our site.  I hope you also enjoy our monthly market updates as much as we like to write them.

If there is one thing I would like for you to remember is this:  It is a proven statistic that 84% of people looking to buy or sell their home, begin their search for an agent or a home ONLINE, typically using Google, Bing, Yahoo, AOL, etc as their search engines.  We are happy to say that we are the most powerful website when it comes to overall exposure in all of Northern New Jersey and is one of our most powerful tools in getting homes sold, getting great deals, and giving buyers and sellers the competetive advantage of online global marketing of your real estate.

Five 2009 Goals:

1. Attract over 5,000 unique visitors per month to our website :  ACHIEVED BY A LONG SHOT
2. Offer an exclusively customized MLS search tool that is user friendly for real estate searches in Northern New Jersey :  ACHIEVED
3. Coordinate our staff and agents to make one of us immediately accessible in all areas of northern NJ :  ACHIEVED
4. Help at least 5 homeowners go from near immenent foreclosure to short sale :  ACHIEVED
5. Launch a northern NJ syndicated radio show regarding macro economic local news :  ALMOST THERE!!!!

During the first quarter of 2010, we are going to launch video blogs where yours truely and my associates/partners will be doing online podcasts, giving you a more intimate real estate experience.  Additionally, we are going to be holding real estate seminars regarding investment property and home ownership in NJ.  Stay tuned for those dates!

Our ultimate goal is to learn from you as you can learn from us.  As the owner of NJ Real Estate Guys, and at only 31 years old, I have learned more good/bad lessons in a short time than most learn in a lifetime.  These lessons stem from both personal and corporate level experiences when I was National Director of Business Development with “the bank”.  At minimum, I hope I can share some things with you that will make you a better homeowner and/or real estate investor.  Going forward, we will continue to implement strategic plans in the process of building wealth through real estate.  Real estate is all about education, networking, and marketing.  You can build a powerful business using those three factors.  Remember:  Education without application nets you nothing.  Be smart and when the time is right for you, we would value an opportunity to get your consideration to work with us.

Thank you again for reading and making us who we are.  We look forward to meeting you in 2010 and may this year be prosperous to us all.

Sincerely,

Scott Allan

and all of the New Jersey Real Estate Guys

So instead of talking about the past and looking in the rear view mirror, let’s discuss my predictions for 2010 and look into our crystal ball.  We’d love to hear your predictions and feedback in our commenting section below.

Isn’t it funny to hear all of the people in real estate, Wall St, etc saying that they saw this crisis coming from a mile away?  I worked with a large construction lender in 2005-2006, and one of the glaring issues I saw was that almost 90% of their entire portfolio was sub prime.  I pulled a few random files and noticed a common school teacher in Michigan on a $55,000 fixed income, with no other sources of income.  The bank had allowed her to close on 4 Constuction to Permanent loans totalling over $1.2 million.  Her intention was to flip the properties and establish quick wealth, something many people did.  Not sure you call that guilty, because everyone likes to have the American Dream in their sights.  Although I did not underwrite nor have anything to do with her loans, I thought to myself that this woman could be SOL and completely screwed if / when the homes were finally built.

I have kept in touch with this woman as she contacted me in regards to the procedure to take to modify her loans once the homes were actually built.  The market tanked and she was left holding the bag on homes she could not afford and without modification capabilities.  The bank was forced to foreclose on all 4 of her loans.  In hindsight, I should have gone to Washington D.C, Wall St, and on CNN evening broadcast to expose this problem I saw.  I didn’t.  So that is my quick story on hindsight and why its easier to look ahead instead of what’s behind us.  I am a better, more educated real estate professional because of these experiences and if there is any good to come out of a crisis, it’s the big “Live and Learn” cliche.

I believe that unemployment will peak out in 2010.  Unemployment is the biggest driving indicator for the recovery of the housing market.    Until we see improvement in the labor markets, you can expect our homes to stagnate in value.  The four main drivers of today’s sudden surge in sales activity are the following:

1. Lower and more affordable prices
2. Additional foreclosure pressures
3. First Time Homebuyer Tax Credit
4. Low Interest Rates

So in 2010, where are we going?  Well, we can expect great sales months during the summer which is typically the case for northern NJ real estate.  But let’s look at what is available out of our 4 drivers listed above after April, let’s say

1. Lower and more affordable prices
2. Additional foreclosure pressure
3. First Time Homebuyer Tax Credit
4. Low Interest Rates

As of today, rates are all over the board, however just 4 months ago, a mortgage with rates in the mid 4’s were not that hard to come by.  Today, on FHA we are looking at about 5.25% and slightly less on conventional financing.  I expect mortgage rates to end 2010 higher than what they ended in 2009, although not drastically different.  The government is aware that despite the debt crisis, higher rates will mean a much slower recovery in the housing sector.  Furthermore, I expect a “Cash for Clunkers” type of result when the First Time Hombuyer Tax Credit expires on April 30.  Unless the government extends this Tax Credit, which I doubt they will (If we need to I’m all for it though), then we will see a noticeable change in sales volume.  HOWEVER, low mortgage rates and historically low prices will mitigate a HUGE change in volume.

In early 2008, the national average absorption rate was about 11 months of inventory.  An absorption rate indicates the number of months it takes to sell the current inventory at the present rate of sales. Today, we have dropped to about 7 months of inventory.  My opinion is that we will settle in by Q3 of 2010 somewhere between 8 – 9 months.  I also believe that the inability of the Federal Government to purchase additional Mortgage Backed Securities will have an negative affect on real estate as banks will continue its death grip on underwriting.  Banks need to lend money to make money, and they need to lend money to assist in the market recovery.

That being said, I truly believe that today is a great time to buy. At least get off the fence and start looking.  Look at it this way.  I believe that we will see an overall lower price of homes by mid year, lower than what they are today.  We are past the huge downward correction so any further declines may be subtle, but they will be there.  Buy a little bit higher today at lower rates and get your tax credit.  Or you can buy later in 2010 and POSSIBLY get lower prices with no tax incentives and no rates at what is considered par right now.  It’s kind of Catch 22′ish, don’t ya think?

In conclusion, let’s wrap up with discussing Northern NJ.  Home sales in Hoboken dropped from 80 homes in October to 60 homes in November.  However since April, there has been a V-Shaped recovery in inventory sold (see graph).  I don’t expect a V-shaped recovery to sustain, but I see consistency.  Prices won’t go anywhere, but possibly a little further down, but sales volume is expected to pick up over the course of the year.  With the extension and expansion of the First Time Homebuyer Tax Credit, we will see sales in Hoboken get stronger.  As jobs are created again, Hoboken will get stronger as we rely heavily on the financial markets similar to how NYC does.

In the suburbs, I expect areas like Wyckoff, Glen Ridge and Montclair to make a push for growing markets  Wyckoff and Glen Ridge have typically low inventory and consistent demand, and Montclair is an ideal area for new suburbanites looking for an urban lifestyle.  Montclair is certainly both suburban and urban.  For instance, at this time last year, Montclair’s absorption rate was nearly 9 months.  As of today, Montclair’s absorption rate is a strong 4 months.  I wrote an article in February 2009 about a pocket of homes listed for under $400,000 in Upper Montclair.  Those homes have sold and the homes left on the market for under $400k are far more inferior than the homes that were available in February.

So without further ado, I’d like to pass along the invitation to give me your thoughts and predictions.  Again, this is only my opinion and I do not want this to act in any advisory manner.  These are just my gut feelings that we are all entitled to express.  Looking forward to reading some of your thoughts!