Montclair Real Estate Report | Sept 1 – Sept 30
Once a month, I take a full drive around Montclair to see what is going on in the real estate world. Any new and exciting homes hit the market? FSBO’s I can solicite? Foot traffic? As I filled up my cup of coffee at Starbucks at the Siena, I took a stroll through S. Park and Church St. People were out shopping and indicative of the shopping bags, it looked like people were spending. For those that know this particular downtown area of Montclair, most of these stores aren’t cheap. It was nice to see consumer spending and just as nice to look at September real estate statistics to see overall sales above the 30 mark for the 4th consecutive month. September 2011 exceeded September 2010 sales by 23%. Year to date, 2011 is averaging the same monthly sales volume as 2009 and 2010 with about 26 per month. Remember 2009 and 2010, however, had the First Time Homebuyer Tax Credit incentive. Currently the market is standing with no system in place or crutch support.
With mortgage rates dropping below 4% recently, homes at all time low prices, and a good amount of quality homes listed for under $400,000 in Montclair, wouldn’t you think now is the time to consider buying? Sure, everyone knows property taxes are high in Montclair, but if you are living in town, chances are you have a decent income. Couldn’t you use the tax deduction at the end of the year?
September showed a similar pattern as previous years with sales activity, homes under contract, etc in Montclair. Rental rates have remained steady and in some luxury spots, rates have indeed gone up. I was negotiating a rental at the Siena today, hence my Starbucks trip, and at $3,500 per month for a 2/2, the seller would not budge to my offered $3,200. I figured I’d get a call by the end of the week as I didn’t feel this would rent at $3,500. To my surprise, the next morning I found out it had rented for full price.
Sellers are getting about 97% of their asking price these days and the rate of absorption in Montclair is holding at about 6.5 months. Generally, a stable market has 6 months or less of inventory, indicated by the rate of absorption. (Rate of Absorption = Current Inventory For Sale divided by Sales the Previous Month). In past years, developers have looked for about a 6 month rate of absorption before starting new projects. Now they are looking at 4-5 months. The attraction to Montclair is seen by everyone from locals to city workers in the financial district looking for a great area to raise a family, yet still close to Port Authority / Penn Station.
Since the peak at the end of 2008, the sales price per square foot in Montclair has dropped about 17%. An updated home in say Upper Montclair typically sold for about $300 – $310 per square foot during the peak. Today, an updated home sells for about $240-$260 per square foot. Using $300 at peak and $240 today, a 2,500 square foot home had a peak trading value at about $750,000 where today that home would trade at about $600,000. Big difference. Let’s look at September 2010 and 2011 statistics.
|September 2011||September 2010|
|Avg. Sales Price||$638,334||$539,875|
|Absorption Rate (months)||6.5||4.5|
As mentioned above, there is a similar pattern that happens every year. Sales volume is up over the summer and quits down after August which only typically lasts until October. A slow October in sales volume is indicative of actual activity in July and August when the homes are put in contract. Sales volume increases from November – January and slows again in February – March. There is no real complex answer as to why foot traffic and buying activity is slow in December and January. It’s cold as heck out. Who wants to shop for homes in the ice? Perhaps the Indian Summer we are currently having will change things. Summer activity is partially indicative of families wanting to settle before the school year starts.
My advice for Montclair buyers and sellers: The housing market has reached its bottom. Prices will remain stagnant for a good period of time. Choosing to rent or buy can be a difficult decision, but there are many benefits of owning a home. If you are planning to stay in your home for 5 years or more, now is a great time to buy. If you are a seller, be sure you are priced to sell if you are truly looking to sell. Sales volume is there, it’s just a matter of price. If you are not in the ballpark, you may have to decide to sell your home for less, and if your mortgage principal exceeds market value, talk with us about the Short Sale Process where we have helped numerous NJ residents.
As seen in the charts above, you will see the comparison of patterns for sales volume in Montclair. In the second graph, it is easy to notice that the average sales price of a home in Montclair has increased year over year since 2009.
Average Sales Price 2009 – $595,068
Average Sales Price 2010 – $637,980
Average Sales Price 2011 – $677,679
If you are looking for real estate assistance in Montclair, please consider Scott Allan with New Jersey Real Estate Guys of Weichert Realtors. As a local native of Montclair, I can help guide you in the right direction to meet your goals. Using our cutting edge technology, analysis, and market presence, we can assure you satisfaction.
E-mail Scott here or call at 877-688-7582 to schedule a complimentary / personalized consultation.
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