Hunterdon County’s Real Estate Market Conditions for September of 2024

Utilizing my extensive knowledge of Hunterdon County, this Market Report explores the current dynamics of our local real estate market. Through my monthly updates, I navigate the economic climate and trends that impact our community’s property landscape. This report goes beyond conventional data, offering hyper-local statistics not readily available elsewhere. By the end of the report, you’ll not only be informed about the “What” in the Hunterdon County market but also gain insights into the “Why.” Armed with this understanding, you’ll be well-equipped to make informed decisions when participating in real estate transactions in 2024.

You can also find a version of the report covering Somerset County here.

133 Under Contract Listings      $608K Average List Price        32 Average Days on Market

“Looks like interest rate cuts by the Fed are about to begin…”

July is predicting a 9%Y-O-Y increase in sales statewide year over year. August showed a decline of 2%

The recent economic indicators raised hopes that the Federal Reserve will start implementing rate cuts. And, based on the last meeting, rate cuts now seem to be very probable. 📈🏠💰

In a broader context, the real estate market shows signs of returning to a more typical state. This usually starts at higher price points and moves down from there and from east to west. Fewer offers now exceed the asking price, and bids include contingencies such as mortgage approval, home sale, and inspection. The inventory of newly listed properties has remained steady as compared to previous months, contributing to an overall steadiness in total inventory. However, strong demand continues to outpace supply, leading to rising prices in our region. Already in higher price brackets, price pressure exists as those market segments move toward a balanced or even buyer-oriented market.

For those considering buying or selling, the answer lies within this analysis. The market strongly favors sellers due to the fast-moving inventory, which helps maintain price stability in our locality. However, there is a gradual shift toward a buyer’s market in the higher price ranges. Over the past years, prices have experienced significant increases—nearly 12% in 2020, 18% in 2021, 9% in 2022, and 11% in 2023. While a more modest 6% growth was anticipated for 2024, homes priced at $900K and above are seeing increased inventory, impacting their supply and demand dynamics.

Conversely, prices below this threshold continue to rise, although the rate of increase has decelerated. Increases will likely be more moderate in future years but still show positive growth. The fifty-year average price increase remains below 5 percent.

Market Statistics for Hunterdon County:

• Last month, the market saw a decrease in new inventory, with 101 new listings, compared to 109 in the previous month. This is also above the 82 new listings seen in the same month in 2023.
• As of the beginning of this month, the available inventory was 233 units, down from 234 units last month. And this is still higher than the 188 units available in the same month last year. A lot of this new inventory is in our higher price points.
• The number of units that went “under contract” last month was 133, down from the previous month’s 154 units and up from the 129 units in the same month last year.
• Over the past month, the average number of days on the market has increased to 32, indicating a slight decrease in buyer demand.
• Currently, the overall month’s supply of inventory stands at  1.75 months, indicating it is still a strong seller’s market. This trend holds for properties priced under $800K.

Given the current market conditions with an optimal supply and demand curve favoring sellers, waiting until later in 2024 to sell may not be wise. The market is likely approaching (or at) its peak, and sustained high price points are unlikely to continue much longer. It’s advisable to take advantage of the current situation and list your property for sale now.

In summary, acting promptly in the current market could be advantageous for sellers.

New Jersey Residential Real Estate Market Forecast

The summer season of 2024 brought about solid listings and sales.

Although inventory levels have risen, new listings are selling quickly, resulting in strong sales and prices for sellers. However, the most significant uncertainty in 2024 is finding a more suitable home and an affordable mortgage.

On the buyer side, the recent lower movements (and rumors that they could soon go lower) in interest rates have given buyers optimism compared to a few months ago. Trade-up buyers are experiencing similar effects.

The higher interest rates resulted in many first-time buyers being priced out of the market and most trade-up buyers being reluctant to move. The recent jitters in rates offer little optimism in this area. If possible, it is an excellent time to purchase a home as the terms have stabilized due to the lack of competition, and refinancing is always an option as interest rates decrease further in the future.

Hunterdon County Real Estate Market Inventory Breakdown By Price For Last Month:

• 43% of sales in houses< $500,000
• 41% of sales in the $500,000 to the $800,000 range
• 17% percent of total sales (or 10 in total) in houses >$800,000

Hunterdon County Real Estate Market Inventory Breakdown By Municipality For Last Month:

Five areas had no sales last month:

• Bloomsbury
• Franklyn Twp.
• Frenchtown
• Glen Gardner
• Stockton

Four areas reported one or two sales each last month:

• Califon
• Lebanon Boro
• Milford
• W.Amwell

Hotspots:

• Clinton/Clinton Twp. – 15 Sales
• Raritan – 29 Sales
• Readington -29 Sales
• Union Twp.- 9 Sales

In the past month, approximately 62% of sales were concentrated in the hotspot areas. Here’s a breakdown of the average prices:

• New Listings Entering the Market: The average list price for these new listings was $826,374.
• Units Going Under Contract: The average list price for units that went under contract was $609,494.

This represents an 26% difference between the average prices of new listings and units under contract.”

In summary, understanding these price dynamics can provide valuable insights for buyers and sellers in the real estate market.

Note:

Note:

If you want to obtain a competitive price for your property based on its location and uniqueness, you can contact me at (908) 304-4660. By leveraging Coldwell Banker’s big data technology and Artificial Intelligence capabilities, you can gain a unique advantage in the market. I can demonstrate your area’s latest age and earnings breakdown, including where people are moving from and how to market directly to those specific areas and demographics. This approach will maximize the selling price while reducing the time on the market. Accurately priced and marketed homes tend to sell faster with the assistance of a seasoned real estate industry veteran and a local area expert.

“Why” is it happening…

New Jersey’s Economic Drivers:

New Jersey Home Sales and Inventory levels:

Contrary to what you see on the news, the Hunterdon and Somerset county markets remain strong.  While the network news is correct for some areas in the country (mostly those with heavy new development sales), my report focuses only on our two counties in NJ, which consists primarily of resales. Our only new construction is primarily on the high end of the market.

• YTD, sales across NJ declined by 3% through July, while year over year, they have increased by 9%.
• Locally, we saw a slight seasonal decrease in sales in August in both Hunterdon and Somerset counties Somerset.
• There are early signs of some pullback in pricing at the higher price tiers, but the lower tiers are still seeing price increases, just not as aggressive as in the past.
• First-time buyers are cooling down considerably due to higher pricing (price resistance), inventory shortages, and interest rates. Their purchasing power has decreased for these reasons, and many have been priced out of the market for now.
• Potential sellers find it challenging to locate suitable housing in the current market and are hesitant to list until they do. They are also dismayed by higher interest rates than they currently have in place on their current homes and, for the most part, are not willing to make a move unless they have an urgent issue, such as a life event or job transfer. About the same amount diminishes their purchasing power, but their equity increases offset it.
• Current mortgages show that nearly 70% are under 4%, and 90% are under 5%.
• The current month’s supply of inventory in Hunterdon County remains just over 1.75 months. In Somerset County, it is around 1.1 months due to the rapid sales of new listings (velocity) as the market remains active.
• Hunterdon and Somerset County have considerably more inventory than a year ago. The unsold inventory in New Jersey has steadily decreased since reaching a peak of over 20,000, and it is down to about 15,00 today.
• Inventory increases occurred in all price points as of the end of August, with the under $500K price tier increasing 4% and the $600K to $1,000K price tier increasing by about 30%.
• New housing development has not kept up with population growth and is now focused on the rental market.

Interest Rates:

• Interest rates are now hovering around 6.3%.
• The Fed announced, “Fed holds interest rates at 23-year high as inflation continues to push back the timing of a rate cut” at their latest session.
• It was anticipated that rates would drop shortly after the July jobs report. It now seems very likely we will see rates drop soon based on recent economic indicators.
• Many buyers are considering attractive ARM rates and creative other buy-down plans as alternatives.
• Based on the current rates, first-time buyer mortgage applications have dropped, but restructuring debt and paying down high-interest items remain active.
• The Fed’s efforts to slow things down have resulted in the above.

National Job Front:

• Total nonfarm payroll employment increased by 111,000 in July, and unemployment rose to 4.3 percent, the U.S. Bureau of Labor Statistics reported. Employment continued growing in government, health care, social assistance, and construction.
• At the same time, job gains for May and June were revised down by 29,000. This gets little exposure on the network news channels but is not a strong indicator of the market.
• And, there was an annual correction of -818,000 jobs being created vs. previous reports as well.
• A large portion of the new jobs was part-time, indicating that people are finding “side hustles” to help account for inflation.
• It’s important to note that this number includes natural job growth of about 175K per month.
• The analysts also state that many new jobs were lost as small businesses failed and those people reentered the labor force.
• The labor force participation rate rose 62.7 percent. This rate is calculated by dividing the sum of all workers employed or actively looking for a job by the working-age population. It also fluctuates due to people taking a second job to meet ends.
• Many people are resigning to pursue new career paths due to perceived health risks, the desire for more remote work, and a better work-life balance. New technology-based jobs are affecting this trend.
• For those under $50K, there is even some incentive not to work and collect benefits, contributing to the current unemployment rate.
• The lower end of the job market has benefited the most from this trend, with higher starting pay rates competing for the lack of workforce. Jobs starting in the mid to upper $20 per hour are already being offered.

New Jersey Job Front:

• Statewide, we saw a decrease in new jobs of 23% in 2023.
• The unemployment rate in NJ for May remained at 4.6%, still quite a bit above the national rate.
• NJ has gained about 22,000 YTD through May of 2024 compared to 53,300 the prior year.
• Job losses are still prevalent in industries such as construction, food services, and accommodations. Retail and wholesale trade are also experiencing a downturn in some states. Even health care, social assistance, and manufacturing are shedding workers.
• NJ was hit harder than most states in the early months of the pandemic, but it has made a remarkable recovery since then.
• It should be noted that the numbers of jobs in New Jersey run a month behind national ones.

Rental Market Trends:

• Rental prices in New Jersey continued to increase in 2024, with a year-over-year average of just under 3%. They are currently averaging just over $2,200 per unit. However, recent data shows a slight decrease in these prices.
• The vacancy rate in central New Jersey is currently at 4.1%, indicating a limited rental supply and leading to a rise in rental prices.
• The rental market typically includes low-end buyers who opt to rent due to a shortage of available inventory. However, the recent constraints in the mortgage market have also contributed to the increase in this sector.
• NJ was on track to add 30K new apartment units in 2023.

New Jersey Foreclosures:

• NJ’s delinquency rate (more than 90 days past due) has decreased, which is a positive development.
• NJ’s current foreclosure rate remains low at 1.1%.
• Nationally, $11 trillion in equity is needed to protect homeowners during a potential recession.
• The average FICO score of mortgage holders is over 750, higher than during the 2008 financial crisis.
• A slowdown and recession could still cause job losses and put mortgages at risk.
• Only 18% of mortgages in forbearance are at risk due to unresolved forbearance issues.
• A housing bust is not predicted to occur since there is a lot of positive equity in houses, thanks to recent appreciations.

Real Estate Market Recap

Forecast:

• The COVID-19 pandemic seems to be over (with only minor flare-ups).
• Supply chain shortages have affected inflation, and concerns remain that undersupply could cause further price increases.
• The consumer price index, which rose by .2% in July, continues to cause havoc on auto, finished goods, and energy pricing and is the enemy of long-term interest rates.
• Mortgage rates had pulled back a bit but are now back to the 6.35% range.
• The local inventory accumulates primarily in the more expensive price ranges, and the housing affordability index has increased slightly (based on wages, rates, and home prices). As a result, mortgage payments now have an all-time high gross percentage (which slows spending in other sectors).
• Due to COVID-19 and recent unrest in NYC, interest in living in more suburban counties such as Hunterdon and Somerset has disappeared.
• Many people have found that working from home (in total or part) is a reality, and as opportunities start to open up again, we will see less commuting and traveling in general.
• Retailing and using vacant industrial space will transform to meet the new altered demands and lifestyles.
• The local market will have to adapt to the new suburban renaissance regarding where people will work and what they need to adapt.
• The lingering question has been, “Can we keep this momentum up with low to slightly rising inventory?” as predictions for slower sales and price increases in 2024 have already been made. Price increases were about an 11% increase in 2023 in NJ. The new year sees more normalized increases (based on your price points) of 5%+ (but that is what we also said last year).
• Days on the market in our area have remained fairly steady, showing buyers are becoming seasonally less active.
• However, change will result in a trend towards a more normalized environment if inventory continues to come onto the market and the first-time buyer fatigue that we have seen continues.
• Younger (millennial) buyers are coming of age in the pipeline for at least the next four to five years, which will continue to put more demand on the first-time buyer market, usually under $400K.
• Housing markets are adding much of the new inventory at higher price points, which is normalizing those results. Change usually happens from the top down and from east to west.
• In a nutshell, 2024 is looking a lot like 2023 with a little more inventory and a little bit better rates.

This is substantial information, and the situation is evolving daily. Nevertheless, it appears to be moving in a positive direction for now. If you require further clarification or have any concerns about how this could impact your circumstances, please don’t hesitate to contact me at (908) 304-4660. I’m always available to chat and assist you in gaining a better understanding.

Note: This information is presented as a public service by Joe Peters of Coldwell Banker Residential Brokerage. Although reasonable care has been taken to provide this information, it is advised that you seek the guidance of a professional sales agent and avoid making any decisions solely based on my views, gathered trends, and statistics. I am not responsible for any consequences of using this data.

If you have any questions or would like to talk out your situation, please call 908-304-4660

Home Prices Forecast To Climb over the Next 5 Years [INFOGRAPHIC]

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