Home affordability remains very attractive. Interest rates are at their lowest in history and property values are the lowest they’ve been in years.
Figures released by the National Association of Realtors (NAR) show growth in the state’s median home prices in the majority of markets, the first since after the peak of the housing boom in April 2006. Sharp demand created by job growth and short supply attributed to homeowners’ ongoing reluctance to sell is spawning bidding wars not seen in years and cautiously raising expectations for an increasingly healthy sector.
The numbers for the state’s housing market are strong, sometimes surprisingly so.
Jeff Otteau, president of East Brunswick’s Otteau Valuation Group is one of the state’s most influential real estate analysts, predicted that this year’s home prices will settle three percent higher than last, but he added, “It would not surprise me to see a five or six percent rise.”
The boost to the housing market stems from a job market that’s recovering slowly. April’s national unemployment rate fell to 7.5 percent, with New Jersey’s rate dropping to 8.7 percent — the lowest it’s been since March 2009.
Last week, however, Chairman Bernanke told Congress’s Joint Economic Committee that he intends to leave short-term rates near zero until the national unemployment rate falls to 6.5 percent or inflation exceeds 2.5 percent a year. He predicts that happening no earlier than 2015.
However, in New Jersey, low interest rates can only do so much. Otteau says housing inventory remains at its lowest levels in eight years and has declined 20 percent since last year. On average, homes sell within 6.2 months, with Hudson County outpacing the state at 4.2 months. Northeast Jersey homes sell more quickly than their counterparts in the rural south, he said, thanks to their proximity to New York City’s job market.
It’s also been discovered that the societal benefits of owning a home include more stable communities, greater academic achievement, higher property values, and lower crime rates, proven research from government entities and nonprofit groups.
Translating the numbers into actionable advice, Otteau said now is the time to buy.
“This is a once-in-a-generation opportunity for a person to buy at the bottom of the market with once-in-a-lifetime mortgage rates,” he said.
Those who wait a year or more, he cautioned, risk being forced to lower their expectations by thirty percent.
“This is a buyer who will have to make do with a home that’s a third smaller or an extra 40-minute drive from where they work,” he said.
Don’t miss the opportunity to make homeownership dream a reality.