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[This monthly market report is provided by Jeffrey Otteau of the [Otteau Appraisal Group](http://www.otteau.com/) who also authors a series of widely followed quarterly [market reports](http://www.otteau.com/The_Otteau_Report/the_otteau_report.html) on the New Jersey real estate market. This information is collected from various sources including Boards of Realtors and Multiple Listing Systems in New Jersey.]

I have known Jeff for many years and consider him one of the leaders in the real estate appraisal profession. He has taught me a lot about quantitative real estate market analysis. -Jonathan Miller

NOVEMBER SALES SUGGEST HOUSING MARKET BEGINNING TO STABILIZE

November home sales declined only slightly from the October pace reflecting more of a seasonal trend than a slump for the New Jersey housing market. In November, contract-sales declined by 10% from the prior month suggesting that the housing market is beginning to gain traction and may be nearing the end of its current slide. By comparison, the month-to-month decline in contract-sales one year earlier in November 2005 was 17% which went beyond a normal seaonal decline and reflected the housing slump that has been gripping the market for the past year.

Upon comparing the November sales pace to November 2005, contract-sales were off by only 6% which is the lowest decline for all of 2006. By comparison, monthly home sales were off by 19% from January through October and a whopping 23% during April through September, which were the worst months of the market correction.

From an Unsold Inventory perspective, the number of homes being offered for sale declined for the 3rd straight month with a reduction of 5,000 homes in November alone. Despite these encouraging signs however, Unsold Inventory now stands at 9.1 months based upon the November sales pace, indicating that home prices will not increase any time soon. By comparison, there were 6.3 months of Unsold Inventory one year ago and 10.4 months in September 2006. Therefore, the improvements in the housing market over the past two months signal more ‘bottoming-out’ than ‘recovery’.

There is however cause for cautious optimism as continuing low mortgage rates, new job creation and rising salaries are creating additional demand for home sales. Based upon these factors, coupled with the improved market performance of the past two months, it appears that the adjustment in the housing market will be more Correction than Crash. However, new home-builders and home-sellers alike would be wise to recognize that recent improvements are driven primarily by lower home prices which have restored a measure of affordability for home buyers. Thus, any attempts to increase prices during the early phases of market recovery will likely be unsuccessful. Therefore, Right-Pricing! will remain essential to successful home marketing.

Here are 2005 annual stats.

Tags: Jeff Otteau, NAR, National Association of Realtors

Comments Off on From The Garden State: The Otteau Report: November 2006

[This monthly market report is provided by Jeffrey Otteau of the [Otteau Appraisal Group](http://www.otteau.com/) in their November eNewsletter. Jeff also authors a series of widely followed quarterly [market reports](http://www.otteau.com/The_Otteau_Report/the_otteau_report.html) on the New Jersey real estate market. This information is collected from various sources including Boards of Realtors and Multiple Listing Systems in New Jersey.]

I have known Jeff for many years and consider him one of the leaders in the real estate appraisal profession. He has taught me a lot about quantitative real estate market analysis. -Jonathan Miller

OCTOBER SALES TREND HIGHER

The New Jersey housing market improved in October as home buyers took advantage of recent declines in home prices and lower mortgage rates. In October, contract-sales jumped 10% after being down by 20% through the first 9 months of 2006. That this improvement occurred at a time when seasonal trends traditionally bring a decline in purchase activity is significant. Also, the number of unsold homes on the market declined by more than 4,300 houses in October, reflecting a 6.4% decline overall from the September inventory level.

According to Freddie Mac’s Primary Mortgage Market Survey® (PMMS®), the 30-year fixed-rate mortgage (FRM) averaged 6.14 percent for the week ending November 30, 2006, which is lower than the 6.26 percent rate of one year ago. Also contributing to the October sales performance was continued job creation with more people now working in New Jersey than at any time in history, falling energy prices which affect both home heating and commuting costs, and rising wages resulting from the tight employment market.

A closer look at Unsold Inventory indicates an overall supply of 8.9 months, down from 10.4 months in September. One year ago, Unsold Inventory reflected a 5.5 month supply. When analyzed by home price, the market continues to show the greatest strength below $600,000 with a 7.9 month supply as compared to 19.4 months above $1 million and 45.2 months above $2.5 million (see table at right).

The improvement in the housing market is a direct result of the gain in housing affordability outlined above and makes a strong argument that the current housing slump is more correction than crash. Housing affordability suffered greatly from 2000 to 2005 during which time salaries in New Jersey rose only 16% as compared to an 87% increase in home prices. Given the recent gains in housing affordability outlined above it appears that the market may be approaching the balance point at which recovery will begin. Look for first-time buyers purchasing starter-homes to be the first segment to recover, following which the recovery will spread to the other market segments. However, the current sensitivity to both home pricing and housing affordability will prevail well into the recovery cycle ensuring that home prices will remain relatively flat once the decline subsides. Therefore, Right-Pricing! will remain essential to successful home marketing well into 2008.

Here are 2005 annual stats.

Tags: Jeff Otteau, NAR, National Association of Realtors

1 Comment

[In addition to Jeff’s [monthly email blasts](http://matrix.millersamuel.com/?p=889), [Otteau Appraisal Group](http://www.otteau.com/) authors a a series of widely read quarterly market reports using charts that track both inventory and contracts as well as tables that break out other useful market information. This information is collected from various sources including Boards of Realtors and Multiple Listing Systems in New Jersey and is a must-read for real estate brokers and consumers in New Jersey.]

[You can download the reports by county [Otteau]](http://www.otteau.com/The_Otteau_Report/the_otteau_report.html).

Here’s a sample of one submarket in one county:

Tags: Jeff Otteau, NAR, National Association of Realtors

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[This monthly market report is provided by Jeffrey Otteau of the [Otteau Appraisal Group](http://www.otteau.com/) in their September eNewsletter. Jeff also authors a series of widely followed quarterly [market reports](http://www.otteau.com/The_Otteau_Report/the_otteau_report.html) on the New Jersey real estate market. This information is collected from various sources including Boards of Realtors and Multiple Listing Systems in New Jersey.]

I have known Jeff for many years and consider him one of the leaders in the real estate appraisal profession. He has taught me a lot about quantitative real estate market analysis. -Jonathan Miller

AUGUST SALES TREND HIGHER

The residential market rebounded slightly in August as buyers took advantage of softening prices and declining mortgage rates. August contract-sales activity ran 6% higher than July, suggesting the overall market deterioration is beginning to slow. Also noteworthy is that the Unsold Inventory of homes on the market increased by only 1% in August, as compared to a 47% increase over the 1st 6 months of 2006.

Also contributing to the August sales performance are declining mortgage rates and unemployment rates as the Economy continues to create new jobs. According to Freddie Mac’s Primary Mortgage Market Survey® (PMMS®), the 30-year fixed-rate mortgage (FRM) averaged 6.31 percent for the week ending September 28, 2006, down from last week when it averaged 6.40 percent. Rates have declined for 8 of the last 9 weeks and are at their lowest since March 2, 2006, when they averaged 6.24 percent. Last year at this time, the 30-year FRM averaged 5.91 percent.

A closer look at Unsold Inventory indicates an overall supply of 8.5 months, down slightly from 9 months in July. One year ago, Unsold Inventory reflected a 4 month supply. When analyzed by home price, the market continues to show the greatest strength below $600,000 with a 7.5 month supply as compared to 23.6 months above $2.5 million (see table above).

Next months report will be a key indicator of future trends as September marks the one-year anniversary of the current market cycle when home sales began to decline and Unsold Inventory started rising.

Here are 2005 annual stats.

Tags: Jeff Otteau, NAR, National Association of Realtors

2 Comments

[This monthly market report is provided by Jeffrey Otteau of the [Otteau Appraisal Group](http://www.otteau.com/) who also authors a series of widely followed quarterly [market reports](http://www.otteau.com/The_Otteau_Report/the_otteau_report.html) on the New Jersey real estate market. This information is collected from various sources including Boards of Realtors and Multiple Listing Systems in New Jersey.]

I have known Jeff for many years and consider him one of the leaders in the real estate appraisal profession. He has taught me a lot about quantitative real estate market analysis. -Jonathan Miller

SUMMER MARKET REMAINS COOL

July was another cool month for the housing market as declining buyer-confidence continued to take its toll on home sales. In July, contract-sales activity declined 11% from the June level and was 25% below the year earlier pace in July 2005. That this slowdown comes in the midst of the prime March-to-August selling season when home sales should still be running hot provides compelling evidence of a market transition wherein home buyers have greater control over final selling prices than at any time since 1991, a 15-year span.

From an inventory perspective, the number of homes being offered for sale now stands 67% higher than a year ago. This equates to a 9-month supply as compared to only 4-months last year at this time. It is however encouraging to note that Unsold Inventory increased by only 1.5% in July following a 47% increase over the 1st 6 months of the year, which works out to nearly 8% per month over that period. This moderation, coupled with recent declines in mortgage rates present home buyers with an opportunity window that will likely close once mortgage rates continue their upward climb.

From a price perspective, market conditions continue to exhibit the greatest weakness for luxury priced homes. Unsold Inventory below $600,000 stands at an 8 month supply as compared to 27-months above $2.5 million. This weakness in the luxury market has been developing slowly for several years now and will likely continue for the foreseeable future. As a result, expect the market for more affordably priced homes to be the first to recover.

Here are 2005 annual stats.

Tags: Jeff Otteau, NAR, National Association of Realtors

1 Comment

[This monthly market report is provided by Jeffrey Otteau of the [Otteau Appraisal Group](http://www.otteau.com/) who also authors a series of widely followed quarterly [market reports](http://www.otteau.com/The_Otteau_Report/the_otteau_report.html) on the New Jersey real estate market. This information is collected from various sources including Boards of Realtors and Multiple Listing Systems in New Jersey.]

I have known Jeff for many years and consider him one of the leaders in the real estate appraisal profession. He has taught me a lot about quantitative real estate market analysis. -Jonathan Miller

Click here for a larger image [note: PDF]

JUNE SALES DECLINE AS INVENTORY GROWTH SLOWS

June is an important month for the residential real estate market as it represents the traditional end-point of the Spring selling season and typically sets the high-water mark for home sales in any given year. Thus, the residential market in New Jersey had much at stake as any hopes for a market comeback would fall heavily on the June sales performance.

In June, contract-sales activity ran 9% below May and 24% below June 2005, continuing the pattern set earlier this year and dimming hope for a market comeback any time soon. From an inventory perspective, the number of unsold homes on the market increased by 4% in June adding further to an already saturated market. Year-to-date comparisons indicate a 17% decline in Contract Sales and a 70% increase in Unsold Inventory when compared to last year at this time. Some encouragement can be found in the fact that Unsold Inventory increased by only 4% in both May and June, as compared to a much higher increase in the preceding months of January (+15%), February (+12%), March (+13%), April (+12%), giving some hope that inventory will stop it’s upward spiral. At the same time however, even a modest increase in Unsold Inventory is detrimental to the market given the current high inventory levels.

Looking ahead, the Summer selling season typically brings gentle but steady declines in buying activity followed by more pronounced dips during the Fall and Winter seasons. Add in the effects of rising mortgage rates, record high energy prices, and the erosion of consumer confidence towards the future of the housing market and there’s no reason to expect a rebound any time soon!

From a price perspective, there is mounting evidence that home prices will decline over the short term as motivated sellers make business decisions to accept a lower selling price in exchange for a quicker sale. On the New Construction front, the myriad of sales incentives ranging from discounted pricing on upgrades, mortgage rate buy-downs and other financial incentives are the market equivalent of price reductions which will steer the overall residential market to a lower price point. Given that the New Jersey Housing Market realized an 87% increase in home prices from 2000 – 2005, the adjustments now taking place come as no surprise. Nonetheless, expect a bumpy ride over the next few years as the market struggles to restore an affordability balance in the face of rising mortgage rates and energy prices.

Here are 2005 annual stats.

Tags: Jeff Otteau, NAR, National Association of Realtors

Comments Off on From The Garden State: The Otteau Report: June 2006

[This monthly market report is provided by Jeffrey Otteau of the [Otteau Appraisal Group](http://www.otteau.com/) who also authors a series of widely followed quarterly [market reports](http://www.otteau.com/The_Otteau_Report/the_otteau_report.html) on the New Jersey real estate market. This information is collected from various sources including Boards of Realtors and Multiple Listing Systems in New Jersey.]

I have known Jeff for many years and consider him one of the leaders in the real estate appraisal profession. He has taught me a lot about quantitative real estate market analysis. -Jonathan Miller

MAY SALES TREND HIGHER, BUT STILL LAG LAST YEAR

Following a disappointing April, residential contract-sales activity in New Jersey trended higher in May providing some balance to the housing market. However, while buying activity in May increased 7% from April, it still ran 18% below May 2005 providing further evidence of a structural market change. Some encouragement can be taken in the slowing rise of unsold-inventory which held steady in May at a 7-month-supply of available homes. When segregated by home price, the market is now holding a 6 month supply below $600,000, 10-months between $600,000-$1 million, and 13-months above $1 million.

While there are very real reasons for the current deceleration in the residential market, the extent of that change goes beyond what can be explained by underlying fundamentals alone. Certainly the record high home prices achieved in 2005 when coupled with lagging salary increases, rising interest rates and slower population growth are solid reasons for a market slowdown. More positive indicators are also in play however such as a state economy at virtual full-employment, new home building activity at constrained levels, and mortgage rates which remain low by historical standards. Clearly, the sweeping change that has enveloped the residential market over the past 10 months extends beyond market metrics and is at least partly attributable to fears of a housing price collapse. Apparently the chorus of voices predicting this collapse and the attention they received from the media, have played a role in bringing the market to it’s current state……as always perception becomes reality!

As we look forward to what’s ahead, expect the current situation of fewer sales and higher inventory to continue for the next several years. As a result, some of the increases in home prices which occurred over the past several years will likely be reversed as motivated Sellers trade-off lower prices for quicker sales. Ironically, this is not necessarily good news for home buyers as rising mortgage rates will likely offset any savings derived from lower home prices. In fact, some home buyers will actually lose purchasing power despite a downward drift in home prices. Thus, buyers should consider whether the current combination of affordable mortgage rates, higher inventory levels and negotiable-sellers are reason to buy now rather than wait.

Here are 2005 annual stats.

Tags: Jeff Otteau, NAR, National Association of Realtors

Comments Off on From The Garden State: The Otteau Report: May 2006

[This monthly market report is provided by Jeffrey Otteau of the [Otteau Appraisal Group](http://www.otteau.com/) who also authors a series of widely followed [market reports](http://www.otteau.com/The_Otteau_Report/the_otteau_report.html) on the New Jersey real estate market. This information is collected from various sources including Boards of Realtors and Multiple Listing Systems in New Jersey.] I have known Jeff for many years and consider him one of the leaders in the real estate appraisal profession. He has taught me a lot about quantitative real estate market analysis over the years. -Jonathan Miller

SPRING MARKET STALLS EARLY

The New Jersey housing market took a sharp turn for the worse in April as contract-sales activity declined 11% from the prior month and ran 20% below the April 2005 level. At the same time, the inventory of unsold homes on the market increased by nearly 6,000 homes in April and now stands 71% higher than a year ago. That this deterioration comes in the midst of the prime spring selling season when home sales would normally be accelerating provides solid confirmation that the transition to a buyer-controlled market is now complete.

Different from one year ago when buyers were competing with each other by increasing their offering prices, it is now the sellers who find themselves in a scramble to gain the interest of buyers. In most cases, that will require a reduction in asking price to recapture the lost sense-of-urgency which dissipated once inventory increased and home prices ceased their upward spiral.

In examining the market from the perspective of price levels, there are significant disparities. The unsold inventory of homes on the market presently accounts for a 7-month supply (up from 3-months one year ago). This supply is however less for lower priced homes as demonstrated in the table at right (6-months below $600k, 10-months between $600k-$1-million, and 14-months above $1-million). The weakness in the market in excess of $1-million is likely to worsen in coming years due to a combination of economic and demographic trends which will further disadvantage the luxury home market in New Jersey.

Here are the 2005 annual stats as well.

Tags: Jeff Otteau, NAR, National Association of Realtors

Comments Off on From The Garden State: The April 2006 Otteau Report

[This monthly market report is provided by Jeffrey Otteau of the [Otteau Appraisal Group](http://www.otteau.com/) who also authors a series of widely followed [market reports](http://www.otteau.com/The_Otteau_Report/the_otteau_report.html) on the New Jersey real estate market. This information is collected from various sources including Boards of Realtors and Multiple Listing Systems in New Jersey.] I have known Jeff for many years and consider him one of the leaders of the real estate appraisal profession. He has taught me a lot about quantitative real estate market analysis over the years. -Jonathan Miller

STILL! Waiting for the Spring Market

Although buying activity in February registered a 15% increase over January’s level, it is currently running well behind last years pace confirming the slowdown in the residential market is continuing into 2006. Year-to-date buying activity is currently running 14% less than last year’s pace while the inventory of unsold homes on the market is 61% higher than a year ago. By combining these indicators the resulting Market Swing of -75% indicates that the 2006 market has lost 75% of its strength as compared to last year at this time. While considerable demand still exists from the buying side of the housing equation, declining housing affordability will continue to dictate the “mood of the market”. From the seller’s perspective, more aggressive marketing and pricing strategies will be essential to restore the buyer’s ‘sense of urgency’ that was prevalent in 2005.

Here are the 2005 annual stats as well.

Tags: Jeff Otteau, NAR, National Association of Realtors

1 Comment

[This monthly market report is provided by Jeffrey Otteau of the [Otteau Appraisal Group](http://www.otteau.com/) who also authors a series of widely followed [quarterly reports](http://www.otteau.com/The_Otteau_Report/the_otteau_report.html) on the New Jersey real estate market. This information is collected from various sources including Boards of Realtors and Multiple Listing Systems in New Jersey.] I have known Jeff for many years and consider him one of the leaders of the real estate appraisal profession. He has taught me a lot about quantitative real estate market analysis over the years. -Jonathan Miller

Waiting For The Spring Market

If you’re looking for a positive sign in the New Jersey housing market you can take some comfort in knowing that increase in contract-sales activity from December to January was slightly greater than the month-to-month increase of 1 year ago. Despite relative improvement however, sales activity in January ran 12% less than January 2005 indicating that the weakness in the residential market which began in October has carried over into 2006. Further evidence that the market has softened comes from the continuing increase of unsold inventory which grew by more than 2,000 homes in January and now stands 46% higher than 1 year ago. Home buyers will clearly have much more to say in determining the selling price of a home in 2006 than was the case last year.

Despite these signs, the Spring Market will arrive, although later than we’ve grown accustomed to in recent years. Look for the Spring rally to start in late March once home buyers realize that the long predicted collapse in housing prices won’t occur and as climbing mortgage interest rates bring some urgency back into the home buying equation.

With all the increased competition on the market this year, the appearance of a home will play a greater role in determining marketing success. Items such as condition, décor, and curb appeal will take on greater significance as home buyers have a wider selection of competing homes from which to choose.

Here are the 2005 annual stats as well.

Tags: Jeff Otteau, NAR, National Association of Realtors

Comments Off on From The Garden State: The January 2006 Otteau Report