NJ realtors have a vital resource for the somewhat tricky business of projecting what the real estate market will be like over the next few years – information provided for by statistical guru Jeffrey Otteau of the Otteau Valuation Group is a key. Like the Nate Silver of Real Estate!
His most recent spring assessment has some enlightening and somewhat sobering news about how the numbers will likely move, and below is a highlight reel of information that buyers and sellers might find really useful.
Prices in NJ will likely rise an average of about 6% this year, then by 2015, there will be a plateauing – a move sideways. Not a major bust but a combination of rising interest rates and an assault on entry level job growth are going to be a factor. What is that? An “assault” on job growth? Well, example…the food chain Applebees is doing away with their wait staff and moving their order system to a self-serve tablet system – see link here: http://www.dailyfinance.com/on/applebees-tablets-tables-customers-order-pay-automation/. Businesses that have the ability to automate are already doing so, and it will affect the buying power of the first time home buyer, without a doubt, which in turns affects sellers looking to sell their entry level home into a more “move up” sized home.
On the other end of the age spectrum, baby boomers who are a huge part of the ebb and flow of money in this country will be stepping back from the previously ubiquitous role they took in the marketplace. They will pull back, prep for retirement, move onto fixed incomes and spend less. This, coupled with the fact that many industries are actually relocating into areas closer to the future talent pool of workers, will affect the real estate market. Where is this talent pool of the future you ask? Proximity to urban centers – such as the City, boroughs…oh and lovely towns with easy access to NYC in 45 minutes or less…(Montclair, Glen Ridge, Bloomfield, West Orange, South Orange, Ridgewood, Summit, Millburn, Livingston, Maplewood, Clifton, Caldwells, Verona, Cedar Grove, New Providence, Short Hills, Chatham, Madison to name a few…)
The upshot? The market is strong right now – a good time to buy or sell. The interest rates are low enough to maximize your buying power and prices are still reasonable. For sellers, the market is healthy enough for 2014, and a little harder to predict for 2015. If you are on the fence about a move, ask me more about the process and I will be happy to review some facts and figures for you. Education is your best tool to help you navigate the changing real estate market of our times.
So the news makes it look like the end of the world is upon us – and we’re all worried about the Post Office getting checks out on time to pay the bills, renewing our passports for the trip to Italy this summer or whether Grandma is going to get her social security check this month. And since this is a real estate driven blog, let’s take a minute and find out how the shutdown is changing the value of our homes. A big piece of our home value is based on buyers finding loans, and more than 90% of all loans are insured, underwritten or owned by our government, and one would be correct to think the shutdown will bring changes to this process. But maybe less than you’d think.
Morgan Brennan has written a piece for Forbes describing the situation:
Initially at least, the mortgage market is likely to be only minimally impacted. New loans will continue to push through most government agency pipelines. What will change is how long the process takes, as many agencies expect to experience delays.
The culprit? Mainly, getting qualified.
[I]f the government shutdown of 1995-1996 is any indicator, the process will take longer than usual. “Loan Guaranty certificates of eligibility and certificates of reasonable value were delayed,” the VA warned in its September 25th contingency plan.
Rumors of an FHA shutdown are unfounded, but have an unusual source:
Where there has been mounting concern is the Federal Housing Administration, which currently endorses about 15% of the entire single-family mortgage market. Several media outlets recently reported that the FHA would be unable to endorse any single-family loans and that no staff would be available underwrite and approve new loans.
That prospect would be somewhat worrisome – if it were actually true. The FHA’s Office of Single Family Housing will indeed remain open for business, albeit with a smaller staff. “FHA will be able to endorse single family loans during the shutdown. A limited number of FHA staff will be available to underwrite and approve new loans,” the report now states. In other words, other lenders’ loans will continue to be insured and some in-house lending will continue to take place at a reduced rate.
The reason for that mix-up: the initial draft of the U.S. Department of Housing and Urban Development’s contingency plan mistakenly stated that single-family loan operations would cease. The report was amended over the weekend.
Apparently, the FHA’s single family home unit is funded with through the next fiscal year, but this is not the case for the Multifamily Housing Office, so expect delays getting a loan for that condo.
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