Residential Real Estate Could Be Bottoming Out

Industry Report – Mortgage BankersHomes may be taking longer to sell and prices may be under pressure, but the New Jersey residential market is holding up relatively well in the view of some mortgage bankers.

“We’re running at about 90 percent of what we had last year,” Kevin Riley, regional sales manager at Weichert Financial Services in Morris Plains, says of the company’s residential mortgage operations. “Mortgage rates have increased a little bit, but they’re still at 30-year lows.”

Lawrence Montani of First Interstate Financial Corp in Shrewsbury says demand is generally strongest among upscale buyers. They are more willing to take risks because “they’re insulated with the backing they have in their assets,” he says.

However, notes Montani, reports of current market conditions may be giving pause to first-time buyers who are crucial to the market.

Such buyers are the vehicle that “drives real estate,” he says, because they enable sellers to move up and thereby create mobility throughout the market.

Riley concurs that “the first-time buyer is the catalyst” and may be overwhelmed by conflicting reports and “not sure what’s happening. It’s analysis paralysis,” says Riley. “There’s just so much information that you need someone to guide you through.”

He advises consumers to do their homework while interest rates are low and home prices are attractive.

Some indicators suggest that the residential real estate market may be bottoming out. According to a newsletter from the Otteau Valuation Group in East Brunswick, the number of unsold homes rose by just 1 percent in New Jersey in June, the slowest pace in five months.

That left the state with an 8.5-month supply of unsold homes, up from 8.1 months in May and 7.7 months a year ago.

In its newsletter, the Otteau Group said home contract sales fell by only 1.7 percent in June in counties within commuting range of Manhattan, including Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Somerset and Union.

This was sharply lower than the 5 percent decline in contract sales for the state

as whole.

“The stronger market conditions in Northeastern New Jersey serve as a reminder that the strength of the Manhattan real estate market, which continues to experience strong demand levels, is generating overflow demand to nearby suburban locations,” according to the newsletter.

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