The Real Estate Market in Maplewood, South Orange, Millburn, Short Hills, Summit, Chatham, New Providence, and Montclair, to name a few, has been more resilient than one might think. I have been studying the market trends in these areas for a few years now. I have been asked for the last 3 years "How's The Market Doing?" So let me tell you. Despite what has been happening nationwide with homes sales THIS market, the bedroom communities of New York on the Midtown Direct Train Line have out-performed most expectations. Let's take Maplewood, NJ. Maplewood is a 30 minute train ride from mid-town Manahattan. In addition to trains to Manhattan there are trains to Hoboken, NJ where you can take a The Path downtown. It is a quaint town that has seen a huge influx of former Urbanites from NYC, Jersey City, Hoboken. Between 2005-2007 Maplewood's average sales price increased from $494,783 to $537,926. This is an increase of 8.7%. So, you ask, how about now...2008? Year to Date the average sales price in Maplewood is $532,988, a SLIGHT decrease of less than 1%. WOW! There is a simliar picture on most of the towns on the train line. Some are up slightly (Montclair is up 5.8%, New Providence is up less than 1%, Millburn is upi 2.2% in 2008 year to date) and some are down (South Orange, hHills,Summit, Chatham Boro, Chatham Twp) Where are we seeing the biggest 'drop' in average sales price? The biggest drops are in towns with a diverse inventory...an extreme high end (over $2 million) mixed with "entry-level" housing. Summit, NJ, for example, is "down" 13% year to date over last year. Why such a decline? It's simple. If you look at the homes that are selling in Summit they are the entry level homes, in the neighborhood of $500K. An unusual price point for Summit as the average sales price in Summit in 2007 was $1,129,142. Summit is an econmically diverse town. Unlike Short Hills where it is EXTREMELY rare to find a home in the $500's, $600's. Summit has a decent amount of inventory that is in this lower price point. Today those are not only the homes that are moving BUT they are also the homes that are being listed. What are we finding? Certainly, there are significant and needed corrections in the market. Certainly, homes prices have finally, in most instances begun to decline BUT the sharpest decline's are not due to too much inventory or competition. The sharpest declines in average sales are in towns where the inventory that is moving has shifted from higher end inventory to lower end inventory. Take South Orange, NJ for example. South Orange, the sister town to Maplewood, NJ has seen a decline in the average sales price from $652,464 October Year to Date 2007 to $568,981 October Year to Date 2008. That is a 12.8% drop! Why would South Orange, the sister town to Maplewood see such a drop, while Maplewood only adjusted less than 2%? I believe there are a few things at play here. Similar to Summit, South Orange has a healthy inventory of high priced homes (over $1m) but it also has a healthly inventory of entry-level homes $300's, $400's, $500's. South Orange also (2006)had a large development, 60 Townhomes built by Pulte come on the market and sell. Those townhomes were priced $800K up to $1.4m. This large influx of higher priced homes boosted the average sales price in South Orange. All 60 homes have sold and a few have come on as re-sales and sold. But that injection into the market of 60 homes in that upper price range somewhat artificially inflated the average sales price in South Orange. The 2nd factor at play in South Orange are taxes. Maplewood and South Orange are both plagued by relatively high taxes. South Orange, long overdue for a re-evaluation did the re-val and then held off on setting the tax rate. Home buyers in the upper level were very hesistant to move forward on a home in South Orange without knowing the new tax rate. Turns out that was a wise decision for some as some taxes doubled! I would argue that this large tax burden is bringing down the home values in the upper level of South Orange. The homes in the top price ranges are not moving as they once were because of this tax burden. Call the tax assessor and complain! :)
An interesting town is New Providence. Also on the train line. Great schools and year to date the homes prices have actually increased slightly! Why? New Providence is a town that has some entry-level homes ($400's-$500's) Some upper level homes (over $1m) but the bulk of the market is in the middle ($600's-$800's) There is not a huge swing between the high's and the lows they way we have found in other towns. It also has a manageble commute to NYC and an EXCELLENT school system. So, while what is true across the board (entry-level housing is moving best) it doesn't impact New Providence in the same way it impacts Summit.
Last interesting note. The BIGGEST market change we have seen is the number of units being sold. South Orange is down 20%, Chatham Boro 37%, Chatham Twp 8.6%, Maplewood 21%, Millburn 11.5%, Short Hills 14%, New Providence 1.7%, and even the Mighty Montclair, 10%. This is the biggest indicator of a market shift, even greater than price. Here is the irony though. Days On Market has DECREASED too! What? We are have 20% LESS inventory selling but it is selling quicker this year than last year! How can that be? There are 2 things at play here. Number 1: There are LESS homes on the market. We do not have an over abundance of inventory. Short Hills has less homes on the market today than it did this time last year. Maplewood, South Orange, Summit have more but only slightly. Buyers are holding back BUT SO are SELLERS! Point Number 2 seller's have finally caught on. This is no longer a seller's market. It took the seller's a while to accept that notion but now thay they have they are more aggressive in pricing, reducing, and if they are aren't willing to accept where their home value is they simply decide to not sell. Less sellers, less buyers equals fewer transactions BUT relatively stable home values. Welcome to the Mid-Town Direct Real Estate Market!
If you would like copies of any of these charts and stats feel free to visit our website and check out our "Market Trends" at http://www.gailamiddleton.com/. They are updated monthly. Or if you would like to receive a pdf of them e-mailed to you just send me an e-mail and I will add you to the list.
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