5 Things Homeowners and Buyers Should Watch For This Month

It’s no secret that the US economy has had a shaky start in 2014, but this doesn’t mean that things won’t perk up. It will be an interesting selling season to say the least, as everything is rather low: interest rates, housing prices and inventory. If there is enough inventory to keep buyers happy, we could see some of the best sales yet.

Here are five things that homeowners and buyers should watch for this month and beyond.

1. Mortgage rates are still at historical lows.

Mortgage rates do fluctuate, and while they are rising a little more each month, rates still remain at historical lows. As long as the economy is poor, mortgage rates will continue to remain low. When the economy is booming, the opposite happens. For new homebuyers, low mortgage rates will save hundreds off their mortgage each month. This could make that difference for you, too.

2. Housing inventory is still limited.

Housing inventory remains very low, which isn’t helping speed up the housing market. But, if you put your home up for sale, chances are strong that you will have a home that is in demand and will sell quickly since there isn’t that much on the market. Low inventory also leads to bidding wars, which can help your home sell for more. On the flip side, buying a home gets a little more tricky – and competitive.

3. Expect stricter lending rules.

The new qualified-mortgage rule makes the collection of asset documentation super important. Basically, the banks want to make sure that you can make your mortgage payments and repay your loan. Even though these rules are a good thing, they create a lot of extra paperwork. If you’re applying for a loan, be prepared for these changes.

4. Refinancing is slowing down.

Homeowners were refinancing like crazy a while back, but now that mortgage rates are rising and new loans are being given, this side of the banking industry has slowed. If you’re interested in refinancing your current loan, don’t hesitate to fill out the paperwork to do so. You can always ask to have your paperwork set aside for when mortgage rates dip back down.

5. Flexible loan options are available.

Things are not like they were during the housing boom, but there are some flexible loan options available. FHA loans are backed by the government and have more gracious terms as far as down payments and credit score requirements. Some say that adjustable rate mortgages will also become more common during 2014 because mortgage rates are on the rise.

Flood Insurance Just Got More Affordable for NJ Residents

President Obama just signed a flood insurance relief bill that will make flood insurance more affordable for American homeowners, especially those living along the Gulf and Atlantic Coasts. About two years ago, coastal homeowners saw their flood insurance premiums spike so high, it threatened their financial stability. With such high increases in flood insurance, it has also made coastal properties unattainable for new homeowners who don’t want to take on the financial burden. This, too, has slowed the NJ market.

The original intention of the Biggert-Waters Act was to make the National Flood Insurance Program more financially stable, but really, it placed strain on homeowners living in flood-prone areas. Some of these homeowners didn’t buy in original flood plains, but their homes were deemed at risk and not built to code, so they were impacted by high premiums as well.

When homeowners began voicing their concerns over significantly high premiums after Hurricane Sandy, Congress took up the issue. It’s understandable that making the National Flood Insurance Program more stable would be a major advantage and take pressure off tax dollars, but forcing people from their homes due to such high costs was not a fair alternative.

The new relief bill looks at several different aspects of flood insurance. First, flood insurance premiums are capped under the new bill, at an average of 15 percent. The maximum is 18 percent for primary homeowners, while secondary homeowners may still see their premiums rise by 25 percent. Second, people buying new properties that are on flood plains can have below-market rates passed down to them. Flood insurance may not be cheap, but at least it’s more affordable.

The flood insurance relief bill helps the NJ market by making coastal properties more practical. In recent years, these properties have slowed because people are afraid to foot a large insurance bill each month. The new bill should offer more financial stability for those living along the East Coast as well as people who are interested in purchasing a home off the coast.

In New Jersey, roughly 233,000 homeowners are now covered by federally subsidized flood insurance, with the majority of the properties coming from Ocean, Atlantic and Cape May counties.

Why 2014 Will be a Strong Year for the Housing Market

We’re already four months into 2014, and the height of the selling season will soon be upon us. The winter was unusually cold, but we should be seeing more homes listed in the coming weeks. Spring has traditionally been considered that perfect time to list a home. This year in particular, we have a lot to look forward to. Housing activity has been increasing over the past several years, so we can expect the same trend to continue this year.

Increased Housing Activity

This year may be the first year that we see the most housing activity since 2006/2007. There are a few reasons for this. The first is simple. Since the housing bubble, housing activity has slowly picked up, with each year a little better than the last. As long as this trend continues, we can expect to see even better sales in 2014. Additionally, there should be more jobs available, a bigger inventory of homes and competitive housing and interest rates to drive up housing activity.

More Young People Looking to Buy

A second reason why 2014 may be the strongest year yet is because of a basic yet important piece to the puzzle: demographics. On average, there are 1.2 million households each year that demand a housing unit, whether that housing unit be rented or bought. Due to the recession, there are more young people living at home with their parents for financial security. Many of these young people want the freedom of living independently, though, and will soon be ready to purchase a home. When demand from young people starts to kick in, we can expect to see real progress in the housing market.

Mortgage Availability is Improving

Lastly, mortgage availability may improve in 2014. While it’s not as easy to get a mortgage as it was during the housing boom, it is becoming easier than in years directly following the boom. For those deserving of a mortgage, there are a number of options available through Fannie Mae, Freddie Mac, FHA and VA loans. Also, with rising interest rates, it’s to be expected that fewer people will refinance their mortgages, so lenders will be looking to boost activity by giving out new loans.

Source: HousingWire.com

New Jersey Housing Market Continues to Strengthen

According to the New Jersey Association of Realtors, the NJ market continues to strengthen thanks to a lower inventory of available homes, higher median prices and faster selling times. How do these numbers compare to last year?

According to NJAR, the number of homes for sale in all markets is down 15.5 percent from September 2012. Closed sales in all markets have risen 21.8 percent, though. Single-family homes have seen a median sale price of 7 percent more compared to September 2012, and single-family homes are spending less time on the market.

To add more good news to the picture, positive trends are being seen in the townhome and condo communities as well. While NJ isn’t back to pre-recession prices, at least the housing market is moving in the right direction.

Why Inventory is Low – But Maybe Not for Long

Part of the reason why inventory is low is because would-be sellers are holding onto their properties because they are not willing to sell their home at a discount. This deters many would-be sellers, so they either remain in their homes or rent them out to continue paying down their mortgage.

Over time, we can expect to see some of these sellers slowly listing their homes when they can finally make the numbers work for them, but in the meantime, inventory will remain relatively low – at least for these types of homes.

Foreclosed homes are a different story. With the high number of foreclosures, there are still many that need to make it onto the market. Once they are listed, we can expect to see them clear out very quickly, boosting sales and driving up the market, hopefully allowing today’s would-be sellers to finally list their homes without taking as much of a hit. This has been the trend for much of the country, and it has helped many states rebound to better sales.

We can only hope that the housing market bubble will be a thing of the past, and housing prices will continue to strengthen over time. We’re making positive steps in the right direction, making now – potentially – a great time to sell, buy or both.

Why Are New Jersey’s Property Taxes So High?

New Jersey is a great place to work and live. Its cities are often ranked some of the best places to live in the US, and the state is home to great restaurants and sports teams, not to mention there are plenty of job opportunities being centrally located to several large cities. But, there’s one thing that often comes up in conversation when talking about New Jersey: property taxes are high. Some of the highest in the country, in fact.

A study from the Tax Foundation found that in 2009, New Jersey residents paid median taxes of $6,579 in 2009, giving them the highest property taxes in the country. It’s no wonder why residents get so angry about having to pay high taxes, but the truth is that New Jersey is highly reliant on property taxes to fund schools and government. So, looking at property tax numbers alone isn’t enough to tell the full story. Other areas may be paying the same dollar amount of taxes, just in a different form.

Here are the factors that determine New Jersey taxes, according to NJLM:

  • Your home’s market value

  • Cost of municipal and county programs and services

  • Cost of local public schools

  • Availability of revenue to cover the above costs

  • Extent of tax exempt properties in your municipality

  • Total value of taxable properties in your municipality

So, if you were to make structural renovations or additions to your property, your tax bill gets higher. If it costs more to deliver local government services and programs to your area, your tax bill gets higher. If local school districts cannot count on other revenues and their costs rise, your tax bill gets higher. When looking at the numbers, it’s important to remember all of the programs and services that NJ taxes support.

Also, NJ municipalities are highly autonomous. This offers a range of benefits to residents, including more control over local school systems and government. But, this also comes with a cost, and that cost is reflected in NJ property taxes. The more emphasis you place on having local independence, the more the municipality is to going to have to pick up these costs, when in other states, they are funded at a state level. It’s a Catch 22, really.

Bottom line: No tax is popular. There will always be some aspect of taxes that people don’t like. At the end of the day, there are many government-level programs and services that our nation’s cities need to function.

Positive Signs of Growth for the NJ Housing Market

The New Jersey Association of Realtors reports that the NJ housing market is growing stronger each quarter, with single-family homes selling 13 days faster and for $11,000 more than the year before. These numbers come from NJAR, as they are launching a new project that will provide detailed housing data each month based on state, county and local niches. This information is designed to educate buyers and sellers who want to learn more about the current housing market.

NJAR pulls the information from the MLS in New Jersey to determine where homes are selling, how quick they are selling and for what price they are selling. New Jersey has a complicated housing market, so it’s helpful to know which areas are seeing the most growth. For instance, South Jersey markets Cape May County, Atlantic County and Cumberland County have had sluggish sales compared to countries like Essex and Caldwell. Still, even these slower markets are seeing better days. On the whole, the average NJ home sits on the market for 82 days.

Additionally, more information will hopefully prompt buyers who are on the fence about buying. Interest rates and home prices are climbing, and with higher costs come fewer affordable homes. As interest rates continue to go up, it will impact people’s decisions on whether or not to buy a home. Prospective buyers can also see which counties have a higher demand. There are differences from one county to the next, as the demand is stronger in Bergen than in Passaic, for example.

Even though the market is still slow in New Jersey, we’re seeing signs of positive growth, and many real estate experts predict that this is just the beginning. The number of homes sold in NJ has rebounded its fastest since 2007. We can attribute this to low home prices, low mortgage rates and a growing confidence in the housing market. NJ has also had steady job growth, which will also help stabilize the housing industry.

Vampire and Zombie Homes Continue to Grow in NJ

Just because it isn’t Halloween season it doesn’t mean that it’s the end of zombies and vampires. A real estate firm coined the term “vampire houses” to represent the many homes that have gone into foreclosure, but the original owners continue to live there. Vampire homes are slightly different from zombie homes in which no one lives in. These homes are going through the foreclosure process, but they have been abandoned by the owners. Which one is worse? It’s hard to say. All we know is that both vampire and zombie homes continue to grow in NJ.

Why So Many Foreclosures in NJ?

It’s no secret that the Garden State has been hit hard by foreclosures. In fact, as much of the country is seeing a reduced rate of foreclosures, the number of foreclosed properties is still increasing in NJ. This is largely due to the fact that New Jersey is one of 17 states that requires foreclosures to go through the court system. With so many homes in foreclosure, the state has a lot of paperwork to process, and foreclosed homes keep piling up.

In the meantime, zombie homes continue to sit, and more homes turn into vampire lots where the family continues to live in the home until they are forced out. Currently, there are more zombie homes than vampire homes, with a staggering 14,000 homes sitting empty, accounting for 17 percent of the NJ population. The vast majority of these homes come from Cape May, Hudson County, Camden, Gloucester and Somerset.

Will Any Good Come out of Vampire and Zombie Properties?

Of course, no homeowner who pays their bills and mortgage on time wants to hear that they have zombies and vampires for neighbors. But, is there any good that could result from this?

Hopefully, yes. As New Jersey deals with more paperwork and processing, the banks are going to want to sell homes sooner. This leaves a good opportunity for buyers to purchase a home that they want, in an area that they want and for a price that they want. With so many homes in the foreclosure process, buyers will have the upper hand, because at the end of the day, these homes are better off being sold and having real owners live in them rather than sitting vacant or with “vampires.”

Best Counties for Middle Class NJ Residents

We may be biased, but New Jersey is one of the best states to live in!

The dynamic history, the beautiful Jersey Shore coastline and great eats from famous diners and local farmer’s markets make the Garden State a pleasant and entertaining place to live. We also have a dense population that keeps things interesting. Some residents were born and raised in NJ, while others have come to our state from NYC to seek a quiet, suburban lifestyle. Our close proximity to other cities, including Philadelphia, Manhattan and Boston, also make NJ a hotspot.

The one downfall to NJ is that we are an expensive state. In fact, a recent study from Trulia reported that in Bergen County alone, only 19 percent of homes are within reach for middle-class families. A family with a median income of $56,000 could afford a home in Bergen County priced at $274,000. Unfortunately, homes in this price range are rare. We are talking about some of the most expensive counties in the country after all.

So, if you’re currently looking for a new home in NJ and have moderate earnings, where are some of the best – but affordable – places to live?

Below is a great chart to reference, courtesy of Fred Kaimann/The Star Ledger, with data from Trulia. This comprehensive chart is an excellent tool for middle-class families looking for an affordable home in the Garden State.

 

County

Percentage of homes within reach for middle class

Median square foot of affordable homes

Median household income for metro

Maximum affordable home price

Atlantic

51%

1,248

$51,191

$218,000

Bergen

19%

1,410

$56,007

$274,000

Burlington

72%

1,497

$68,241

$272,000

Camden

86%

1,376

$68,241

$272,000

Cape May

37%

1,040

$57,001

$270,000

Cumberland

74%

1,302

$47,072

$191,000

Essex

55%

1,760

$70,062

$294,000

Gloucester

78%

1,536

$68,241

$272,000

Hudson

40%

825

$56,007

$274,000

Hunterdon

34%

1,418

$70,062

$294,000

Mercer

70%

1,316

$67,991

$278,000

Middlesex

63%

1,432

$75,355

$326,000

Monmouth

45%

1,448

$75,355

$326,000

Morris

32%

1,353

$70,062

$294,000

Ocean

66%

1,437

$75,355

$326,000

Passaic

42%

1,503

$56,007

$274,000

Salem

92%

1,404

$62,075

$319,000

Somerset

45%

1,320

$75,355

$326,000

Sussex

65%

1,381

$70,062

$294,000

Union

54%

1,360

$70,062

$294,000

Warren

55%

1,389

$55,766

$249,000