Chatham Housing Market Update

 I just returned from a New Jersey Housing Forecast Workshop with Jeffrey Otteau of the Otteau Valuation Group, and thought I would share his findings with you. The housing market can be perplexing! It helps to bolster our understanding of what is going on at local level with the broader perspective of an industry “expert.”

Otteau suggests that it is a mixed message. Overall the long awaited housing recovery has stalled somewhat mirroring slow growth in the job market. However there are some bright spots in the housing market: Chatham and Madison are fortunate in occupying a bright spot.

As we moved towards fall the buoyant spring market gave way to a slow August;  April through July contract activity had started to rise and there were encouraging signs of stabilization in the market. In August this increased activity came to a grinding halt. Otteau attributes this to low job growth and suggests that stabilization in the housing market may be delayed until next year.

Some of the banks have recently lifted the moratorium on foreclosures. There is concern that a flood of foreclosures released onto the market will further depress prices. In 2010 in New Jersey 1 in 38 households received their first foreclosure notice and 8 out of 100 homeowners were behind on mortgage payments.

The impact of accelerated foreclosures will hit some areas hard—typically areas already suffering high unemployment and low income and in urban towns like Irvington  or rural areas in Sussex and Warren Counties. The impact is likely to be less in Morris County and towns like Chatham and Madison.

Similarly, the recovery in the housing market will take longer in some town than others. Across the State there is an average inventory of  13 months supply of homes on the market. Otteau suggests that towns with an inventory at 8 months or above are likely to see some decline in home prices.

Towns with an inventory below 7 months are likely to see some improvement in house prices.  Chatham Borough has a 4.3 month supply; Chatham Township has a 4.5 month supply and Madison has a 5.8 month supply. So the outlook for Chatham and Madison and other towns classified by Otteau as “Manhattan centric,” i.e. high priced towns with a direct rail service to Manhattan in 55 minutes or less, is more encouraging.

How do you make sense of the market if you are thinking of buying or selling? Talk to your Realtor first and foremost! Just a few points to bear in mind:

Thinking of selling?

• There is nothing to be gained by waiting
• Expect the buyers to be looking for a ‘bargain”! It is nothing personal. They understand the market is slow and expect prices to be dropping—even if they are not!

Thinking of buying?

• Mortgage rates are likely to stay low for the foreseeable future
• Prices in some towns may drop but not in Chatham and Madison. Make sure you understand the market in the town where you are looking to buy
• Understand that the rental market is very competitive and prices are likely to rise.

If you would like a monthly market update specific to your town or have any other real estate questions, email me and I will be happy to send it to you. I am always delighted to help.