Real Estate Market Report (3rd Quarter) - North Brunswick, South Brunswick, East Brunswick

With the economic events of the last few weeks, I've been keeping a close eye on our local market. Before the bailouts, many people were predicting that we were close to the bottom, and though prices may continue to drop, the number of homes sold would go up. Now, with this economic uncertainty, its hard to say. Let's take a look at the market data...

As we've been seeing in national trends, based on data from the Middlesex MLS, the average price of a single family home in the Brunswicks have gone down, though the reality is that we haven't seen such a sharp decline until this past quarter.

While its early on in this quarter, based on current trends, we'll probably see the average price drop into the 450-455K range, though in these times, anything is possible.

Something I've been watching closely is the number of closed sales. While the numbers are down, they aren't that far off. If we see this number go up year over year in the 4th quarter into 2009, we could be looking at the bottom of the market. However, if we continue to have economic turmoil or rates rise significantly, we may continue to see a drop in number of home sales.

Once we see a stop to a drop in number of sales, that'll be great news, because prices will follow. Perhaps not immediately, but they will follow.

Sellers - The Bottom Line

If you saw the graph of the Case-Shiller Index in my previous post, you can see that average prices in decline and are predicted to do so. So, what does that mean for a Home Seller?

1) If you wait to sell your home or to price it where it will sell, the price of the home will continue to decline into 2009-2010, perhaps even into 2011, in the case of a severe recession.

2) In a more normal scenario, your home will be worth what it is now in 2011 (3 years from now).

3) In a severe recession scenario, your home will be worth what it is now in 2013 (5 years from now).

The Bottom Line - If you want to wait to get a certain price for your home, you may be waiting a very long time. However, if you need to move, don't wait. Inaction could be very costly!

Real Estate National Market Forecast

With all the craziness going on in the stock market and our economy, people are wondering, "What about home prices?" According to the Case-Shiller price index, a lot depends on our economy. Take a look at this graph...



In a normal market, we can expect to see the bottom somewhere in 2009, with prices equivalent to 2004. However, in a severe recession scenario, we're looking at a bottom in 2011, with prices equivalent to 2001/2002, meaning an additional 25% decline.

Granted, here in New Jersey, while we've had our decline, prices haven't dropped as signficantly as the rest of the nation. However, whichever scenario happens, we're in for a bumpy ride.

Stay tunes for practical implications for Buyers and Sellers...