Looking Back... Looking Forward, Part I

As I have written in previous blog entries, contract signings measure the motivation of buyers to commit to a large purchase, where closings are just the consummation of that decision.

Following the format of last years’ three part examination of the real estate market, I will share measurement data in separate blog entries.  Click here to read my review of contracts from last year,or continue below to see the latest news…

The past year in real estate was a play in two acts. The first act took place between January and April while the extended and expanded the Home Buyer Tax Credits were still in effect. The second act took place following the April 30^th deadline.

Looking Back – Act I

As shown in the chart below, contracts in Morris County and Randolph were considerably higher while the Buyer Tax Credits were available during the first four months of the year.

In fact, contracts for 2010 were at their highest point since 2007, before the current financial crisis began.

CONTRACTS : January – April
Area	2009	2010	+/-	%
Morris Cnty	1,154	1,578	+424	+37.6%
Randolph	53	68	+15	+28.3%

Looking Back – Act II

As spring came into full bloom, reluctance by many to continue tax incentives brought an end to these programs which had been in place for more than two years. The real estate market had been on life-support… with good reason; now came the time to let the market react freely.

                                                                                       

For the first few months without incentives, many buyers thought that since they “lost the $8,000” (that they never had), they would make lower offers and move more slowly than in the first part of the year. Mortgage rates stayed around 4.5-4.75% for a 30-year fixed rate mortgage and were falling slowly. The lack of urgency was highlighted by unemployment rates that stood near 10% as the year ended.

Although a slowing of the market was expected, it was more dramatic than many thought it would be. Compare the data above for contracts before the end of the tax incentives with those below that measure activity after the April 30 expiration date.

CONTRACTS : May – December
Area	2009	2010	+/-	%
Morris Cnty	2,644	3,245	-512	-15.8%
Randolph	177	122	-49	-28.7%

Looking Forward

Several factors have shown buyers that the market may be improving a bit, and that now is the time to buy; including a slight increase in mortgage rates, the extension of the Bush Tax Credits and a slight dip in the unemployment numbers.

When separated from the May – December data, the statistics below illustrate that we may see a slight improvement as 2011 begins.  We’re not back to 2006 by a long shot, but any indicators that show some growth are encouraging:

CONTRACTS : November – December
Area	2009	2010	+/-	%
Morris Cnty	411	547	+66	-12.1%
Randolph	28	29	+1	-3.6%

I will give a more detailed analysis for 2011 following the entries for the review of 2010… so stay tuned. 

As always, feel free to contact me with any questions at andrew.mensch@cbmoves.com

or call me directly at 862.432.2771.