As real estate buyers try to find the best property they can find, sellers are starting to get cold feet. Although the housing industry has dipped for the past years (luckily, it hasn’t hit rock bottom yet), a lot of towns and cities are escaping the pinch. Welcome, ladies and gentlemen, to the reality of real estate in New Jersey.
“For Sale” signs are back in most property yards in the State of New Jersey. A lot of property owners and real estate agents went through a lot of frustrations and revolutions. A couple of years ago, with the prices of real estate properties some of the owners dropped their prices, but to no avail, there are still no takers.
Some of them pulled out their house off the market because of frustration. Although the prices are still slipping, a lot of owners are ready to get their homes on the market with the help of new real estate agencies. Holding on to the property at this point is sometimes the best decision you can make.
But sooner or later, you need to let go of that house. It is a wrong time to sell a property, especially if certain circumstances are forcing you to make that big decision. The profit that most homeowners are expecting to get during the real estate boom of 1998 to 200s is slowly eroding, although it is not entirely disappeared.
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People who bought their houses ten, twenty years ago are fortunate since they bought it at a much lower price. People who bought their properties recently are feeling the pinch. Across New Jersey, the total number of properties sold declined from 8% in the past years.
Prices are expected to drop will houses continue to sprout like wild mushrooms. Buyers, on the other hand, are trying to flex their muscle; some of them are just waiting for the right moment to spend their hard-earned money.
In the United States just started to get out of the recession that recently happened, recovery in New Jersey is starting slowly but surely. Most experts believe that it will take at least half a decade for the New Jersey real estate industry to get back on its feet and reach its peak again. Real estate agents will tell you that the market today has undergone a significant renovation.
Construction companies are congratulating themselves on their business practices and are very grateful they are not building properties in the overheated real estate market like Florida, where the housing frenzy has led to overbuilding and a lot of new houses are left unsold.
Mortgage companies and real estate agencies boast of low mortgage interest rates while trying to deflect the issue for a surplus of loans to subprime borrowers, a lot of them are not able to repay the mortgages. The big question is, “How bad is the real estate crisis in New Jersey?” For the past years, the state averages at least 200 subprime per month – a 31% jump from the time of great recession of 2008.
But it is much worst in other areas of the country. In Ohio, one in every 739 houses is foreclosed. In Colorado, it’s one in every 678 homes. The national foreclosure average is one in every 2,683 houses or a total of 46,438 houses – three times higher than the foreclosure rate in New Jersey.
A bubble burst is not the right word for the housing market today. In terms of property prices, it is more of a location balloon; some are deflating a lot slower compared to others, some are holding on steadily. The areas that are still doing well are places that are closer to the cities – Hoboken, Monmouth Jersey City, even homes for sale in Bradley Beach are being looked at by buyers.
These are the place where high-paying jobs are located and transportation is not a problem. It is also a lot cheaper compared to living in big cities like New York City.
The Jersey area has fared well with the real estate bubble. Sales have risen steadily since 2006 up to 2018, with the average property price of $1.1 million to $1.33 million. Overall, the state of New Jersey gained at least 2% increase in its real estate market every year.
But despite the rise in the sales, the number of issued building permits is still declining across New Jersey, according to the New Jersey Department of Labor. In some areas, new construction is falling off drastically. Farm areas or commercial land that has been developed before also experienced a rapid decline in new constructions.
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Another significant indicator is how long the property sits on the market. It will take at least one year and three months for a house that is listed in the market to be sold. Sellers of high-end properties need to wait longer for the house to be sold. For estates above one million, the estimated time is two years and above. For properties above two million, it will take at least five years.
The good news is, for the past 50 years, the real estate industry in New Jersey has been the most reliable of all personal investments in the country. Just like every state in the United States, New Jersey experienced a boom in housing construction in the past decades that also coincides with the baby boom.
The slump in the real estate industry is not surprising. Following the post-war construction boom leveled off and the prices dropped as New Jersey begun hemorrhaging when it comes to manufacturing jobs. The rise of corporate corridors in the 80s, as well as the influx of jobs, sparked the boom in real estate in the state.
From 1980 to 1988 the prices of real estate properties grew by about 145%. The sudden decrease that was spurred by the crisis in the savings and loan industry, as well as the decrease in jobs, has prompted the drop of prices of houses by almost 10% since the start of the 1990s.
From there the housing industry in New Jersey experienced a sudden growth up to the beginning of the great depression or the housing bubble in 2007. The good news is, longtime owners still have a lot of upsides. People who owned their house for 20 or 30 years are still getting 350% to 900% profit.