The State of Real Estate in Union County

THE MARKET REMAINS HOT AMONG NEW JERSEY COUNTIES, AND HOMES THAT ARE PRICED RIGHT ARE GETTING MULTIPLE OFFERS.

By Barry Levine

With 103 square miles and nearly 190,000 households, Union County’s real estate picture can have many shades of interpretation, but many real estate professionals see a market that is still very active.

“Union County is booming,” Jill Guzman of Guzman Realty in Elizabeth says. “All towns are doing well, and it’s better than a year ago.” She says she is not seeing a major effect from the steady rise in mortgage rates, in part because there are “all kinds of good programs for mortgages,” with financing packages to fit most pocketbooks.

Other local realtors concur with Guzman. “In general, Union County is still a very, very hot market,” says Harvey Tekel, manager at Weichert Realtors in Westfield, who works with properties throughout the county. For Weichert, “January and February for 2006 exceeded in gross sales the same period in 2005,” he notes. “There are more high-priced homes on the market than last year, because prices in general are stronger this year.”

PICKY BUYERS
Even among those real estate agents who see a great market, though, the market is not always great in every price range.

For Guzman Realty, the “sweet spot” for selling houses is in the $200,000 to $800,000 range. But for Susan Hunter, broker-in-charge at Lois Schneider Realtors in Summit, the hot market is in houses selling for $450,000 to $2 million. She handles properties in Summit - where, she says, the average price tag is $1 million - as well as in New Providence, Berkeley Heights and Springfield. Homes in those areas over $2 million are taking longer to sell, she says. While taking longer to sell $2 million-plus homes may be a reflection of a more normal market, the past few years in New Jersey real estate have been anything but normal.

“In Summit,” she says, “the inventory of houses is not increasing, and we’re still seeing multiple offers on a given property.” In one recent week, she says, she had six offers on properties in Summit. House prices in towns like Summit, she believes, are driven by how well Wall Street is doing, and Summit’s values in particular are bolstered by the fact that it has the Midtown Direct train service. The difference from a couple of years ago is that now there is more selectivity, with multiple bids on good properties. As an example, she cites a $600,000 home in New Providence that recently received six offers. If a property has any “issues”-like needed repairs, for
example - buyers are taking more time to make up their minds. This is in comparison, of course, to the real estate frenzy of recent years, when speed of action was critical in landing a property.

That frenzy ended in 2005. “Buyers are much pickier now,” she says, “but our company is still having an unbelievably good first quarter, and our expectation is that it will continue through June.” Weichert Realty’s Tekel agrees that, although it’s a very active market, “homes are on the market a little longer now.”

After June, the usual summer slowdown kicks in, when buyers are less eager to interrupt vacations or make decisions that could mean changing their children’s
schools in the fall.

BUBBLE TALK
But those doldrums could be exaggerated by the increasing mortgage rates, and the continuing talk of a real estate “bubble.”

“Higher mortgage rates will slow it down, at some point,” says Hunter. If home prices and monthly payments are wildly out of line with incomes, there could be a rapid decrease in property values when the bubble bursts. Some buyers are reportedly hoping they’ll find bargains, if they just wait. But the market isn’t sitting still. Weichert Realty’s Tekel points out that towns such as Rahway and Linden, which had been considered more “affordable,” are now seeing a larger hike in prices.

In fact, rather than bursting like an over-inflated bubble, Tekel sees the Union County market as “normalizing.” By this he means that the the sky-high appreciation rates many Union County homes had been seeing over the last few years, with not-uncommon annual rates of 10 to 20 percent, are now being replaced by appreciation rates that are a somewhat more earthbound 4 to 8 percent.

“If the seller prices the home right,” he says, “we will see multiple offers.” With the increasing mortgage rates and bubble talk, appropriate pricing is the name of the game for him - a theme that is echoed by other realtors. “A year ago, everybody was piggybacking their price over what had recently been sold,” he says, so that a house that sold for $400,000 became the basis for asking $450,000 or more by the next seller.

Now, however, one can price “a little more than what’s been on the market, but not too aggressively,” Tekel says. How much more is, of course, why selling real estate is closer to fashion than to science-one has to cut and trim just right for the prevailing sensibility.

For George Kraus, vice president and manager of Burgdorff Realty’s Westfield office, a general rule of thumb is that houses are often selling at 97 to 98 percent of asking price. Like Tekel’s view of the market’s normalization, Kraus sees a “stabilization” in the past six months that is helping to set prices - and expectations.

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