Today in Realty Times was published their report of falling interest rates.  According to Freddie Mac the average rate for 30-year fixed rate mortgages has fallen to 5.19%, the lowest since 1971.  There are predictions that the rates will fall further, but there are also predictions that they will rise faster than they fall.  Even USA Today the other day trumpeted the good news that rates were the lowest in 50 years.

Although in Somerset County, New Jersey real estate inventories are no longer at record highs, there are opportunities out there for those who have the courage, solid employment and credit to get off the fence.  It's unlikely that 30-year interest rates will fall much below 5%, and if they do, it probably won't be for long. 

Is 5% a magic number for you?  Last year at this time rates were about 6%.  On a mortgage of $300,000 the difference is nearly $200 per month.  Is that enough to make a difference to you?  Let me know your thoughts.

Hillsborough, New Jersey, usually a solid real estate market, was hit hard by the financial market pressures since September 15.  Although listing inventories remained level, the supply/demand ratio was negatively affected by 16 new home listings that were withdrawn and re-listed.  The ratio, with those re-lists included, was 41%, down from 54% in October.  However, excluding those re-lists, the ratio was 60%, a much more attractive ratio, and one more reflective of reality.  There were 21 new sales written in November, and 6 of the new listings from November went under contract.  That's suggestive of a real estate market that is not dormant.

The absorption rate is troublesome, however.  It leaped from 8.1 months in October to 11 months in November.  This is still lower than Somerset County as a whole, but worrisome.  It is indicative of the malaise that is affecting the American (really, global) consumer.  There is not much good news to lift the spirits of the public.  Nevertheless, as pointed out above, people are still buying homes in Hillsborough.  There are clearly opportunities out there for buyers who are smart enough to look for them.  These values may be gone soon.

O.K., I admit it, I have not posted anything for a long time.  However, much has happened since the day after the election, and I wanted to take some time to see how the market shook out.  Well, it did.  Try to remember when the only problem in the real estate market was the mortgage troubles of August 2007.  More than once in this space I opined that we would see huge improvements in year-on-year numbers once we got to October.  Unfortunately, reality intervened.  Here's what's happened recently.

In November in Somerset County, sales made dropped 21% over the same period in 2007.  Although the supply/demand ratio remained about the same (48% vs. 49%), the absorption rate tanked to 12.7 months, the worst by far since I have been recording numbers (since 2000).  Is this the end of the universe as we know it?  Not exactly.

It is customary for absorption rates to increase this time of year, as buyers back off from buying properties that have been on the market for a while.  Actually, the number of listings on December 1 were lower than last year, by about 4%.

People are waiting.  Interest rates are at last falling. Last week the national average interest rate for a thirty-year mortgage fell half a percent, resulting in a spike in mortgage applications.  In spite of a lot of bad press, there is some suggestion of confidence building, at least in Somerset County, but it is not as evident as in areas like Las Vegas, where the greatest "hits" were felt in real estate.  There, as in other areas hardest hit, "deals" are being made at very attractive prices.  Somerset County was never hit as hard as other areas, even some in New Jersey.  Our recovery will not be as dramatic, but it will happen.

Stay tuned.  I've been here before.  Now, if I can just find my trail of bread crumbs....