Screaming headlines were back this week, not the least of which was USA Today's "Housing market just gets uglier" on Wednesday.  Of course, they were bleating the findings released by Standard & Poor's Case-Shiller index for the first quarter.  IT'S MAY, FOLKS!  But of course Case-Shiller trails the market, measures only a small part (20 metro areas), and was constructed to create fear and sell hedge funds.

As I have said often in this space, year-on-year numbers will remain down until October (and reported in November).  The mortgage implosion peaked in August of last year, so until that month sales were down only a bit, but as soon as it became evident that it could become increasingly difficult to get a mortgage, the market died (or at least went into a coma).  That hit was also evident this week (buried in the same "ugly" article in USA Today) in new home sales for April that were an improvement over March of this year, but year-on-year were down significantly.  March was horrendous in new home sales because those March closings were most likely Fall contracts, diminished because of the mortgage issue.  Re-sales take less time to close (2-3 months), so we saw the bottom of the pit in January for those Fall contracts.

These are all hypothetical "national real estate market" numbers.  The media will continue to apply those numbers as though they affected every single market in the United States.  Hey, if it's snowing in New Jersey, do residents of California look for their snow shovels?  Just as there is no national weather, there is no national real estate market. 

Look local for news about the market that affects you most.  Watch this space. (Shameless plug).

In a Realty Times article today Blanche Evans points out that banks are "turning the clock back to 1975," when higher downpayments were required to purchase a home.  This comes on the heels of FNMA's abandonment of their "declining markets" policy just ten days ago.  So what's happening here?

Fannie Mae and Freddie Mac can renounce any policy they want with regard to markets, but if the discussion is about downpayments of less than 20%, the private mortgage insurance companies are the ones making the rules.  In fact, it seems that those companies are less concerned about creditworthiness of borrowers than about the local market.  There is anecdotal evidence that people with superior credit scores (over 800) are still experiencing difficulties obtaining mortgages with less than 20% down.  Those mortgage insurance companies are still smarting under some huge losses (real and anticipated), and want to remove all risk.

Continuing risk avoidance on the part of mortgage insurance companies will lead to continued paralysis of the market.  What will break this logjam?

The real estate market in Hillsborough NJ continues to improve.  Activity in the various price ranges has changed in the past two months.  In March, the middle price range, from $500,000 to 700,000, had a pending/active ratio of 15%.  Currently, that price range's ratio has increased to 21%, still far short of a "balanced market" of 50%, but an improvement.  Some of that growth was at the expense of the low middle ($300-500K), which dropped from 24% in March to 21% this month.  The entry level (below $300K) continues at 26%, the strongest segment of the market.  The upper middle, from $750,000 to $1,000,000, continues to stagnate; in March it was 7%, now 5%.  In real numbers there were and still are 42 active listings in the price range; in March there were 3 pendings, now only 2.  This is largely new construction, and constitutes a lot of inventory to be absorbed.

Overall, the ratio is 21%, compared to 20% in March.  The median list price of actives now is $439,000, and of pendings, $359,900.  Both numbers have increased since March, but the pendings a lot less than the actives.  Many sellers remain convinced they can get "their price."

The outlook for real estate in Hillsborough is good.  It is a solid market with new construction inventory at its upper end, inventory that will move slowly.

To see all the activity in terms of price ranges, click here.