After a September in which we saw the re-listing of new construction skew the market unfavorably, October experienced a return to continuing steady improvement in the market.  The two major activity indexes - supply/demand ratio and the absorption rate - both improved over the preceding month and the comparable month in 2008.  In fact, the supply/demand ratio jumped to its highest level this year - 85%, a good sign indicating that fewer listings are coming on the market as more homes go under contract.

The absorption rate fell to 7.7 months, definitely better than the 10.2 months of September's skewed number, and better than the 8.1 months of October of last year.  The number of sales made each month has averaged over 30 for the year, but that is still significantly less than the 40+ seen in prior "boom years."

Prices seem to have stabilized in Hillsborough, as in the rest of Somerset County.  The extension and expansion of the homebuyers' tax credit has given added courage and impetus to buyers who have been sitting, watching, from the sidelines.  The real estate market in Hillsborough is definitely improving.

The first-time homebuyer tax credit, due to expire on November 30, has been extended and expanded.  Under legislation signed today by President Obama, first-time homebuyers have until April 30, 2010 to enter into a firm contract for the purchase of a home, and must close on it by June 30, 2010.

In addition, people who already own a home and have lived in it as their primary residence for at least five of the last eight years may be qualified for up to $6500 in a tax credit.

Income limits apply, but they have been raised in the case of the first-time home buyers.  For more information click here.

The real estate market should experience a good winter and spring!

The real estate market in Hillsborough took a step back in September, unlike the Somerset County market as a whole.  Part of the problem is the fact that Hillsborough right now has nearly a quarter of its listings in the $750,000+ price range, a range not noted for its strength currently.  Additionally, of those 60 or so listings above three-quarters of a million dollars, the overwhelming majority are new construction, including Toll Brothers developments, a Beazer Homes development, and several smaller builders with big expectations.  As a consequence of this relative glut of new construction (which builders re-submit to the MLS periodically), the absorption rate has risen to 10.2 months, compared to 7.8 months last year, the supply/demand ratio has sunk to 39%, compared to 55% last year.  That includes re-sales as well as new construction.

However, there is good news in the market.  Last year at this time the entry-level (under $300,000) was in bad shape.  There were 88 listings and just 12 pendings at that time.  This year, entry-level homes are selling much better - with 87 active listings, there are 35 pendings - nearly three times the number of October 2008.  That price level and the next one up ($300-500,000) are now very strong.  This activity suggests that the first-time home buyer tax credit plan is working, driving the market for entry-level and first trade-up buyers.

Generally, if the new construction is factored out of the market in Hillsborough, the absorption rate is a couple of months better.  And just to make a point of why to factor it out, builders may put in their entire development - anywhere from a handful to fifteen homes - in essence, competing with themselves, and increasing absorption rates and decreasing supply/demand numbers.

Anyway, the Hillsborough market bears watching over the next couple of months, since there usually is a seasonal retreat, but there may be an improvement over the market of a year ago.