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 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.

With the release today by the National Association of Realtors® of their cheerless report on the "national market," showing a decline of 2.7% in sales from July to August, it is important to observe that Hillsborough, NJ bucked that trend.

In August of this year there were 37 sales made, compared to 36 in July of this year, and 36 in August of last year.  This year the market seems to be on the rise, while last year at this time the market was spiraling downward.  From May through August this year we have seen a steady, but small increase in sales made.  Even more important, the absorption rate continues to decline, moving closed to the "balanced market" which is usually regarded as a six-month supply.  It is currently 6.8 months, after a disastrous January that say a 20.6 month supply.  That was ugly.

The median sale price so far this year is $330,000, compared to $345,000 for all of last year, a 4.3% decline overall.  The inventory of unsold properties is within two units of last year at this time.  So, are we seeing a reply of last year?  I'm inclined to say no.  The death spiral of last year was in the opposite direction of what we're seeing right now.

Who can accurately predict the market in Hillsborough?  No one.  However, if you're thinking of buying or selling now, it is best if you have a market-knowledgeable Realtor® on your side.  Any names come to mind?