The first three quarters of 2008 in Somerset County, compared to the first three quarters of 2007 are very illustrative of two different real estate markets.  For the most part, the first nine months of 2007 are a picture of a market that had slowed over the peak of 2005, but one in which the subprime market had yet to take a toll. 

The first nine months of this year, however, are a different situation entirely.  The subprime collapse has affected this market significantly.  The number of closings through September 2007 was 3197, in 2008 just 2401, or nearly 25% fewer.  The average sale price skittered downward a bit more than 5%, from $496,734 in 2007 to $470,360 in 2008.  Even the median sale price drifted downward a bit under 4%, $385,000 vs. $370,000.

Yet, Somerset County real estate prices have not fallen as much as the media would like the public to believe.  Volume is down, no question about it, but prices in this atmosphere of shock and stupor are nowhere near the stunning declines of Florida, California and Arizona.  Homes in good condition priced well are still selling, some with multiple offers, and some municipalities are doing better than others - like Hillsborough, for example.  More about that tomorrow.

OK, so the "light at the end of tunnel" was another train.  Like most of America, I am now peeling myself off the tunnel walls to which I was plastered by the on-rushing fast freight of The Financial Crisis (worthy of capital letters, don't you think?).  There is cautious, very cautious, optimism out there.  But before we get too involved in what might be, let's look at what the market in Somerset County did in September.

In a nutshell, September 2008 was not much unlike September 2007, with listings taken (547 vs. 608), and two more sales made (239 vs. 237).  The number of properties available for sale on October 1, was 2402 this year, 2453 in 2007.  There was a 4% drop in average sale prices this September over last, and for the year Somerset County average sale price is $469,730 vs. $498,302, or nearly 6% lower than last year.

The supply/demand ratio was lower in September than in August by just a bit, but the absorption rate climbed to 10.1 months from 9.4 months in August.  However, it was lower than September of 2007, when it was 10.4 months.

The general financial horrors of September probably are not reflected in the sales made numbers.  Consumer confidence is reputed to be crucial to the improvement of the American economy.  The financial rescue plan signed on October 3 should generate an increase in that confidence level, but it will take several months for substantive improvement to work its way through the system.  In the meantime, if you are thinking about buying or selling real estate in Somerset County, New Jersey, be in touch with a Realtor® who is in touch with the market.

When I was a college student at Macalester College shortly after the Earth cooled, I studied political science with G. Theodore Mitau.  Ted Mitau was incredibly savvy, and we enjoyed his excitement with politics and his personal connections with liberal lions like Hubert Humphrey, Orville Freeman and Walter Mondale.  In addition, a fellow student in my international politics classes was an Ghanaian exchange student by the name of Kofi Annan.  It was a lively time.  One of the most fascinating notions Ted Mitau put forth was a great truism, perhaps a very old truism, but nevertheless great stuff for a college student: every politician in office is faced with the challenge of voting his or her conscience, or voting his or her constituents' wishes.  In other words, do people elect politicians because of the politicians' views or because the constituents believe they, the constituents, will direct the votes of the politicians?

We witnessed today congresspeople caving in to their constituents' opinions, however ill-informed they may be.  Millions of Americans sent emails and letters and made phone calls to their representatives saying in essence "this is a bad thing because it bails out Wall Street; don't pass it."  The House decided that it was important to obey The Will of the People, and voted down the bailout bill.  A cynic might say that the representatives needed the cover of a Wall Street crash in order to go against The Will of the People.  It would allow them the incredible luxury of not understanding the bill, and letting The Market make the decision. I truly doubt that the majority of American voters understand the rescue plan.  Indeed, the majority of our elected representatives probably don't fully grasp the fine points of the bill.

Well, The Market made the decision.  More than one trillion dollars disappeared from the pockets of Main Street so that Wall Street wouldn't get a 700 billion dollar rescue.  Since it will be two more days before the Congress can re-address the rescue plan, will there be a loss of a trillion dollars each day?

We need some profiles in courage here, folks - courage that was conspicuous by its absence today in the House.