Suddenly, the real estate market in Montgomery Township, NJ, seems to have caught fire.  June seems to have been a breakout month, with sales made outnumbering listings taken, for a supply/demand ratio of 113%, the highest in several years. At the same time, with inventories about 20% less than 2007, the absorption rate dropped to 4.2 months, into the seller's market category, the best since February 2006.  Average monthly inventory was 128 homes, compared to 149 in 2007.

The number of sales written in June was identical to the number in June 2007, and the number of sales closed was also identical for June in those two years.  In fact, the number of sales written was 40% higher than June of 2006. Still, that number was off 16% over the first two quarters of 2007.

The average sale price in the first two quarters of this year is $591,177, 3.3% lower than the $611,647 for the same period in 2007. It should not come as surprising news that as sellers adjust their prices and/or expectations to reality, homes sell. Homes ARE selling, and the Montgomery market is recovering. 

Since it is a relatively small market with many higher end ($800,000+) homes, with fewer than 300 sales per year, Montgomery can see some wild variations from cold to hot and vice versa with just a few sales difference. 

The news on Friday that the Federal Deposit Insurance Corporation (FDIC) was taking over IndyMac Bank should not have come as any great surprise. 

Why no surprise?  As far as I am concerned, IndyMac was the poster child for irresponsible lending (and borrowing).  In my experience as a real estate agent for nearly 30 years, marginal borrowers could always find a loan at IndyMac, regardless of their income.  IndyMac specialized in "stated income" loans, the so-called "liar loans."  Potential borrowers would simply state their occupation and income, without providing any documentation or verification.  This would allow people like independent contractors to obtain mortgages, but it also was open to outright fraud.

When a buyer of one of my listings resorted to IndyMac for financing, I held my breath until the closing.  They usually closed, but not without a lot of, shall we say, excitement.

Senator Charles Schumer (D. New York) has taken a lot of heat for suggesting in a letter of June 26 that IndyMac was in trouble.  So, he's blamed for the Emperor not having any clothes on?  Or for the heavily-made-up pig?

The bigger surprise is that IndyMac held on this long after another lender, Countrywide, fell into a hole.  The FDIC claims that it has 90 institutions on its list, and it has been reported that IndyMac wasn't even on that list.  That's scary, but we live in scary times.

Last week in this space I wrote about the May numbers for Somerset County, New Jersey, and how they were a bit disappointing.  Absorption rate increased, and supply/demand ratios decreased for the first time this year.  Two days ago the National Association of Realtors® released their May pending home sales numbers, and described the same scenario for the so-called "national real estate market."  Because of the scope of their research they always lag behind my reports, but I find it intriguing that the dynamic was the same in Somerset County as across the country.

The good news is that June pending numbers in Somerset County have already improved, as I pointed out here last week.  Supply/demand increased to 57% and absorption rates fell to 7.2 months.  As I pointed out then, the real estate market is "definitely on the mend."

Although all real estate is local, and local market conditions are most important to buyers and sellers, it appears that Somerset County has become pretty much reflective of many markets across the country.  Perhaps next month NAR's figures will show the recovery we've already noticed in Somerset County. 

Stay tuned....