So, what do real-estate people think about the suggestion recently made by James Hughes that people not buy a house now—unless they are planning to live in the place for 10 years?
Hughes, a real-estate expert, is dean of the Bloustein School of Policy and Public Planning at Rutgers and believes that house prices are very high.
“You should always look for the long term,” said Colby Sambrotto, chief operating officer of ForSalebyOwner.com, the leading nationwide broker that charges fees, not commissions.
“Market-timing is hard to do. Besides, every time experts have said that you’re buying at a peak, prices have continued going up.”
Sambrotto, who works out of ForSalebyOwner.com’s headquarters in New York City, granted that the market has been cooling off recently in the hottest markets, including New Jersey.
“We could be transitioning to more of a buyer’s market,” he conceded. “But it’s not a cause for panic—no one should obsess about it. It’s not the pop of a bubble. It’s just a slight deflation.
“Houses are taking a little longer to sell, but it’s not disastrous.”
Also commenting on Hughes’ advice, Maureen Doyle, broker-manager of RE/MAX Properties Unlimited in Morristown, said, “I don’t agree. I think we’ll see continual appreciation, but it will be more reasonable. Just not the 7 to 12 percent a year appreciation we’ve seen over the past four or five years.”
Her arguments:
• Interest rates remain relatively low.
• New Jersey doesn’t have much land on which to build new houses.
Doyle concedes that the inventory of houses for sale has increased—up 20 percent in the past year, while sales have increased only 6 percent.
And houses are taking longer to sell.
Has the spike in energy prices had any effect?
Perhaps buyers are looking for places closer to work now, Doyle said. The farther east a house is, generally the more in demand it is. Chatham houses are pricier than those in Morris Township.
A colleague recently sold a house in Chatham for $100,000 more than the asking price—for close to $1 million, she said. One reason: The house was within walking distance of a train.
Is use of the Internet growing?
Absolutely, Doyle replied. A study by the National Association of Realtors found that more than 70 percent of buyers use the Internet to do research, and they buy faster than people who don’t use the Internet: in three weeks rather than in six weeks or longer.
Also in disagreement with Hughes: Dominick Prevete, regional vice president of Weichert, Realtors in North Jersey. “Prices won’t decline significantly, but we will return to single-digit appreciation next year,” he predicted.
The big change next year will be: Buyers will have more choices and less competition. There also will be fewer bidding wars.
He also predicted that interest rates will stabilize at a high 6 percent or at 7 percent—still reasonable for most buyers, he said.
Buyers who wait for the bubble to burst will learn that there was no bubble—and they may miss out on good purchases while waiting fruitlessly for prices to decline, he said.
As for sellers, Prevete said they will be more sensitive to marketing plans in view of the greater competition.
In the past, there might have been only one house for sale in a neighborhood; now, there may be competition. And sellers will have to learn to put more reasonable prices on their houses.
What about the rise in heating costs?
Buyers are more concerned about those costs, he reported. But he hasn’t seen sellers improving the insulation of their houses yet.
Among Sambrotto’s other predictions:
• As home sales soften, more sellers will turn to fee-only and discount brokers.
• The number of working real-estate agents will shrink.
• Home renovations will stress energy efficiency.
• Buyers will avoid storm-ravaged coastal areas.