There is widespread agreement that the real estate market will improve this year.
Local and national realty forecasts, however, vary considerably regarding when, where and in what segments long-sought growth will appear.
The National Association of Realtors outlook provides a good baseline. It predicts an 11 percent rise in existing home sales in 2010 to 5.7 million, and a 3.4 percent increase in U.S. median home prices.
NAR expects the sales surge to begin strongly in the first quarter, peak in the second quarter and retrench in the third quarter before finishing 2010 nearly back at its earlier high.
Home prices are forecast to increase through the third quarter before returning to springtime levels.
Carol Anderson, who on Tuesday will be sworn in as 2010 president of the Cape May County Association of Realtors, said federal subsidies for homebuyers and traditional seasonal effects will be factors early this year.
“We expect to see another surge in activity once we get through January,” a month many spend further south and those who remain hunker down, Anderson said. “I think we’re going to start to see people being serious again after January.”
She said that’s when the effects of the extension of the tax credit for first-time homebuyers and the new credit for buyers who own existing homes will start to be felt.
The $8,000 credit for new buyers produced the biggest sales increase in three years in November, when it was set to expire. Now that the federal government has extended it through April, Anderson expects it to motivate another batch of would-be homeowners.
This time, adding to the stimulus will be a tax credit for buyers who have owned a home for five consecutive years in the last 10.
“Now it will be even better, with the $6,500 tax credit available to current homeowners, whether they are stepping up or downsizing,” Anderson said.
At her office, Coastline Realty in Cape May, she said potential buyers right now are looking at second and investment homes locally and in the Wildwoods.
Richard Shaffer III, president of the Atlantic City & County Board of Realtors, said this year’s spring season, normally the busiest of the year, will see more buyers than last.
“We’ll still have the tax credits through April, and hopefully that will thin out the inventory,” he said.
Shaffer said he’s more concerned about home prices than sales, which already have improved. He expects to see prices start increasing by the end of 2010.
Real estate forecasts for local markets suggest southern New Jersey will recover more slowly than elsewhere.
HousingPredictor.com’s 2010 forecast sees home sales rising in New Jersey, but undercut somewhat by residents fleeing the state’s difficult employment market and high taxes.
In Atlantic County, HousingPredictor expects increased sales driven by the tax credits in the spring, then tapering off into summer. Home prices are forecast to fall another 13.1 percent this year, and in Cape May County, another 10.3 percent.
Mike Colpitts, president of HousingPredictor, said Tuesday that the company spent two years developing a system for analyzing 20 characteristics in more than 200 metropolitan markets nationwide, beginning its free online forecasts in 2006.
“We wanted to offer an independent housing forecast that’s not biased,” Colpitts said. “Our target market is consumers, but we have a lot of real estate agents, mortgage lenders and builders who watch the site closely.”
HousingPredictor says Atlantic City’s condo market is particularly stressed, with some newly built units selling for nearly half their original asking price.
A look at condos on Zillow.com confirmed the weakness, with many units remaining on the market for more than half a year and those that sell often fetching prices well below estimated value.
At a condo complex on Ventnor Avenue, for example, the 10 units for sale have been on Zillow from 52 to 216 days. Three that sold in 2009 went for an average 49 percent below Zillow’s estimate of their value.
Four condos for sale on Montpelier Avenue have been on Zillow from 61 to 214 days. Four 2009 sales there averaged prices 27 percent below Zillow’s value estimate.
East Brunswick-based Otteau Valuation Group predicts a robust spring home sales surge in New Jersey and modest price increases in 2010, fueled by low interest rates, the tax credits, an improving economy and slowing job losses.
The group’s breakdown of New Jersey counties, however, sees particular weakness in southern New Jersey, with enough unsold housing inventory that more than a year would be needed to sell it at current rates.
Through October, Atlantic County had 13 months’ supply, and Cape May, Cumberland and Salem counties 18 months each — the highest supply levels in the state, which overall had nine months’ supply.
Regarding new home construction, Otteau Group is more optimistic, expecting a strong post-recession increase. Within two years after the recessions of 1982 and 1991, building permits increased 45 percent.
Grubb & Ellis Co., a commercial real state services giant based in California, says a slowdown in southern New Jersey’s office space market that began in 2008 has likely reached bottom and modest gains in rental rates for Class A space are possible in 2010.
The firm’s outlook, which focuses mainly on the western side of the region, expects tenants to continue to seek short-term renewals until economic conditions are more favorable for expansions.
Wherever and whenever the real estate recovery takes hold locally, it will be welcomed by an industry made hungry by two lean years, Anderson said.
“We’re looking for the positive. It’s been hard for people making a living at real estate in 2008 and 2009, and now it’s time to grab our profession and go with it,” she said.
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