Info for the New Real Estate Investor

Investing in real estate looks a lot different today than it did just a few years ago.  Real estate is still a solid investment, even since the bubble burst, but most investors go about it in ways they didn’t consider even just five years ago.  “Investing” used to be synonymous with “flipping.”  These days when someone asks his Glen Ridge NJ realtor about buying an investment property, he’s usually thinking about renting it.

Renting is a long-term way to make money from real estate.  It’s not as fast a profit as flipping a home could be, but there is more security in renting.  The market is strengthening but it’s no longer at such a peak that a flipped is a guaranteed sale.  Plus, there are benefits to renting that newly minted landlords may not even be aware of yet.

Tax Deductions
There are a lot of ways to maximize the money you make from renting a home and one of them is to investigate every tax deduction available.  Some are obvious and some may not have occurred to you.  Check with your tax professional to make sure you are getting the full benefits from your rental property.  Here is a sampling of deductions to get the discussion started.

Interest
This one is pretty well-known.  Every homeowner can deduct the interest from their mortgage, whether it’s on a rental property or primary residence.  This is quite often a large deduction.  You can also deduct the interest on loans used to improve the property

Travel
Every time you have drive to fix that faucet, you can deduct your travel expenses.  You can use the standard mileage rate deduction (around 55 cents per mile in 2009) or the actual cost of gas, repairs and so forth.  If your property requires you to travel long distances, you may be able to deduct the cost of hotels, airfare, meals and other related expenses. 

Contractors
The wages you pay to contractors and laborers to make repairs on your properties may also be deductable as a business expense.  You can do this whether the worker is your own employee or an independent contractor.

Depreciation
This is definitely an area to discuss with your accountant, but the depreciation of your rental property is deductable.  It’s a complicated formula that allows you to deduct a certain percentage each year for the first 27 years you own the rental.  This deduction can really improve your bottom line.

If you are thinking about investing in a rental property, look into the different types of deduction you may be able to claim before you call your Montclair NJ realtor.  What you learn may just give you the push you need to get back into the real estate market.

I’m very excited to report that a great new charity is born!  It’s called Baby Steps and it’s a clothing drive for children ages 0-4 who are among the 900 families living below the poverty line in the Montclair area.  The new or like-new clothes will be collected and given out to these families twice a year, in May and October.  The drive will begin this May, 2010.

How Baby Steps Was Born
This charity is both a grass roots and interagency joint effort among the Montclair United Way, The Salvation Army Montclair Citadel and local parents. It began with the parents, who often have so many clothes to dispose of as their babies and toddlers grow and who wanted to see the items go to the best use possible.  Many of them give the clothes to family members, friends or drop them in a bin – unsure of exactly where they end up.  Getting clothing directly into the hands of those children who need them most is a very exciting and simple way to help. 

Baby Steps will put the clothes directly into the hands of the local families who need them most.  These families already come to the United Way under the WIC Program (Women, Infants, Children) for food stamps, counseling and other services.  And The Salvation Army provides a host of services through the Emergency Assistance Fund for Families.

How to Get Involved
If you have some new or like-new clothing to donate for children ages 0-4, you can drop them off on Wednesday, May 12th at The United Way Building on South Fullerton Ave, next to The Montclair Public Library.   You will receive a receipt for tax purposes.  If you would like to volunteer some time to help sort through and give out the clothes, just contact me and we’ll sign you up!  If you would like to make a donation of money instead of clothing, your checks can be made payable to The Emergency Assistance Fund for Families and then The United Way and Salvation Army will put it to good use.  You may, if you wish, earmark the money for a specific purpose.

Baby Steps Clothing Drive Information

Clothing Drop Off Day: Wednesday, May 12, 2010   9:30-4:30pm

Location:   The United Way Building
                      South Fullerton Ave (next to library)
                      Montclair, N.J. 

Volunteer times:  Thursday, Friday and Saturday, May 13, 14 and 15th

A lot of buyers worry that the right house will never come.  But the right house always appears eventually.  And, buyers should be able to take as much time as they need find it.  But, one of the obstacles to finding it without spending two years looking and fretting is to begin eliminating as many communities as possible – as early on as possible – so that they can target the town that is perfect.  In a region like Essex County, New Jersey where there are so many towns to choose from in very close proximity, it’s easy to conduct a search in 5 or 6 of them at once.  However, one of the interesting characteristics about our area is that the towns are each very unique and different from one another.  They vary in their transit systems, their housing inventory, tax ratios, politics, goods and services, lot sizes, school systems, household income levels, parks and recreation programs, and so much more.

Steps 1 and 2
After getting pre-approved for a mortgage – which is the first thing a buyer should do – eliminating towns is the next step.  You might need a few weeks to target the top choice but the best way to get there is by ‘process of elimination’.  Finding the house is not that hard.  In fact, it’s actually the easy part, believe it or not.  Even if the community you choose is a little pricey for your wallet, you can always buy a smaller home and expand, or a fixer-upper and improve down the road. But you’ll never be able to change the address – or create services, beauty or amenities that just don’t exist in the municipality.  It’s better to buy a home that may need a little work in a town that you’re over the moon about then to buy a better house in a town that is just okay in your mind.  Once you’re in, you’re in. Like a marriage, you want to be 100% sure that you know what you’re getting into. 

How to Choose the Right Town
How do you judge a town?  Certainly, don’t judge it by looking at a bunch of attractive affordable listings on the internet.  I don’t care how great they are; those are just buildings.  They tell you nothing about the fabric of the community.  You can easily be compelled to go see one of those homes, get seduced by its charm and temporarily forget that the location makes your commute more difficult.  You’ll realize this, of course, the next day when you think it about it but, by then you’ve already wasted a Saturday or Sunday afternoon with your family by having gone to see this home.  I know that it didn’t cost you anything but your time.  But these hours of searching in the wrong towns can add up and wear you down – making your search a chore rather than the fun and exciting experience it should be.

Things to Consider
Just the way you have priorities for the house itself (location, size or condition), prioritize the towns by deciding what your top three criteria are.  Is the school system your highest priority?  Are lower taxes next?  Do you absolutely require proximity to major highways or business centers?  Once you establish these priorities, the decisions almost make themselves.  Some of the criteria to consider are:

• School rankings and/or teaching philosophy (Rankings don’t always tell the whole story.  Some highly ranked school systems have difficulty managing children with slight learning disabilities and you will pay extra for services.)
• Property taxes  (In many cases, you get what you pay for so when you see a town with ultra-low taxes, find out why they are so low.  There is always a reason.)
• Sports and Recreation  (How many parks are there?  What sports programs do they offer?  Is there a Community Center?  A YMCA?)
• Do they have their own Police and Fire Dept?  (Some small communities share with neighboring towns and they may be volunteer departments – as opposed to being paid by the municipality.)
• Where is the top of the market?  (How much do the most expensive homes in the town sell for?  Are you buying one of the best homes in town?  Or are most of the homes around you more expensive?)
• Who lives there?  (What’s the profile of the residents?  Are they mostly professionals?  Tradesmen?  Artists?  How does the town skew politically?  What’s the vibe?)
• Medical Services (Where is the nearest hospital, medical center or walk-in clinic?  How highly is it ranked?)
• Town Center  (Walk through it; talk to the shopkeepers to help get a vibe on the community)

There is a saying in real estate: “In the absence of proper pricing, no amount of marketing or advertising will sell your home.” You could have the most beautiful home in your community; have hundreds of buyers come through it; and advertise it all over the internet and in magazines and newspapers.  But, if the buyers do not perceive value at your asking price, unfortunately, they will not make an offer.

Of all the steps involved in selling real estate, pricing a home correctly is truly the most important.  And a well-priced home will always sell - in any market – because the buyers perceived value at the right number, and almost no value at the wrong number.  What I mean is, they won’t make any offer at all if they think the price is too high… not even a lowball offer.

Perception of Value Works
When you have created a perception of value with price, the home will also sell more quickly and at a higher number than if you didn’t.  Statistics show that the fewer number of Days that your home has been on the Market (DOM), the more money you’ll get for the property.  Conversely, the ultimate sale price goes downward the longer the property sits on the market.

I am not saying that you should under price or give your house away. Actually, I’m talking about strategic pricing. I am also saying that the pricing process has never been more complicated and home buyers in this economy are avid comparison shoppers. They will compare every detail of two similar homes priced in the same range.  If the buyers feel that the two properties are just about equal in most ways except in price, the odds are that they will put an offer on the lower priced home. 

How To Price
I’m sure you’ve heard of Comparables or, “comps” as the most popular tool used to price a home. Comps are listings of other homes which are similar to your in style, condition and location. I can perform and interpret a Comparable Market Analysis (CMA) for you.  But let me explain here how they work.

There are three types of comps:
Currently On the Market:  Those homes currently or actively on the market. Many, but not all, of these homes are available to see on the internet.

Under Contract But Not Yet Closed:  Transactions which are pending or which have gone under contract but have not yet closed. Until these transactions close, the under-contract price is usually privileged information and can only be gotten through private contacts or Realtors who keep themselves in-the-know.

Closed: These are transactions which have sold or closed. The sale price is now public information and is accessible to anyone. To be relevant, sold comps should not be more than about one year old and, even then, they may be irrelevant depending on how much the market is fluctuating.

Other Factors in the Selling Process
Other factors to consider when selling include staging every square inch of the home - including closets; broad exposure of the home to the entire pool of motivated and qualified buyers (with a big global brand name like RE/MAX; and having a very strong realtor with good negotiating skills to lead the deal all the way to the closing table.  Look for future blogs on these issues!

I get this question ALL the time.  I have clients who call me over to their home and ask what I think.  I also have buyers who ask if they should buy a smaller house and build an addition later.  I’ll discuss both scenarios – and tell you what I plan to do with my own living situation this year.

If You Already Own and You Need More Room

There are many questions to ask but the first and simplest is, ‘Do you love your location?’  If you don’t, forget the addition and just buy a bigger house.  It’s a huge investment to add on – not to mention the inconvenience.  Why bother investing in a spot that you may want to leave before the equity has increased enough to justify the expense?

But, if you do love it, that’s a good motivator for improving.  You can change just about everything about a house except the address. It’s possible that you might not find another location as good as the one you already have.  And if you have great neighbors and your kids have loads of friends on the street, it’s even harder to leave.

Structurally Speaking

Is a doing an addition structurally prudent?  If all the homes around yours are about the same general size, it could be a huge mistake to build a big addition – making your home the largest on the street.  Most buyers are hesitant to purchase the largest house in the neighborhood.  In fact, buyers often lean the opposite way and purchase the smallest home on the best street they can find.  It’s important for resale value that your home be ‘amongst its peers’ and not stick out like a sore thumb.
How Much Does an Addition Cost?

A local contractor recently told me that the cost of building an addition in the Montclair, New Jersey area is $120 – $140 per square foot.  For a 1,500 sq foot addition, that’s $180,000 – $210,000.  And that’s before you pay for appliances, light fixtures, sinks, tubs, toilets, flooring and carpeting.  Financially, the cost of borrowing money right now – to buy or to build – is extremely low.  However, if you will owe more than 50-60% of the new value or worth of the home after you put an addition on, be very careful about moving forward.  You may need to stay in the house a very, very long time for the renovated house to appreciate enough to sell and not cause you to lose money.  This scenario was one of the major cautionary tales of the subprime crash.  Over-improving caused millions of Americans to go into foreclosure or to declare personal bankruptcy.

The best advice you can get is to call in a realtor before you make this momentous decision.  Let him or her tell you whether or not it’s advisable and what it might be worth when the addition is complete.  Best of all, the realtor’s advice is free so you have nothing to lose by doing your homework.

If You’re Looking to Buy a House and Add on Later

First, congratulations on buying a home right now.  We will probably never have a better climate  in which to buy real estate than today.  It’s a virtual candy store out there with loads of inventory to choose from.  That said, the market is improving in Montclair, Glen Ridge, the Caldwell’s, Verona and other towns in Essex County, New Jersey.  The window of opportunity will close.  Interest rates are already bouncing back up over 5% and expected to climb steadily throughout 2010.  A fraction of point climb can make a big difference in your monthly mortgage payment.

What I’m Going To Do in 2010

So, what size home should you buy?  Should you purchase small and add on later or – buy as big a house as you can find?  I’m actually a potential buyer myself right now so let me share my plans with you as a way of answering the question. I currently own a home and am looking to trade up this year and am planning on making location my #1 consideration and size the #2 factor.  I am much less concerned with the interior condition because I know that I can always improve it over time.  Personally, I’m not really interested in dealing with the hassle of an addition.  I don’t want to spend the money to move walls around and spend months living amid debris and dust – or worse, spending thousands of dollars on a short term rental to move into while the work is being done.

I want a bigger house in a fabulous location and I’ll save loads of money for two reasons. First, I’ll buy my ‘forever’ house at a record low interest rate and second, I’m not going to pay a premium for someone else’s ‘move-in condition’ home.  I’ll make the interior upgrades myself, even if they are somewhat inconvenient. But, they won’t be nearly as inconvenient as building an addition.  So, bring on the old kitchen and bathrooms!  Just give me size and location – and let the contractors go build an addition for someone else!

I – and many of my colleagues – believe that local real estate is poised for a very active Spring 2010 market (mid-late January through June).  Some people are not so sure of this and point to the high levels of inventory that will come on the market – with both new listings as well as those which were withdrawn in 2009 and will return to the market in 2010.  However, those of us working with buyers know how much pent-up demand there is from 2009 and that the demand will likely grow in 2010 with brand new buyers entering the marketplace.

The good news is that the local real estate market appears to be more stable.  There are still some headwinds coming in 2010 and I will discuss them later in this blog. 

Local Real Estate Market
In Montclair, Glen Ridge, Verona, Bloomfield, Cedar Grove, Essex Fells, The Caldwell’s, West Orange, South Orange and Maplewood, New Jersey, homes are selling – right now.   Well over 200 single family residential properties went under contract in the month of December alone. Fully 90% of them were listed below $800,000 which is likely a reflection of the homebuyer tax credit which caps out at that purchase price. Personally, I can’t recall any December where I have shown this many houses – in all price ranges (luxury included).

New Jersey (and Northern N.J.) Real Estate Market
New Jersey, and northern New Jersey in particular, is in the front of the nation in terms of stabilization.  Home sales and home prices in most counties have stopped falling and in many counties, are actually up. But we are still in a varying month-to-month performance trajectory. Earlier this month, Patrick O’Keefe of J.H. Cohn in Roseland said, “I think it’s apparent in the data that the April point was the bottom. But the improvement since then – here in North Jersey area – has not been an unbroken upward line.”
Even in the very hard-hit new construction sector, the CEO of Hovnanian (New Jersey’s largest home builder) reported more price stability and a narrowing of it’s 4th quarter losses.

New Jersey continues to be a popular area for first-time homebuyers with 52% of sales attributed to them vs. 47% nationally.

National Real Estate Market
The Case-Schiller index (used by the Wall Street investment community to gauge the health of the real estate market) reports that home prices in 20 cities are up for the 5th consecutive month with San Francisco experiencing the biggest month-to-month gain.

Refinancing, as you might imagine, is also way up.  Wells Fargo is reporting a 55% increase(!) in current homeowners refinancing from 30 yr down to 15 yr mortgages.  Of course, they were driven by low interest rates but no matter how you look at that, the monthly payments are going to go up for that homeowner. It’s not only a smart move but it also reflects a considerable measure of confidence.

The Headwinds Coming in 2010
The first half of 2010 is expected to remain a challenge for real estate.  Among the particular headwinds we face in the coming months are:

Job Market:  The jobless rate is expected to be above 10% through the first two quarters of 2010.

Foreclosures:  Expected to remain a major issue in 2010.

ARM’s:  Many adjustable rate mortgages purchased in the run-away market will be ‘re-set’ in 2010 to higher rates – possibly leading to more foreclosures, short sales or personal bankruptcies.

Interest rates:  At the end of March, 2010 – the Federal Reserve will end its $1.25 trillion program of buying down interest rates– setting the stage for their steady climb the rest of the year.

Homebuyer Tax Credit:  This significant government tax credit for first time and current homeowners will conclude on April 30, 2010

If you’ve ever wondered why certain sellers (and buyers) need to close on a home before December 31st, here’s yet another good reason why. The latest gift to come out of Washington is the brand new rule that applies to widows and widowers selling real estate.  It used to be that a widow or widower had to sell a property in the year of the last jointly filed tax return if the survivor wished to exclude $500,000 from the paper profit on the sale.  This usually meant selling the home in the same year as the spouse’s death.  If the surviving spouse waited longer, he or she could only deduct $250,000 from the paper profit on the sale.

The new rule now allows widows and widowers to sell within two years of the death of a spouse.  It’s a good extension but it still requires widows and widowers to watch the clock.  I wish they’d made it three years instead of two, giving them more time to recover and make clear-headed decisions.  I’ve sold many homes for widows and widowers and it’s a very emotional process for them and you can just see that the weight of the world is on their shoulders. 

The Home Buyer Tax Credit

Another year end trick – if you qualify for the home buyer tax credit and close before December 31st – is to file and amended 2008 tax return and get your money back within weeks instead of waiting to file your 2009 returns.

To qualify for the home buyer tax credit, you must find a home for under $800,000 and be under contract by April 30, 2010 and close by June 30, 2010.  To be considered a first-time buyer, you must not have owned a home in the last 3 years and you may then take up to 10% of the value of the home capping at an $8,000 credit.  The benefit starts to phase out when your income reached $125,000 and is gone altogether when your income is $145,000.

If you already own a home, you must have lived there for 5 consecutive years of the last 8 and the credit begins to phase out when you earn $225,000 and disappear when you earn $245,000.  Your tax credit caps out at $6,500.

A Word on Interest Rates – and a Rant by Katie on Moving the Goal Posts

The Federal Reserve is keeping interest rates historically low – which are currently about 4.81 percent on a 30 year fixed loan.  With three more months left in the program to hold them down by buying massive amounts of mortgage-backed securities (1.25 Trillion) and debt ($175 Million) from our old friends at Fannie Mae and Freddie Mac, they may (repeat ‘may’) extend that program beyond March.

I hope they don’t do it and instead, end the program in March – as planned. Let me start my rant by saying that, in my opinion, Fannie Mae and Freddie Mac are just as equally responsible for the sub-prime crash as the diabolical knuckleheads who invented ‘credit default swap’ products.  Did you know that apparently 80% of the banks in the U.S. who underwrote home loans used Fannie Mae’s and Freddie Mac’s in house software program that gauged how much a buyer was able to spend and how likely he was to keep up his mortgage payments?  Yeah – that was them.  Good program, guys.  It would be funny if it weren’t so dangerous.  Before the crash, there was a very real ‘perception’ out there that Fannie Mae and Freddie Mac were government-controlled companies.  Of course now they are indeed controlled by the government due to their incompetency, but before the crash, they were not.  They were private institutions which received tremendous amounts of latitude from the U.S. government and were operated by highly paid corporate officers making enormous amounts of money. 

Since these institutions are now controlled by ‘the people’, we don’t want to punish them.  My reasoning for wanting the Fed to end the program on time comes from spending time with and talking to buyers and sellers all day long – and has to do with the old adage about moving the goal posts.  If these programs keep getting extended, sale prices will never hit their natural ‘bottom’.  Buyer’s still have a low sense of urgency and keep waiting for the ‘bottom’ of the market to come.  If the Fed keeps extending its program to keep rates down, buyers will feel even less urgency and home prices won’t hit bottom for another year or more.  It’s true that the program has been good for business but that’s because when it was announced, there was an end to it – a deadline – which made buyers feel urgency and drove them to act.  If the end date keeps changing  – and it drags on an on – then the very people it was designed to motivate will become unmotivated.

For a quick article on the interest rates and the economy, click on the link below.  And Happy Holidays everyone!

http://www.huffingtonpost.com/2009/12/16/fed-interest-rates-held-f_n_394798.html

The Montclair public school system is just buzzing with activity.  At the top of the agenda is the new Washington elementary school opening this September.  There has been much debate among residents, parents, students and educators as to how to best utilize the school.  The whole idea or goal behind building the school was threefold:

1. To reduce elementary class sizes district-wide.
2. To find a permanent home for Renaissance Middle School, which has been leasing space on Munn Street for years.
3. To bring back our special education students who are currently being educated outside the school district. 

On December 7th, the Montclair Board of Education voted 6-1 to move the Rand Elementary School population into the Washington Street School and to move the Renaissance Middle School population into the Rand building on North Fullerton. Shirley Grill was the lone dissenting vote but the results were otherwise met with a standing ovation among the 100+ parents and residents in attendance.

Board of Education Appointment

I (and my colleague, Chris Lane) have been appointed by Dr. Alvarez – the Superintendent of Schools – to his newly created Communications Committee. The committee is designed to hone and better deliver the message of the Montclair Public School System – through many channels – to residents, parents, students, newcomers considering moving to Montclair, colleges and universities, as well as the media.  

I could not be more excited at the prospect of volunteering for the community in this capacity.  As a Montclair High School graduate (no need to mention the year!) and also having attended Bradford, Mt. Hebron and Glenfield, I am particularly excited to give back to the system through which I came, and in which my son is now enrolled.

In January, the committee will make a presentation – for a broad plan of action – to the Board of Education.  Look for future blogs on this topic.

School Tours, Registration and Parent Notification Schedule

Elementary schools will be open for tours during regular school hours the week of February 1st – 5th.  There will also be evening visitations that week and into the week of February 8th – 11th.  Please review the 25 minute video presentation, “Our Schools, Our Town”, on the district’s website ay www.montclair.k12.nj.us

You may pick up an information packet at the Montclair Board of Education office at 22 Valley Road.

Middle School tours take place January 11th – 14th.

Registration for new students held at 22 Valley Road is the week of March 8th – 12th.

The deadline for submitting school choice is May 1st.

Parents a re notified regarding K-5 school placements by July 1st.

You might think that real estate grinds to a halt as the holidays are approaching.  It’s not true.  In the last month alone, Montclair had 25 homes go under contract.  Verona had 10.  South Orange and Bloomfield each put 13 properties under contract.  And, West Orange homeowners accepted offers on 28 homes.

What Kind of Buyers Are Actually Shopping For a Home Now?

Motivated buyers; that’s what kind!  The buyer pool does indeed get a little smaller at the holidays but it does not disappear.  But what’s most noteworthy is that those who are still out there shopping are very serious buyers.  Many of them want to (or must) close by the end of the year.  Beginning in November, it’s very common for sellers to receive offers with a designated closing date of December 28th or 29th.  And January is statistically the most popular month for relocations.

Many sellers think that their home will not sell over the holidays.  It’s true that sales slow down in the second half of December but that is mostly because the real estate industry has – over the years - come to think of Christmas and Hanukah as ‘down time’.  In other words, it’s really the realtors who – historically – have advised sellers to just wait until January to introduce a new listing.  So, ‘new’ inventory coming on the market at holiday time can be scarce.  With January only  a couple of weeks into the future, most sellers don’t mind waiting to list then when buyers begin to return to the market in greater numbers.  But then again, new listings flood the market in greater numbers, too.

Another upside of being on the market over the holidays is that, because inventory shrinks, there are fewer homes for these very serious buyers to look at.  Those homes on the market really get noticed and considered.

Note to Sellers

There is one scenario where – as a seller – it is wise to withdraw a property at the holidays and re-list in January or February.  That is when it has been on the market for a few months without selling.  The holiday season is a natural break period to remove it and re-introduce it as a ‘new listing’ (hopefully at a new lower price and with an improvement or two) after the New Year. Even though the real estate community will remember the property, it will begin the New Year with zero Days on Market (DOM) on the listing sheet.  A high DOM signals buyers that, either the property is way overpriced and they can make a lowball offer or worse, that the sellers are unrealistic and inflexible.

Note to Buyers

The next 4 months will be very active in real estate because so many buyers are trying to take advantage of both the U.S. home buyer tax credit which requires that the buyer be under contract by April 30, 2010 and close by June 30, 2010.  They will also be motivated by the last few months of the fed buying down interest rates.  We don’t know exactly when this will end, but it will end.  Afterward, it is possible for rates to climb at an accelerated pace.  Most experts agree that inflation is coming at some point in the not too distant future.

As I wrote in my blog about the entire state of New Jersey, suburban Essex County is among the counties experiencing a stabilization meaning, home prices are no longer falling. That’s the good news. Jeffrey Otteau, of the Otteau Valuation group – the foremost expert on New Jersey home values, says that we will experience a slow and steady recovery in Essex County with the worst of the decline behind us. But, it will take some time (years) for prices to reach the levels they once were at the height of the market in 2005.

Glen Ridge still has strong demand and the low levels of inventory. Many homes are selling there and it’s among the most swiftly moving towns in New Jersey in terms of number of days on market. The beautiful community of Essex Fells, once nearly frozen in sales, is among the most improved locales in the entire state in terms of recovery. By the way, their exclusive elementary school may soon be absorbed into the West Essex Regional School District. Small class sizes will likely remain the same but they will lose control of the curriculum.

Montclair is once again experiencing bidding wars, mainly in the $400k-$700k range although bids are not as high above the asking price as they once were in 2005. Most homes are still taking some time to sell. Of those homes currently under contract in town, average days on market was 82 and half of them were listed between $650K – $3.5 million. With some of the most impressive homes in Essex County, Montclair is trying to find the new “top of the market”. The most expensive home sold in the last 24 months traded for $3,622,000. Michael Strahan’s house, once listed at $7,750,000, is now on the market for $5,795,000. Comparatively, best selling author Dorothy Benton Frank’s magnificent stone manor home will give it a run for its money listed at $4.2 million. Stay tuned for developments.

West Orange has an enormous amount of inventory and is having a hard time, experiencing the highest amount of homes for sale in suburban Essex County - over 300 homes. However, even they are experiencing some swift sales among homes that are priced correctly – to reflect the market. Also, the recent purchase of a home in Llewellyn Park by Whoopi Goldberg should boost that exclusive gated community.

Of the Caldwell’s, North Caldwell has the most expensive inventory that is under contract with nearly half of it in the $1million – $1.6 million range. However, average days on market is 160. Comparatively, both Caldwell and West Caldwell housing is taking about 70 days to sell but with most of the ‘under contract’ homes selling between $300 – $600K.

Verona homes are taking 105 days to sell and current under contract sales are averaging in the $400 range.

South Orange is taking about 71 days to sell and most of the under contract housing is in the $300-$500K range.

Maplewood is less expensive with most of the under contract houses in the $200-$400k range and taking 83 days to sell.

Bloomfield’s average days on market is 130 and has nearly 200 homes currently on the market. Of those under contract, only 6 are listed above $400K.

I’ll blog about the state of the market on a quarterly basis so look for updates.