This is the time of year when the list of home sales from the spring selling season are closing. So, what did we learn in this 2014 post-Sandy real estate environment? We learned that values have stabilized for the most part and mortgages are readily available at historically low rates.
The biggest complaint from buyers and Realtors is that there isn’t enough good, quality inventory. Even the supply of short sale and R.E.O. listings are dwindling. Properties that can be flipped are still very popular, and there is a lot of competition among potential buyers. Post storm construction is lively in the shore areas and builders are busy with knockdowns and “add-a-level” construction up north. All in all 2014 will have been a rather healthy real estate year for New Jersey.
We can anticipate similar activity in 2015, but the mortgage melt down, subsequent declining values and the storm left their scars. Lenders and purchasers are proceeding with a greater degree of caution. Appraisers and home inspectors are more closely scrutinizing each property, and they should. Sellers and Realtors are afraid their deals will be killed during the due diligence period. I find that many appraisal reviewers are using satellite technology to determine if any offsite conditions will affect the value or marketability of a property.
At one time a shared driveway on a busy street or an adjacent gas station may have raised some concern. Now the list is huge. A lender can now see how far a property is from major thoroughfares, power lines, railroad tracks, flood zones, commercial properties, cell towers, and the like. These offsite conditions are known as “negative external influences.” They do now and, will more so affect value and marketability in the future.
At this point all concerned parties to a transaction can see if all of the neighbors are properly maintaining the adjacent and nearby properties by simply going on Google maps and looking at each house on the block.
Realtors will have to be better prepared to respond to questions about these issues in the future so they can prepare sellers for potentially reduced values and extended marketing times because of circumstances off site. A buyer may want to purchase a home near a grammar school. A lender may ask the appraiser if the traffic from the school negatively affects the value. A purchaser may need to be near a train station for their commuting convenience, A lender may be concerned that the noise and vibration from the train may cause a problem. Driving around a neighborhood to make an assessment of the surrounding areas used to be sufficient. Now technology has made local survey easy for everyone. Tax maps, zoning maps, flood maps and satellite photography are available to everyone. Lenders are now skeptical about every offsite detail.
For these reasons, it is very important to use only the most professional local real estate experts when shopping for a home. Make sure your Realtor has an intimate knowledge of not only the homes you are interested, but the immediate surrounding areas as well. Buying a home is likely to be your biggest investment. Negative external influences will become more greatly considered as time goes on and will have an impact on the value when you decide to sell in the future.
Michael J. Timoni is a certified general real estate appraiser and a licensed real estate broker with J.J. Elek Realty in Woodbridge, 732-634-9100. He is also a certified tax assessor. His areas of expertise include mortgage services, tax appeals, estates, divorce, and expert testimony using both his appraisal and real estate broker’s license. He is also a commissioner on the New Jersey Real Estate Commission.