Recent forecasts by the National Association of Realtors have had a decidedly different view than those previously released. In part, this is due to a new chief economist, Lawrence Yun. David Lereah, who had long held that position, was consistently optimistic that home sales would not decline appreciably from 2006 to 2007. Nationally, the June forecast is for existing home sales to drop 4.6 percent from last year and housing starts to drop 20.4 percent from last year.

It’s not just a pessimistic outlook on Yun’s part – some major events have impacted the market in the two months since he has overseen the National Association of Realtor’s forecast. With the collapse of the sub-prime lending market, loan standards have naturally become tougher, high risk buyers and more importantly housing investors have been forced out of the market, and lastly, interest rates have finally begun to rise.

Locally, the reality is that here in Bergen County residential home sales to date in 2007 have been almost identical in number to those sold during the same period in 2006. However, both the levels of inventory and the days that those home spend on the market have risen. Currently, it takes 100 days to get a contract in place in Bergen County as opposed to an average of 84 days in 2006 and 68 days in 2005.

Similarly, the difference between asking price and the actual sales price has dropped. Back in 2005, there was an average difference of 4% from asking price to selling price. That difference is now 8% for residential properties in Bergen County, although the figures will vary for individual towns and it’s important to understand your local market whether buying or selling.

The big talk about “all the foreclosures” seems to be dying down. Wall Street has repackaged high-risk loans in an effort to forestall that happening. So too, banks seem more responsive to short sales (accepting less than the full loan amount due) rather than foreclose on a property. Here in Bergen, we haven’t seen this raft of foreclosures and many are optimistic that we won’t.

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