From the WSJ:
House prices in the New York City suburbs, after a six-year roller coaster ride in which they lost roughly a quarter of their value, are climbing again.
The strongest rises were in the southwest Connecticut and northern New Jersey, while the recovery is weaker in parts of Long Island, where foreclosures still weigh on home prices.
Buyers who have been waiting have jumped back in, creating bidding wars for many desirable properties, brokers say. The number of new contracts signed is up; some homes are selling in a few days, often with multiple offers.
Market reports show that median home prices hit a bottom in late 2011 or early 2012 in northern New Jersey, New York’s Westchester County and Long Island and Fairfield County in Connecticut.
In the last two quarters, the market has risen out of the doldrums: Prices are up in all four markets from a year earlier. The second quarter also is off to a strong start.
“Across the board, it is on fire,” said Jeffrey G. Otteau, a New Jersey-based appraiser and founder of Otteau Valuation Group. “Buyers today once again feel a sense of urgency. Buyers are now convinced that waiting they will pay more.”
Analysts attribute the bump to improved confidence in the economic recovery, signs of job growth, low home prices and historically low mortgage interest rates. The rental market also is tight and rents are rising, giving people looking for space fewer alternatives.
Mr. Otteau frets that the market is rising so fast that it could be the beginning of a new housing bubble that could burst if interest rates begin rising before robust job creation returns. Increased mortgage rates reduce the purchasing power of buyers and can dampen prices.
“Over the last year we have gone from the question of whether the recovery is real to whether it is moving too quickly,” he said.
Not all properties are flying. Many high-end suburban homes continue to languish. Houses that need work also can be tough sells, brokers say. And brokers remember how home prices and sales surged in 2010, when the federal government offered tax credits to home buyers, then ran out of steam the following year.
Northern New Jersey
Prices rose more than 3% in each of the last two quarters from a year earlier, after tumbling 27% from 2007 to 2012. The recovery began in neighborhoods like Summit, with an easy commute to Manhattan, and then spread more broadly, brokers say.
Last year, Susan Hunter, a vice president at Lois Schneider Realtor in Summit, said buyers were out looking, but “just weren’t making any decisions to buy.”
That has changed. “Now if the home is well-located in great condition, there is a very good chance it will get multiple bids,” she said, citing the improving economy, job security and credit conditions.
On the waterfront in Jersey City, Biyang Sun closed last week on the $568,000 purchase of her first home, a 925-square-foot, one-bedroom condo with a balcony on the 10th floor of 1 Shore Lane overlooking Manhattan,
The morning the apartment came on the market, she went to see it and made an offer close to the asking price. It had the southern exposure she wanted, a parking lot for her car, and was a 20-minute commute to Midtown Manhattan. “I have been looking for this kind of apartment for half a year,” she said.
The building opened during the boom, when prices were much higher. Her broker, Thomas Pichi of Metropolitan& Waterfront Residential Brokerage, said a few years ago, every owner in the building would have had to sell at a loss. Now, listings have dried up and prices are higher.
“The market is being driven by supply and demand,” he said. “As soon as a listing comes on the market it creates a feeding frenzy.”