So much of real estate is a matter of perception. In the eternally optimistic phrasing of real estate sales agents, weakness in a market doesn’t really exist. There are red hot markets, emerging markets, revitalizing markets, and value opportunities, but there’s no such thing as a bad market.
Still, even eternally optimistic agents understand the dichotomy that always exists in any real estate market. While some sectors or regions attract a bevy of bids every time something hits the listings, other sectors and regions hang in the corner hoping someone notices their pretty dresses and asks them to dance.
It’s been a decade since everything was across-the-board strong, says Jud Henderson, managing member of Callaway Henderson Sotheby’s International Realty on Nassau Street. Back in 2005, Henderson says, “there was strength everywhere.” Today, a little more than six years after the recession, the Princeton region is going strong, and getting better. And those value opportunities are starting to catch on in the surrounding communities.
Henderson will be one of four industry professionals to discuss the regional real estate picture at the Princeton Chamber’s 2015 Real Estate Forecast Breakfast on Thursday, January 29, at 7:30 a.m. at the Hyatt Regency Princeton. Joining Henderson will be Paul Anastos, president of Mortgage Master; Aubrey Haines, CEO of Mercer Oak Realty; and Tom Gates, residential mortgage advisor at Mortgage Master. Cost: $40. Visit www.princetonchamber.org.
Henderson is the son of John and Peggy Henderson and the grandson of John T. Henderson Sr., who founded the original Henderson family real estate office in Princeton in 1953. John Jr., with a background in advertising, revamped the family business into the premier agency it became. Jud Henderson took up the family career at age 18 when he became a real estate salesman. Ten years later he became a broker associate with the Princeton Real Estate Group before becoming the broker of record for Henderson Sotheby’s International Realty. After the merger with N.T. Callaway Real Estate in 2012, Henderson is a managing member of the combined firm. He holds a bachelor’s in English from Hamilton College.
In his decades inside the Princeton real estate scene, Henderson has witnessed every kind of market possible for the region. And from what he is seeing right now, things actually do look pretty good for the area. They’re not back up to 2005 salad days, but they’re far better than the crashed-and-burned market of just a few years ago.
Then and now. To see how well the 2014 Princeton regional residential market finished requires comparing things to the best time, which is 2005, and the worst, which is 2010. While values and closings are lower than 2005, everything, whether downtown Princeton or one of the neighboring towns like Hopewell, is up since 2010, Henderson says. More properties are worth more than they were just five years ago, and the focus on where to buy is shifting a bit from the always-desired, highly competitive downtown hub.
Even when things were not good everywhere, Henderson says, downtown Princeton was the “it” spot. With real estate improving, as it is doing in more parts of the country now, competition for homes close to the university can be especially thick. If it’s within walking distance of downtown and selling for less than $1 million (which isn’t common), “we’ve seen 40 showings a week and five offers,” Henderson says. “A place with high-tension wires or something, not so much.”
Farther out. Henderson and his family live in Hopewell, which suffered like a lot of areas when the recession hit. But with downtown Princeton becoming more exclusive, people are starting to head a little farther out, to areas like Hopewell, Montgomery, and West Windsor. Part of the reason for the attraction to these places in general, Henderson says, is the education. School systems in these towns are highly rated.
West Windsor also has the train station, which attracts professionals who ride the rails to New York City. But people, Henderson says, are rethinking how it’s not really so bad to be a short drive from Princeton. They’re also finding relatively affordable townhomes and condos, which Princeton itself doesn’t have in large supply. Younger families, especially, have realized the value of living nearby, as opposed to the high price of living downtown.
Values. None of this is to be confused with the idea that Princeton is impossibly expensive. It’s very expensive, but compared to what? If you’re coming from Hamilton or Bordentown, the idea of paying more than $500,000 for a small piece of property might seem excessive. But for those coming from Westchester or Long Island, where the same size property would be twice what Princetonians pay, the deal doesn’t seem so bad.
Perspective, remember? A lot of people look at the upfront cost and realize it’s not so bad, Henderson says. Taxes, however, can eat up your earnings in a hurry. It’s not unheard of for Princeton properties to carry $60,000 to $100,000 a year in taxes and there is zero indication of that going down. Taxes are about 2.2 percent of assessed value, and homes are selling for about 91 percent of their assessed values. So a $1 million assessment would be about a $910,000 sale, and the taxes would be about $20,000 a year. And $1 million isn’t a stretch here.
Still, higher-end properties are selling. In the $3 million to $4 million range last year, three of eleven properties went under contract, Henderson says. In the $2 million to $3 million range, 12 of 27 offerings went under contract. And at the very high end, above $4 million, one of the eight properties went under contract last year.
“A market begins to form,” Henderson says. “People say, ‘I’ve got the money, I can afford to buy this house.’” It’s a great value when competing with markets like Westchester, where the same homes from above would be in the $5 million to $15 million range. “We don’t see anything like that here,” he says.
So yes, Princeton is expensive, but it could be worse, and people are buying. How much it will change based on the influx of buyers who find Princeton’s homes reasonable compared to where they already live cannot be determined yet. But as far as values go, Henderson expects Princeton to stay in the sweet spot it has occupied for a long time. “We don’t get too high on the highs and we don’t get too low on the lows,” he says.
Looking up. The end of 2014 marked the fifth straight year the number of sales in Princeton increased, Henderson says. Things have rebounded to “a healthy, normal market.” Last year saw 312 closings in Princeton. Still shy of 2004, when Princeton boasted 398 closings, the market is far improved over 2009, when there were 207 closings here. The average sale price is a little short from where it peaked in 2008 (before the fall). Then the average sale was about $1.16 million. Last year it was $955,000. “We’re within about five percent,” Henderson says.
Last year’s pick-up came late but managed to smooth out the general real estate picture, Henderson says. After a horrendous and long winter in which buyers couldn’t get out to look and sellers couldn’t even get their homes listed, the second half of 2014 showed that the market actually was rather robust, waiting there beneath the snow and ice. How does this bode for 2015?
“We’re unusually busy for January,” Henderson says. “The conversation is on purchasing.”
In short, the perspective on 2015 is, this should be a very good year.