THE REAL ESTATE MARKET IN NORTHERN NEW JERSEY
The market is experiencing some changes as we speak. With the rise in interest rates, we are now at the beginning of transitioning from a seller’s market to a buyer’s market. Buyers seem to have no urgency in their search process. They are most likely to just sit on the sidelines until they are satisfied with the terms of an offer before actually pulling the trigger. This is not to say that multiple offers and over asking prices are completely gone. It is to suggest that the asking price has to be one that shows value as compared to where it would have been priced 4-5 months ago.
Inflation is the culprit here and the Feds are looking for the prices to decline everywhere. It is outpacing wage growth and causing a lot of pain for people. Interest rates are up from 2.75% during August of last year to close to 7% now. The statistic around mortgage increases is that for every 1% rise in mortgage rates, the buyer loses 9% of their buying power. For instance, if a buyer was looking at a $600k house when interest rates were at 5% and they rise to 6%, that buyer can now only afford a home for $546k. This is a serious chunk out of what they can buy. The silver lining is that this difficult period is likely only to last one year or at the very worst, 2 years. Once inflation becomes controlled, the belief is that the banks will begin to bring down interest rates again and many will just refinance.
Buyers who want to make a purchase should not wait. Interest rates will continue to move upward making homes harder to afford. Home prices are expected to drop by about 1% as of the 3rd quarter of this year and by another 1.5% over the 4th qtr. We will end up with a much more stable housing market because the chaos of the past 2 years+ was not sustainable.
Call us if you are looking to buy or sell and we can expertly guide you through the process.
LOCAL MARKET STATISTICS **single family homes
ACTIVE (active as of 9/17) UNDER CONTRACT since 9/15
MAPLEWOOD 21 (27) 10
SOUTH ORANGE 11 (9) 7
WEST ORANGE 46 (53) 29
MONTCLAIR 24 (25) 27
BLOOMFIELD 37 (36) 17
MILLBURN/SHORT HILLS 30 (42) 12
ORANGE 22 (21) 6
UNION 61 (70) 44
SUMMIT 20 (17) 9