The market is changing! Over the past few weeks, a shift has begun to take place locally. Sellers no longer have the iron clad hold on the prices that they have had for the past several years. The market is becoming more balanced with buyers and sellers having equal say as to what the pricing picture looks like.
With interest rates rising, fewer people are now able to make a purchase and this rise in rates will continue for the next few years. Each 1% rise in rates equals a 9% cut in the consumer purchasing power. This means that buyers can offer 9% less with each 1% rise in rates. This interest rate rise is also starting to cause some first time homebuyers to drop out of the marketplace.
New Jersey home purchase contracts dropped 1% in June, 2% in August and 6% in September as compared to the same months last year. 2017 and 2018 were still the best years in the market since 2005 with 91,047 purchase contracts in 2017 and 91,087 in 2018 but those numbers are evidence of a slowing market.
The message for buyers who are looking to make a purchase over the next 6 months is that NOW is a great time to buy as there is inventory sitting out there without offers. Many sellers have not yet processed the message that their price may be wrong but they will as the days on market build up. For sellers, you MUST price correctly. It is the only way that you will get close to or an at “ asking price” offer(s). If you price correctly from the start, you will get 95% of your asking price.
In general, things are good! New Jersey job creation is the best in 19 years with salaries rising at a 4% rate. The real estate market for the towns on the train line will remain vibrant for the next few years but there will be that caution sign out there with regard to pricing. Trade up activity should increase, Millennials are in the marketplace now at an ever increasing rate and the Baby Boomers are selling at that increasing rate. Jeffrey Otteau, the well known NJ real estate statistician says the next recession will likely be in 2022 but may hit a year sooner. Plan accordingly!
IF YOU ARE THINKING ABOUT SELLING, CALL US IN NOW FOR A CONSULTATION. IF YOU ARE A BUYER WONDERING ABOUT THE PROCESS, WE ARE HERE TO GUIDE YOU.
The Lichtman Rabney Group at Hearth Realty is led by a former NYC attorney and a former Senior VP at Atlantic Recording Company. While we are award-winning agents with over 25 years combined experience in the local market, our true measure of success is through the satisfaction of our clients. It has never been our goal to do the greatest number of transactions, our goal is to bring the greatest value to you.