Despite a cooldown in NJ home sales, experts predict a strong winter
High prices and low inventory have continued to cool home sales in New Jersey in September. While the state saw a slight dip in closed sales the past few months, overall sales are up 13.6% since the start of the year.
New Jersey Realtors president-elect Robert White said the housing boom is not over but he predicts prices will normalize. There are still multiple offer situations and he said he's seeing 103% to 105% over the original list price in most markets.
There is an uptick in inventory, especially with new home starts. White said developers and builders are playing catch-up from 2020 due to the pandemic, and are now starting to sign contracts in 2021 and beyond.
He said in most markets where they were seeing 20 to 25 offers on a single property, they are now seeing just 6 to 12 offers. Typically, a home listed on a Monday at 9 a.m. is under contract by Wednesday at 5 p.m. as opposed to Monday at 5 p.m.
But White said this is definitely still a seller's market. "I think some of the inventory that sits out there longer than 30 days is just that. If somebody comes along and is willing to pay the price that they're asking, they'll move. If not, they'll just pull it off the market. So it's not real inventory," said White.
The real inventory has opened up, especially for first-time homebuyers. White said with the uptick in inventory, they are starting to win big and getting that dream of homeownership.
With single-family homes this year, there's been an increase in median price by 18% versus last year, said White. In new listings, they are only down 3.8%. Last year, there were 92,000 new listings for single-family homes on the market in New Jersey. This year, it's at 89,000. But he said he sees an increase in 2022. There was a bit of a cooldown between August and September this year, compared to 2020. But everything is steadily rolling along.
As far as condo sales, White said buyers, especially first-time homebuyers who were looking for single-family homes and kept getting shut out of that market, turned their direction toward condos and townhouses. New condo listings are up 6% this year and the median price is up 12%.
The fall housing market has always been historically strong, said White. "So I think the outlook for fall into winter will remain very, very strong especially since we'll see new inventory hitting the market, whether they're new-home starts or people that are looking to sell and move on," he added.
First-time homebuyers have been creative in making their offers on homes, he said. If they can get the money from their parents or are able to dip into an inheritance early, for example, they are presenting their offers as a "cash buyer." Then once they are in the home, they're doing a refinancing because the interest rates are low and they're able to pay their parents back.
"The bottom line is that there is no bubble. We are expecting a very strong 2022 into 2023. Interest rates might creep up throughout the remainder of this year but in 2022 we're not looking to see anything higher than 3.25%. So, again, it will still be a very strong market for all our buyers across the state," said White.
Increasing inventory will be key to moderating prices, relaxing buyer competition, and opening the market back up.