NJ housing market remains hot as new listings become major events
It's no secret that demand for homes has far outpaced available inventory for much of the past year in New Jersey, and the April report from New Jersey Realtors indicates that imbalance is not close to evening out.
More than 10,000 closed sales last month represented a one-third increase (33.4%) from April 2020, with 101% of list price received and the average listing lasting just 43 days.
Historically low interest rates, still at only 3% currently for a 30-year fixed-year mortgage, brought more buyers into the market as soon as the most stringent pandemic restrictions began to lift late last spring.
That caused a brief uptick in inventory, but Robert White, New Jersey Realtors president-elect, said that many couples or families either looking to move up or downsize have been unable to find anything to their liking, meaning they can't put their current homes on the market.
All this, while city-dwellers flocked to more suburban areas at the height of COVID shutdowns.
And they aren't leaving.
White said particularly in Monmouth and Ocean counties, families have enrolled their kids in school and put down new roots, even if the parents are now resuming work commutes to the big metro areas.
"Those people from New York City, Philadelphia, even northern New Jersey, those people wanted out, and they came to the Jersey Shore," White said.
Another element that COVID eliminated, according to White, was the stall in the luxury market. Once the pandemic hit, buyers' worries that they might not be able to claim SALT deductions seemed to dissipate.
Now, determined buyers are getting creative, White said, trying to present themselves in the best possible light.
In many cases, that means offering cash. And for first-time buyers, White said that can mean getting Mom and Dad to dip into their portfolios, loaning the kids the cash, then the kids winning a bid and immediately refinancing as part of a plan to pay their parents back.
It's all happening, and all kinds of homes remain hot, according to White, with New Jersey's median sales price up 20% so far in 2021, to $375,000.
New listings have become the Jersey equivalent of waiting in an online queue for Bruce Springsteen tickets: Because eagle-eyed prospective buyers can see what homes are about to go on the market, a 9 a.m. Monday listing can have 10 to 20 offers by the afternoon.
"We've seen open houses where that's the first day the listing is active to the public, and we've seen people waiting in line for hours to get through the open house," White said.
Another complicating factor is the lag in new home construction, one of the many industries to be hit hard by a drop in the workforce.
White expects that to pick up by the fourth quarter, and eventually catch up from the temporary ban on non-essential construction early in the pandemic, but he makes the point that if a new home start began in early 2020, that price is locked in — even as costs for things like lumber have skyrocketed.
"Now, if you're getting your materials now and the builders are paying these higher prices, that could have an effect on some of these home builders out there," White said. "I understand exactly how consumers feel trying to get work done at their own homes, but think of these builders."