February Market Update & Predictions
Current Market
As predicted last month, we saw a very slight boost in inventory. However, we also saw that a lot of buyers who were preoccupied during the holidays have returned to their search. Sellers who are living in their homes are still hesitant to have people coming through as the COVID rate continued to climb with a huge spike on Jan 10th (just between the 2-week mark of Christmas and New Year’s). Most of the January inventory was vacant, investment properties or sellers motivated by extenuating circumstances.
February Predictions
Expect more of the same. Typically spring market starts at the end of February, I have been predicting, and still believe it will be delayed to mid-March for the following reasons:
COVID
The rates have declined since Jan 10th but are still higher now than they were in November and December. There was a hope that the vaccine would help alleviate some of these concerns. However, with the vaccine being in short supply and new, more contagious strains popping up, sellers are still nervous.
Sellers Are Stuck
When you sell your home you need to move someplace else. The trouble is most sellers are also buyers and they can’t find a new home to move to because of the lack of inventory. It’s a real catch 22. Sellers who are looking to move out of the area or downsize to a condo are more successful than their counterparts looking for a house in Bergen County.
Economic Uncertainty
This is a double-edged sword. The stock market was recently at an all-time high, the past two weeks it has taken a bit of a stumble. The question many are trying to answer is this a short term loss impacted by the recent market volatility, we’re talking about you GameStop, or is it a sign of things to come. This plays out in three very different ways.
First time home buyers are holding off. Some buyers believe the economy will take a downturn and when that happens that the price of homes will drop, so they are willing to wait it out, even if that means continuing to rent for another year or two.
Sellers who are also buyers know they can get top dollar for their current home, but they also will be paying top dollar for their new home. So they are waiting for that Goldilocks moment when the condition is “just right” to make the move. I believe that time is February 2021 and with no huge developments, the next time will be October 2021. (For further explanation, read Sell Before You Buy)
Potential sellers who’ve been struggling financially believe more people will be in the same situation as them. Some are foregoing short sales in favor of mortgage modification. Others know their home will eventually be foreclosed on, but instead of selling they are taking advantage of current executive orders and hoping banks will take longer than usual before evicting them.
Summary
Typically January and the beginning of February is a great time for buyers who are more flexible to get a deal before the competition in Spring Market. However with so many hold-over shoppers from 2020 that doesn’t seem to be the case. Sellers know the inventory is almost non-existent right now and some are getting greedy. Some of those houses are just sitting, which speaks volumes because they are literally the only game in town. Others are getting offers at asking, but there is a good chance they may not appraise. I am predicting a significant increase in inventory starting mid-March continuing late into the summer.
Advice
Seller Advice
List NOW! Just like I encouraged everybody to list in October and we saw the dip follow by mid-November, the same thing is going to happen by mid-March.
Buyer Advice
If you are flexible with your criteria it doesn’t hurt to keep an eye out. Just don’t overpay for something because you feel like you don’t have options. Spring market and additional inventory is coming.