June 2023 Market Update
May 2023 was a really tough month for Bergen County home buyers. If you are a cash buyer or you have a home to sell and don’t need to buy in the area, now is your time. If not, buckle up, becuase we are in for more of the same.The hope was that we would have a slight bump in rates at the very beginning of May and then they would continue to tick down, encouraging those sellers who are also buyers (specifically those who are upgrading) to list their homes during spring market.
As expected, we saw the bump in rates followed by a decline which caused me to get excited. However, at the same time I was looking at the inventory and in the middle of the month, despite rates coming down there was a stall in inventory. For the first time ever in my career there were more homes under contract than available inventory (and this includes properties in attorney review). This was not great! Ironically the next week as rates rose, there was an inventory correction.
Some news outlets were warning if the federal government couldn’t settle on a budget that rates would go upward of 8%. While I was never seriously concerned about that, luckily it didn’t happen.
This article on Forbes.com addresses the mortgage rate trajectory with predictions in more detail. As CBS reports, home prices are falling in the west and rising in the east with NJ.com reiterating that home prices in every county in the state increased last month. An article on Fortune states that “New Jersey housing markets slip right back into the Pandemic Housing Boom.”
Everybody is saying the same thing and it is only emphasized when referring to Bergen County, we do not have enough inventory! This is causing home prices to rise despite rising interest rates. Last year a lot of buyers put their home search on hold waiting for a market correction that never came in this area, now faced with rising rents they are back searching with the same interest rates, higher home prices, and terms that favor sellers more than ever before.
My advice is if you want to move, find your dream home and do what you have to (but still feel comfortable with) to get it. I honestly believe rates will come down, at that time refinance. If they go up, great, by buying now you saved money. The reason I am saying to buy now is that all evidence suggests that when rates do come down the bidding wars are going to intensify and drive-up home costs even more.
When will we see a correction? I don’t predict a housing market correction in Bergen County any time soon, in fact I bet my professional reputation that we will be among the last of the country to feel the relief. New Jersey is and has been the most densely populated state for decades. This coupled with Bergen and Hudson County’s proximity to the city allowing for an easy commute to Manhattan will keep this area in high deamnd.
I do believe an increase in foreclosures and decrease in mortgage rates will help relive some of the gridlock and encourage sellers who are also buyers to list their homes, all which will help alleviate the inventory shortage. The trouble is, we have no idea when this will eventually happenwhat home prices will be at the point or how big of an impact it will have.