November 2023 Market Update

Take advantage of market shifts!

As a Realtor, I’m always being asked how the market is doing, and for years my response has been, “The real estate market is always good for somebody” because it's true. 

It was no shock that these past few years confirmed low inventory is good for sellers, higher interest rates reduce competition, and that on average, even in the most prolific sellers’ market in our nation’s history, For Sale by Owners (FSBOs) lost money by not using an agent. Time and time again the numbers eventually (data is 45-60 days delayed) show us what we already knew.

So, I am going to tell you what you already suspect... if you are timing your real estate transaction(s) to make/save the most money and not around life events, then you need to be aware of market shifts. Of course, none of us have a crystal ball but we can use past trends and current stats to make educated predictions.

Market Shifts Based on the Calendar

The fact that the general public even knows the term “spring market” proves that the real estate market has highs and lows throughout the year based on the calendar. However, most people are under the misconception that the best time to buy or sell is during the spring market.

I will argue that the best time to buy and sell based on the time of year is as follows:

• If you are selling one of the best homes in town: Spring because you have the most buyers looking. You stand out compared to the competition and this is when you will most likely get the most money for your home due to bidding wars.

• If you are selling an older home: January, February, or March. A significant number of buyers stop looking around the holidays and resume their search in the new year but there is very little inventory. Use the concept of supply and demand to your advantage to increase the amount you can get for your home.

• If you’re a buyer who keeps losing bidding wars: Buyers who go under contract during October, November, and December typically see the most savings due to lack of competition.

• If you’re a selective buyer: Wait until spring market so you have the most options. Just be aware you will also have the most competition during this time.

• Investors: The numbers usually make the most sense when purchasing during Q4. However, I advise my investors to consider other timing factors that may play a bigger role.

Market Shifts Based on Rates

There is no time in history where the impact of rates on the housing market was as obvious as 2020-2023.

• Lower Rates = More Buyers

• More Buyers = Lower Absorption Rates/ Less Inventory

• Lower Absorption Rates/ Less Inventory = Higher Home Prices

• Lower Rates = Seller’s Market

Logically if this is true, the inverse must be too. Meaning higher interest rates create a buyer's market. It’s hard to believe this as fact in this area, because we have such a lack of inventory in Bergen County. However it is true as proven by the fact that many markets in our country have become a buyer’s market at some point over the last 3 years, some more than once. However there is an important caveat.

• Higher Interest Rates = Less Buyers

• Less Buyers = Higher Absorption Rates/ More Inventory

• Higher Absorption Rates/ More Inventory = Buyer’s Market

We have finally seen higher interest rates leading to lower sale prices in Bergen County. However based on the above logic, with such a significant increase in rates over such a short period of time, we should be in a strong buyer’s market, not a seller’s market. What is going on?

Because so many would-be-sellers refinanced at such a low rate during 2020-2021, they are not listing their homes because their interest rate would more than double. Recent stats show that a 5% interest rate is the threshold. At 5%, homeowners who need a mortgage to finance their move are willing to part with their current 3% interest rate to buy a new home that better fits their needs.

Most experts believe that rates will continue to stay high and possibly rise throughout the end of 2023 and early 2024 followed by a decline in rates (most likely timed with spring market) as we approach the presidential election.

My advice to my clients on how to try and time the market based on rates is as follows:

• Buyers: Buy the right house you like in the area you can afford now and refinance when rates come down.

• Investors: Buy with the hope of breaking even or making a tiny profit now and refinance when rates come down

• Sellers: Based on the condition of your home, let’s come up with a plan combining the anticipated rate change with the the typical market changes to net you the highest profit.

• Sellers who are also Buyers: You missed your ideal moment, but we can come up with the second best strategy for you, give me a call