I recently attended a fabulous workshop which highlighted a few 2014 spring housing market trends. I thought I would share!
Superstorm Sandy – Still with Us
Although Superstorm Sandy made landfall across the southern coast of New Jersey over one year ago, its impact is still being felt today. The loss of power, flooding and property damage across the state was horrific but particularly significant at the shore. While my team is seeing a seller’s market in northern New Jersey with multiple bids on properties, low inventory and strong demand, the housing market looks different elsewhere in the State. One statistic realtors look at is the amount of available months’ supply in housing with larger numbers indicative of a weaker market. Some counties at the Jersey shore have almost 25 months of supply, whereas others in northern New Jersey have less than 3 months supply. As well, some year-on-year home prices have actually fallen at the shore but generally risen in New Jersey. Superstorm Sandy has caused people to reevaluate living at the shore and owning a secondary residence there. I suspect the fallout will continue for years to come.
Pricing Remains Critical to a Successful Home Sale
One of the most difficult decisions a potential home seller must make is the initial listing price. Selling one’s home is an emotional time and makes decision-making difficult. The listing agent must carefully consider market conditions, timing and competitive environment when advising on the sale price. One of the most interesting statistics presented at the conference was that by establishing the “right” price for an initial listing, in other words not overpricing and thereby creating strong initial demand, the selling price of the property tends to increase by 3 to 5 percent. There will be more showings, and the time the home is actually on the market is far less than if a home is overpriced from the start.
Also something I found very interesting was that in the list of factors that go into determining the listing price, one is particularly intangible. It is locational appeal. It encompasses everything that might be important to a family or individual when moving into a new neighborhood: schools, access to work, parks, safety and so forth. Locational appeal is also the primary reason why I live where I work. As a member of the community where my buyers are looking, I bring local knowledge and pricing expertise to every transaction.
Mortgage Rates are Set to Rise
The recession that began at the end of 2007 and lasted through the summer of 2009 led to an environment of historically low interest rates. One objective of the low interest rate policy was to stimulate the housing market, and in general, home prices in New Jersey continue to rise today. But mortgage rates will start to increase as the Federal Reserve tapers its bond buying program, and the impact on the housing market is not necessarily what you might think! Believe it or not, housing prices often continue to rise along with increasing mortgage rates. But there is a different effect highlighted in an article in 2012 by Bill Conerly, a contributor to Forbes magazine. As mortgage rates rise, buyer mobility declines. It is harder to get a mortgage and, therefore, harder to move. He refers to this phenomenon as the “lock-in effect.” It may explain why we are seeing the frenzy of buying activity now. Perhaps homeowners looking to move into a larger home are anticipating rising mortgage rates in the future, so they are capitalizing on the benign rate environment now.
Clearly, the housing market will always be complex in nature and ever-changing. The Victoria Carter team brings a wealth of experience to every transaction. We understand the nuances of the real estate market and will guide you at every juncture. If you are looking for insights on locational appeal, thoughts on market timing or just an evaluation of your current home, contact Victoria Carter at (973) 220-3050, or email email@example.com.