April 2023
Current Conditions
By the time you’re reading this it’s June already, normally the waining end of The Spring market. Despite the Fed increases the Federal Funds Rate again and mortgage rates drifting higher (currently 6.96% as of today, May, 20th, 2023) the seller’s market continues throughout Colts Neck, Monmouth County, and most of New Jersey. Inventory in Colts Neck currently sits at just over 5 months which is nearing “neutral market” territory. However, depending on your price range you’re either finding almost no homes available in the under $1m price range and more over-priced, under-renovated options in the higher price ranges. Well-priced homes up to $2m are still seeing multiple offers and bidding wars. Buyers are still willing to pay over asking price and limit appraisal protection if they are getting a mortgage, for the most highly sought after homes.
Competition
Buying a home under $1m remains an extreme challenge for younger buyers. With cash buyers dominating multiple offer situations, FHA, VA, and mortgage buyers as a whole are forced to offer prices much higher than the recent sales and likely show funds to cover 10-15% over the asking price to cover any shortfall in appraisal, in order to win. We are seeing young buyer present with cash, often funded by parents or relatives, in order to be competitive in the market. After closing they are taking out a mortgage to pay back that gift.
Despite tech layoffs rising and a general consensus on economic slowdown, demand for homes here has not slowed since mid-January when buyers largely re-entered the buying market on the back of mortgage rate declines. The lack of supply will not be a problem solved quickly given the near non-existent new land to build on. If rates decline into the 5% range later this Summer, that may prompt more sellers sitting on equity but avoiding moving to incur a 7% rate on their new purchase, to list their homes and move.
Forecast
We expect strong sales through early Summer, and depending on whether rates rise again or potentially fall before the end of the year, we could be looking at continued price stability to an even more frenzied seller’s market.
If you’re curious what your home is valued at, but aren’t serious about selling, sign up for our HomeBot alerts here. What’s My Home Worth
If you’d like us to stop by and provide you a full pricing analysis, set up a meeting here. Arrange A Meeting With DJ
If you’d like to see what homes are currently for sale in Colts Neck, click here. Homes Currently For Sale
March 2023
Current Conditions
The Spring market started very early this year. After rates dropped from their highs over 7% to the mid-5% range just after New Year’s, the market reignited. The Fall of 2022 was your chance to buy a home without NEEDING to offer over-asking price. You didn’t necessarily need to waive your appraisal and rights to inspections. Why?…because as rates nearly tripled with the span of 9 months, plenty of buyers were priced out of the homes they wanted to buy. Many others just felt the market had topped out and were going to wait for prices to come down. As we predicted, that didn’t happen. Any relief was temporary and in the form of reduced competition. Early 2023 has been a return in many ways to the frenzied pace of 2020-2021, but with a few distinct differences. As rates dropped back into the 5s after New Year’s, most of the buyers who had sidelined themselves in the Fall entered back into the buyer market. As rates again drifted to 7% we did not see those buyers exit the market again. They held course and kept buying. What was different this time? The sticker shock had worn off. Buyers now realized that 6-7% is the new “cost of doing business” and rates will drop again, like they did in January, and you’ll be able to refinance lower.
Competition
Buying a home under $1 million dollars so far this year is harder than it was during the peak of the COVID crisis. It’s routine to see more than 10-40 offers on properties, with the most aggressively priced and best conditioned homes selling 15% or more over asking price. The same thing is not occurring in the luxury market, indiscriminately. Inventory over $1 million is greater for sure. Case in point, at this time there are 28 homes on the market in Colts Neck, with 20 of them listed over $1 million. Days on market for the homes over $1 million is 94 compared to 65 for homes under $1 million. The reason isn’t that there are fewer buyers out there looking over $1 million. It’s that the homes that aren’t renovated are priced too high for their condition, and buyers have options now. Well renovated homes priced correctly are still selling at and over asking price, even if that asking price is over $3 million.
With multiple bank failures over the past 2 months and corporate layoffs stacking up nationwide, the economy, if not already in one, is likely headed into a recession. That doesn’t mean real estate prices will decrease. Given the sheer number of buyers in the market, including the Millennial generation entering homeownership, we will continue to face a housing shortage for years to come. That lack of inventory relative to demand will keep real estate pricing stable, if not growing through 2022 and into 2023.
Forecast
We expect the current rally for sellers to taper off as we head into Fall. So, if you’re thinking about selling and want top dollar and for buyers to fight over your property, act quickly.
If you’re curious what your home is valued at, but aren’t serious about selling, sign up for our HomeBot alerts here. What’s My Home Worth
If you’d like us to stop by and provide you a full pricing analysis, set up a meeting here. Arrange A Meeting With DJ
If you’d like to see what homes are currently for sale in Colts Neck, click here. Homes Currently For Sale
