NJ housing market could be cooling — why that’s good news for buyers
As we head into the hottest weeks of the year, New Jersey's active housing market is apparently in the middle of a cool-down, and that could result in good news for folks who are interested in entering the market for a home.
According to the latest report from New Jersey Realtors, which covers home sales through May 2022, buyer activity is slowing as a result of high home prices and a surge in mortgage interest rates.
And, due to more inventory on the market, sellers aren't seeing a deluge of wannabe buyers like they would have just a few months ago.
A continued softening of the market could put downward pressure on home prices.
"We're now not seeing 20 to 25 offers on any given property, and we're now not seeing offer prices going $40,000 to $100,000 over the suggested list price in certain markets," said Robert White, president of New Jersey Realtors. "What we are seeing is five to 12 offers on any given property in certain markets, and $20,000 to $50,000 over that asking price."
Sellers are still in the driver's seat before and during a transaction, but they may not have as much power as they did one year or one season ago.
Compared to one year prior, according to the report, closed sales on single-family homes were down 8.7% in May 2022, and down 7.9% for all properties. The median sales price for single-family homes was $490,000, up 12.6% from 12 months prior.
The number of homes for sale today is significantly down compared to a year ago, but inventory has been growing recently on a month-to-month basis.
"We are going to continue seeing increasing inventory in all markets," White said.
Mortgage interest rates are more than 2.5 points higher today than a year ago. This would logically push more buyers out of the market, particularly those who are first-time buyers, but that hasn't been the case as of yet.
"They may not be pounding the pavement every day, but they're still on top of the inventory coming in, and if something catches them, they're on top it," White said.
White noted that July and August are typically slow months for the housing market during any year.
Rising rates equate to higher monthly payments and a larger payout overall for buyers, but a calmer market would mean their purchase price may be lower than what it would have been months ago.
White expects rates to dip significantly in the first quarter of 2023.