A Shifting Real Estate Market at the Jersey Shore? 🏠 🚩
Published: Fri, 04/29/22
The residential real estate market at the Jersey Shore is in transition. After two full years as a solid seller's market with homeowners squarely in control, we're now beginning to see the first signs of the pendulum swinging back toward the buyers.
Let's break it down:
Rising Inventory - More homes are being put up for sale throughout Ocean and Monmouth County now than in the last two years. In fact, since December, new listings in our area have more than doubled. As inventory rises, we're also seeing days on market creep up. so it's taking longer for homes to sell. In addition, more price reductions are taking place and we're starting to see a decrease in the number best-and-final offer deadlines, meaning that the bidding wars many have experienced are starting to slow down, at least slightly, and turn towards a what’s thought of as a more balanced market environment.
Rising Interest Rates - Interest rates are steadily creeping up as regulators attempt to get a handle on inflation which is running hot right now. Mortgage rates that were in the high 2% and low 3% bracket just a few months ago are now stretching past 5% in some cases. Yes, rates are still historically low but that is giving some buyers pause as it gets more expensive to borrow money. That leads to some folks re-considering their potential purchase, holding back on writing offers and generally speaking, moving more slowly in this marketplace. That, of course, in turn, leads to homes being on the market for longer, driving days on market up as part of the real estate cycle.
Where do we go from here? That's an important question. The fundamentals of this market are solid, the economics are sound and most market watchers are not expecting a 2007-2008 scenario. What we're likely to see in the months ahead is more of a "normalizing" of the local real estate market where there is a healthy amount of inventory and homes last a little longer on the market meaning not everything gets sold in a matter of days. Home values will remain high, however the 20%+ year-over-year increases we've seen are simply not sustainable. Yes, we'll continue to see home values grow but at more measured rate that allows people to get into homes without the cut-throat competition, bidding wars and ridiculously long lines at open houses.
Here's the bottom line: this real estate market is in a transition but it's a transition that is somewhat needed and ultimately healthy as it balances the market and allows more people to purchase homes while current home-owners still continue to enjoy home value increases, albeit at a more sustainable rate moving forward.
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