We've been talking about a shifting real estate market for several months in this newsletter. We are now living in that shifted market. Here's an
Inventory creeping upward, buyer pressure down - Yes, inventory is creeping back upwards, albeit very slowly, however, buyer pressure has dropped significantly. Remember the law of supply-and-demand. A constrained demand will continue to drive prices up only as long as there is a strong demand. Once demand takes a hit, inventories rise and then prices fall.
Interest rates crushing buyers - The interest rate for a 30-year fixed
rate mortgage on Monday, January 3 was 3.29%. That same mortgage came with an interest rate of 6.64% on Wednesday, November 16. These rising interest rates are, of course, in response to exorbitant rates of inflation making everything from single-family homes to Thanksgiving turkeys significantly more expensive.
Questions about where the economy is going - Inflation is still persistent, hiring has slowed and the markets are volatile. That sense of uncertainty is not
good for the economy nor the real estate market. Being unsure about the future leads people to pause or delay purchases, especially second-home purchases, a large portion of homes in Ocean/Monmouth County.
Against this backdrop, it's easy to understand that we are in for an unsettled residential real estate market in 2023. We could see a decline in home values, however in my opinion it is not likely to be as fast or as severe as some of the declining values already being seen in other parts of the country.
Thanks for reading this edition of the newsletter. I’d like to wish you and yours all the best for a very Happy Thanksgiving!