August data shows continued rise in home prices

As you can see from the just-released chart below, home prices in Ocean and Monmouth County continue to rise even as the number of sales slows down.

Median home prices rose 9%-10% across Monmouth and Ocean County even as the number of transactions fell 16% and 22% respectively across the two counties.

What's going on here? Slumping demand should lead to lower prices, right? That's economics 101. 

For starters, let's look at interest rates. On September 12, 2022, the Freddie Mac 30 year fixed rate was 6.02%. Today, that same mortgage comes in at 7.12%. The house you could afford last year or the year before is markedly different than the house you can afford now. That has caused some buyers to put a pause on their search as they wait for interest rates and prices to abate. They may be waiting for a long time.

The Federal Reserve has indicated that it will likely keep interest rates "higher for longer" meaning that mortgages will continue to be seen as expensive, especially compared to the low interest rate environment of just a few years ago. So, rates will likely stay high for longer than most would like but what about home values?

We must keep in mind that like politics and the weather, all real estate is local. What's happening in our area may not be happening in other areas of the state, region or nation. That being said, we have a couple important factors that would indicate home values will likely continue to increase. 

• Population growth - You may not have seen it in the news, but the Jersey Shore is undergoing a significant population boom, especially in Ocean County. In fact, the Asbury Park Press recently had an article talking about the five fastest growing towns in NJ: Lakewood, Jackson, Howell, Toms River and Brick.
   
• No room to build - We are bordered by the ocean on one side. Obviously, that limits development potential. In addition, preservation efforts and regulations, at the state-level and among many of the Shore's small towns, make it challenging for home builders to develop a meaningful stock of new construction homes in our area.
   
• Highly desirable area - With an hour commute into New York or Philadelphia, our high standard of living, safe neighborhoods and proximity to the beach, the Jersey Shore has become a destination not just for summer beach-goers. 
   
• Low inventory - The chart below shows a double-digit drop in homes for sale from August 2022 to August 2023. Simply stated, there are not many homes for buyers to buy. That, in turn, creates competition for any properly priced home that hits the market, which is why you continue to hear about multiple offers, bidding wars, etc. even as high interest rates force some buyers to pause their home search. 

The bottom line: it's still a great time to sell and still a challenging time to buy.