Bergen County homes bounced back in spite of an onslaught of never before seen obstacles. While we’re still down from last year we are far from out.
Obstacles Against The Market
Because we had to face unprecedented obstacles against the market, it took a little while to adjust. Since the lock down began in the middle of March, real estate like all of us had to figure it out.
The lock down itself made everyone stop in their tracks. It took 1-2 weeks to figure it all out in order to continue. A large number of sellers took their homes off the market. As a result, our “spring market” had an extraordinarily weak inventory. Banks found themselves having to increase requirements for a mortgage because investors worried about whether buyers would lose their jobs in the future. Buyers became uncertain about a purchase for the same reason. Additionally we had a stock market crash wiping out many buyer down payments and/or rattling confidence.
The Positives That Made A Difference
Because shattering change initially stuns you, it takes time to adjust. However Bergen County real estate has adjusted.
Technology allows virtual tours of homes; in the house viewings use masks, disposable gloves and booties. Closings are done virtually as well. While home inspections require the inspector to go inside, appraisers no longer visit a home. As a result, homes are being shown and sold thanks to technology.
Mortgage rates have dropped from the previous 4.75-5% to 3-3.5% which is a tremendous change. For every 1% drop in rates, buyers get 9 times buying power. For example, with a 1% drop in rates a $500,000 buyer can afford a $545,000 home at the same mortgage cost.
Covid 19 accelerated an already present movement. Milennials make up the largest number of buyers. They’re really getting old now as they’re nearly 40. A lot of them have kids. While it was so cool to have that Soho or NJ waterfront apartment, it’s not fun with kids. Add in $30,000 per year (if not more) for private schools. Nirvana is now the suburbs.
Suburbs give you space, privacy, a yard and good public schools. Covid 19 made this natural movement a firestorm. People want out of congested cities where social distancing is impossible.
County Wide
Looking at Bergen County as a whole, it’s easy to see the devastating impact of Covid 19. Let’s dismiss sales because a lot of them began pre-Covid. It makes the most sense to look at homes that went under contract:
- January and February both had 15% more homes going under contract than in 2019
- March is when Covid came into view and we had the lock down so that’s only 5% less
- April is the worst month when things looked so impossible – 55% less
- May recovered a good deal of that loss although it’s still at -32%
Let’s look at the average and median listing price for these under contract homes:
- January +4% Average & +10% Median
- February +8% Average & +9% Median
- March – No change for both
- April – -8% Average & -1% Median
- May – +6% Average & +6% Median
Clearly we were, as predicted, ahead of 2019 until Covid hit in mid March. March reversed whatever gain occurred and we had significant loss in April. The market adjusted by April’s end and has been gaining ground since
Inventory Is Our Challenge – Great for Sellers & Tough for Buyers
Today as I write this article, there are 1,987 homes for sale in the New Jersey MLS. I’d guess 5-7% have accepted offers. As a result we have about 1,800 homes for sale in our 70 Bergen County locations. We should have around 4,300.
Over the past 2 weeks I’ve seen more homes coming back on the market. It’s still going to be a tough market for buyers because low inventory will be with us for the next several years.
Right now this is an unusually great moment for sellers. Extremely low inventory and mortgage rates create a very special opportunity for sellers. Home buyers are going to have a tough time. Expect that when you find a house, so have several others. As a result, you’ll be in bidding wars. It might take a few attempts to get a house and expect to pay nearly full to 5% over asking.
As I wrote in a previous article, Bergen County real estate is strong. The only thing holding us back is not enough homes to sell. Remember this when you see articles screaming doom and gloom because sales numbers are down. If the inventory is down, what else would you expect?
The bottom line is that Bergen County homes bounced back in May and it will remain a sellers market in the future. Mortgage rates are an extraordinary advantage right now for buyers too. For figures on a particular town or neighborhood or anything else you’d like, just click here to tell me.
