From Covid to today, Bergen County homes have been in high demand. At the same time, I can report that a change is happening. To understand the real estate market today, we need to go back to 2020.
Everyone knows that we are living in a very different time. Covid, social unrest and the mortgage market are all uniquely different in their own way. All of them have had a very specific effect on the Bergen County real estate market. This is why going back explains what’s happening now.
Natural Market Rhythms
A good part of what’s happening is normal. Did you know that over half of all house sales are sold to families with school age children? Those families must close by mid August to register their children in time for school.
Back this up the normal 60 days the home buying process requires. While this can be done in 45-50 days, contracts on homes need to be in by mid-late June.
Do you find a house in 1 day? Of course not. You spend time researching, casually open house looking and then seriously for 3-5 weeks. As a result, over half of all home buyers are out in earnest during springtime. While the fall remains strong, it’s naturally less robust than during spring.
Covid Effect Then
The March 2020 shut down created an over heated summer market because it canceled the spring market. This threw spring home buyers into the summer. Add in fewer homes for sale than in 2019 and you had a perfect storm.
Additionally we had urban flight. Since cities are densely populated, it was impossible to social distance plus there was rioting in Manhattan. We had a near panic to get out of NYC along with other urban areas and into the suburbs. Remote work enabled this further.
Covid Effect Now + Inventory
This continued into 2021 for several reasons. Bergen County began the year with 1,050 homes for sale. That’s roughly 1/3 the number we should have had and half of 2020.
Rates dropped increasing the number of home buyers for 2 reasons – more people qualified and it turned tenants into buyers.
Covid concerns became much less intense. Vaccinations and improved therapies got people to relax. As more of ust were vaccinated, we started going out to dinner, to shopping and to gatherings. The economy slowly began to open up. While this is certainly a time to be cautious, it is also true that normality is returning.
In addition, businesses are opening their offices. There is a movement back to urban locations to be closer to work. You can see it in how commuting schedules have grown. While remote work is here to stay, it’s not going to be 100% of the time.
From Covid to Today
From Covid to today the market has really improved. Bergen County had 1,050 homes for sale on Jan 1, 2021 in the New Jersey MLS. This rose to just over 1,600 at the height of the spring market (53% increase). Today it’s 1,365 (30% gain) while 1,400 are also under contract. Clearly this remains a hot seller’s market.
The difference is that the number of buyers is more in line with the number of sellers. We’re not getting 20 offers on a house; it’s more like 3-5. In a normal world 2 would be fabulous. But this isn’t a normal world.
So where are we today? It’s still a great time to buy a home and to sell a home. Isn’t this crazy? Usually it’s better for sellers or buyers, not both. Here’s why:
There are still more home buyers than houses for sale. Rates remain low maintaining the home buyer population. Great for sellers. Plus appreciation is forecast at 3% next year which means you’ll lose value. It will cost you more to hold your house for another year than 3% will give you.
Rates are so low now that it’s smarter to buy rather than rent plus it’s often cheaper too. Additionally, when rates rise next year it will make it impossible for a lot of buyers to get a mortgage. Rising rates next year means the same house will cost you more every month.
The bottom line is that right now is better for buyers and sellers. Like I said, this is a crazy time.