Emerging trends for Bergen County homes confirms my earlier suspicions. While nothing major is happening, it’s becoming more and more apparent that the market has shifted.
To understand what’s happening, let’s go back to what I have in a previous article and look at market data. I’m going to use 2019 comparative dat because it’s the last normal market we’ve had.
The Fed and Rates
In a recent article I wrote about the Fed’s Chairman Powell’s testimony to the Senate Banking Committee. Powell told the Senators quite directly that the Fed was not backing down from tapering. Rates are going to rise as a result.
The reason this was such news is because beforehand inflation had been seen as transitory. Chairman Powell now called it persistent. This is a significant change in perspective. Additionally, Omicron’s arrival had many analysts expecting the Fed to pull back on tapering. Powell was adamant – tapering will continue. No doubt about it. Rates are going up in an effort to fight inflation.
Comparing Fall Statistics
Using September through November data, 2019 had 1,743 closings while we had 2,016 this year for a 16% increase. Unfortunately NJMLS data doesn’t allow us to separate out homes that are listed from those that accept contracts so I can’t tell you with 100% certainty. However, my distinct impression is that we had more homes listed this September than we did in 2019..
The number of sales were up too this year for the early fall (Sept-Nov). 2019 had 3,849 sales and 2021 had 3,924. This might not look like much but it’s still a gain. Even though 2021 is a year of lower inventory, this year reversed that trend. You see it in the larger number of November closings – 637 as opposed to 534 for a 20% increase. This outpaces the year’s 16% gain. Most November closings originated in September.
The Pace is Slowing
Jeffrey Otteau in his most recent newsletter (out about 10 days ago) showed that the pace of sales has “noticeably” slowed over the past 6 months. Jeff attributes this to 2 things – the change in movement and high prices. People are no longer fleeing urban areas for the suburbs and buyers are walking away from buying in the face of today’s prices.
This is what I’ve reported in the past too since this is what we Realtors are seeing. Still sales are indeed up and days on the market are only 40. In 2019 it was 58 days so this is quite a difference. Bergen County homes are among the most in demand but Sundays tell it all – 15 people at an open house instead of 25-40.
Multiple offers still but not like in the spring. By “normal” standards we’re still in a very strong seller’s market but it’s not like before. Even taking into consideration that the fall is slower than spring, I can feel it. I know that there’s a change going on. While not large, it’s here.
Emerging Trends for Bergen County Homes
So what are the emerging trends for Bergen County homes as we enter 2022? The market will continue to slow. Look at the 3 changes we’ll start the year with:
- Fed tapering
- Urban flight is over
- Buyer resistance to high prices
What you have is a drag on the market with these 3 plus the unknown effect of Omicron on the economy. The market is so strong, however, that change is building. This is not going to be a bust. It’s a gradual movement to balance between buyers and sellers as a 4th change is already underway – inventory increase.
Zillow Is Nuts
I know that Zillow has told you to expect just over 19% appreciation next year. Frankly I think this is extremely irresponsible since Zillow is awful at finding home values.
Zillow announced 1 month ago that it was immediately closing it’s home buying program. The reason? They were losing millions. Why? Zillow is so lousy at figuring out home values and where the market is going that they were losing millions of dollars. So why on earth are they telling people what’s going to happen in 2023 when they can’t figure out the market?
The Bottom Line
Will prices go up in 2023? Yes. All the data and analysts say so. It’s just going to be at a much healthier rate. Bergen County will see price growth at 3-5%. If anything changes, you know I’ll be back to you on this.
Want to know what’s the best approach for you? Call me at 201-741-8490.