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data driven real estate market analysisI thought I should do a data driven real estate market analysis for you.  My previous article, The 2022 Real Estate Market for  Bergen County Homes, was done in a narrative format.  Because of this, I thought those of you who are data driven would appreciate a statistical approach to analyzing the market.

Nothing has changed since I wrote my market analysis article on January 6th.  The Senate held confirmation hearings for Fed Chairman Powell Tuesday.  Powell said that the Fed will stop buying assets.  Because of this, rates will rise.  This is part of how the Fed will fight inflation and normalize things from what’s now artificially low rates.  He said too that the economy is healthy enough to handle this.

Let’s look at the data now.

New Jersey MLS

If you want to know what’s going on in the Bergen County real estate market, there is no better source than the New Jersey Multiple Listing Service.  This is not only the primary MLS system for Bergen County, the NJMLS has wonderful data at every real estate agent’s finger tips.

I love their Comparative Report.  You can compare data for any 2 years over the past decade.  Because you can, it gives you a great view of what’s truly happening.  Here is the data comparing the last 2 years:

# of Sold Listings – 150,50 in 2020 and 16,213 in 2021 for an 8% gain

Average Sale Price – $593,614 in 2020 and $666,715 in 2021 for a 12% gain

Days on Market – 54.4 in 2020 to 41 in 2021 for a 25% decrease

Clearly 2021 was a much better year for sellers.  While the inventory was lower in 2021, we had more sales driving up prices.  We know that mortgage rates remained very low which helped tremendously as did increased demand.

The Effect of Mortgage Rates

Incredibly low mortgage rates continued throughout 2021.  Although not as low as the worst of the pandemic when they were just under 3% for 30 year loans, most of the year rates were at 3-3.25%  I’ve said this before and I’ll say it again.  In my 34 years of dong this full time, I’ve never seen mortgage rates this low.

The effect of mortgage rates at this level is to enable thousands of people to become home buyers.  This has flooded the market with the 1st cog in the wheel of the real estate engine – first time home buyers.  It’s also energized moveup buyers.  Let’s look at the $500-900,000 market:

# of Sold Listings – 5,597 in 2020 to 6,960 in 2021 for a 24% gain

Average Sale Price – $647,999 in 2020 to $648,820 for 0 difference

Days on Market – 49.9 in 2020 to 35.7 for a 25% decrease

What this shows us is that the move up buyer was extremely active in 2021.  While this is true, they didn’t over do things.  They kept the move up to the next step at the same differential as before.  However 24% more sales is huge.

Jeffrey Otteau

You know I love Jeff Otteau’s data.  His full year report on 2021 (that also shows how 2021 did compared to 2020) is coming in a few weeks.  I will send it to you if you like.  Just email me at [email protected] to request this.

Jeff looks at New Jersey as a whole.  He stated that year over year through November, NJ has a 7% decline in the number of sales.  He expects another 2% decline for December.  He went on to say that this is the 7th month in a row that sales are down.

“While the housing market remains strong, the pace of sales over the past 7 months has been noticeably slower due to the
combined effects of reduced migration from New York City and buyer price resistance.”

Although Bergen County is outperforming the State (as it always does), this is a sobering view of the market.  Otteau’s analysis further makes the point in that year to date the 1st time buyer group is down 12% in the number of sales.  Every other category is up.  This will effect the market because 1st time buyers drive the market.

The Bottom Line on a Real Estate Market Analysis

Jeff Otteau’s view shows us that things are changing.  The New Jersey MLS data tells us that Bergen County is doing well.  The Fed will begin to raise rates in March.  Between that and what Jeff Otteau has shown us, real estate will remain healthy in Bergen County but at a much slower pace in 2023.  We will be fine through most of 2022 but change is inevitable.

Hold on to this thought:  Chairman Powell tells us that the economy is strong enough to handle it.  This is good news indeed because he’s telling us essentially that there will be no crash.  I feel that we’ll have a soft landing.  While we’re having a tough time right now with Covid, it’s fundamentally getting better.  Imagine where we’ll be in 1 year.

Covid 19

Do you know a nurse?  Or a hospital doctor working with Covid patients?  Or anyone working in the ER or elsewhere in a hospital?  How about sending over a dinner, some flowers or a thank you note?  They are having such a horribly tough time.  Let them know how appreciated they are.  That’s about it for now.

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