Looking at Bergen County through August tells us two things about the real estate market here. Most importantly the market has fully recovered. Also while it seemed at times over heated, we’re moving forward conventionally.
New Jersey MLS Sales
Using the New Jersey MLS Comparative Report, I can compare one year to another. Because sales figures are not enough, I also look at under contract figures. Using both gives you a great view of what’s happening and how things are trending.
Here is a chart of Bergen County homes sold through August in 2019 and 2020. Keep in mind that most sales originate 60-75 days before.
The top line is 2020. It’s easy to see that this is a stronger market than in 2019. Watch it take off as you get into February but then pull back due to the Covid 19 lockdown. By the time you get into May, however, recovery is fully underway and it continues to gain steam through August.
New Jersey MLS Under Contract
Because homes going under contract is more current information than sales, the picture sharpens. You can clearly see how severely things changed in March and April. Equally dramatic was the recovery that started in May and continued until it plateaued and pulled back at summer’s end.
While many people worried about being in a bubble, market dynamics tell a different story. We have been following a conventional plateau and slowdown as we move into the early fall.
2019 followed a more stable pattern than we’ve experienced this year. Because we rebounded so ferociously, it’s good that things have pulled back a bit. The market is gathering itself; it always finds balance.
Bergen County Through August
2020 was on track to be a fabulous year. Then Covid 19 shut down real estate along with the rest of the economy. Because real estate is so essential to our economy, its truly wonderful that we have been able to accommodate to our new world and thrive.
Take a look at these figures through August:
- Both the average and median sales price rose 9%
- The number of sales declined by 7%
- Dollar volume rose 1% in 2020
- Days on the market was nearly identical at 59-60 days
- 5% more homes went under contract in 2020
- The under contract average price rose by 10%
It’s no wonder there was a tiny difference in dollar volume with both median and average sales prices rising at the same 9%. What this means is that the mix of price ranges sold is about the same. Nothing dramatic going on here. Additionally price rises with fewer sales = stronger demand.
As for days on the market, I bet you’ll see that lengthening because of all the refi’s. Homeowners are taking advantage of incredibly low rates and, as a result, banks are overwhelmed. Thus longer processing times. Market strength is shown in more homes going under contract at higher pricing.
What’s put so much pressure on pricing has been the near panic to get out of urban locations as well as spring buyers being forced into the summer. I went into this in detail in my article 1 week ago.
While some people are questioning if this has become a bubble, it’s not. The inventory shortage is real and long lasting. Read my June article. It explains the market fundamentals on this.
The Bottom Line
2020 in spite of a crushing halt in early spring will end up being a great year for residential sales. This is excellent news for sellers. Buyers will still face inventory shortages but the good news is that rates will remain at all time lows. It also looks like we’ve seen the bulk of appreciation already. I expect it to hold and perhaps rise another 1%.
Whether buying or selling, your best opportunity will be September through October. Looking to next year, rates should remain low and it should mimic the last half of 2020. Sustained strength at a solid pace – nothing dramatic.