During the prior 20 months, one of the big hurdles that buyers had to deal with was the scarcity of inventory. Inventory of available homes on the market truly has been reduced from prior periods and prior years.
Some agents are expecting the rising interest rates to create a barrier that will throw another kink in the pipeline of home purchases. But this may not be the case at all. Even as home prices escalate and mortgage rates increase, the economy is robust and real wage growth is impacting the prospective home buyer of today. Even Millennials have jumped into the market and are representing a higher percentage of first-time home buyers than has been the case in the prior 24 months.
Interest rates are projected to hit between 5.3% and 5.5% by the end of 2019. What this may ultimately end up doing is creating a higher buyer demand for those looking to get into the market.
Buyers may not wait till spring to make that new home purchase, considering the anticipated hike in fed rates over the next 12 months.
Home price growth has slowed to about the 2% level in much of the country, but that still does not impact New Jersey in some ways, because New Jersey’s value has many times reflected the very high prices in the New York market. Even New York City’s outer boroughs are seeing a significant climb in their values. Certain homes in Brooklyn that were once considered affordable to just about any family with decent credit scores are now priced above the million-dollar mark. Brooklyn is now $1,000,000 for most homes on the market.
As for home sellers, there will be more competition from more sellers who have also jumped into the market, but that still does not mitigate the fact that inventories are still usually under 6 months, which had been considered standard. Many of New Jersey’s counties, including Essex, Hudson, Passaic, Union, Middlesex and Monmouth County, have under 5 months worth of inventory; some even drop down to 4 months worth of inventory.
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.