Interest Rates Drop, Prices Pop    

According to the National Association of Homebuilders, less than 60% of new and existing homes that were sold in 2Q of 2020 were considered affordable to families with an adjusted income of approximately $73,000 per year. Unaffordability is here, but how long will it stay.

This market condition is also being aggravated by the historic contraction of inventory of homes available for sale in the United States. Some markets have fallen by as much as 60% from 2019.

New Jersey’s Market
In New Jersey, for example, the median sales price has increased by only 1.7% to $355,000; but the average sales price has skyrocketed by 6.5% to $450,645 over the last year.

And the number of homes for sale throughout the state of New Jersey has fallen by nearly 45% to just 23,514 homes. This translates into a 3.4-month supply of homes.

Compare this to the number of homes for sale in September of 2011 when there were approximately 57,000 homes for sale on the market and the month supply was 15.7-months. Also the average sales price back in September 2011 was $396,000 with the percentage of price received translating into 93.8%.

So it all comes down to more buyers, lower interest rates, fewer homes for sale, and pent-up demand are all contributing to what is now the strongest home buying market seen in the last quarter century.