When I read that line in a CNBC story on mortgage rates, it made me laugh. Everybody can clearly remember the impact the lockdown had on the real estate business in April 2020 with an incredibly disappointing month for businesses and real estate. With the the pandemic rifling fear throughout the population, spring buying season never arrived. It was a Christmas without Santa Claus; a tree without lights. It just never came.
As posted earlier on the Counsellors blog, the prices for single-family houses continues to appreciate at incredible rates. One county that stands out significantly is Essex County. The median price for a single-family home reported in the month of July 2020 was $531,000; that is 12.4% above July 2019. What is even more remarkable is that the number of new listings also skyrocketed from 627 for July 2019 to 796 in July 2020, representing a 27% jump in just 12 months. It seems that the buyers can’t get enough. The other metric that stands out is the percentage of list price received, which in July represented 101.7%. The 2-7 months supply of inventory obviously has scared buyers to the point that they’re willing to take what they can get.
Bergen County also experienced an unusual surge in new listings, climbing 22% from new listings posted in 2019. The median sales price in Bergen County in July climbed nearly 11%, to $565,000.
Historically Low Interest Rates
In addition mortgage applications jumped 33% from 2019 to 2020. Obviously, the anticipated buyer surge that was supposed to come in April has arrived finally in August.
The convergence of factors contributing to this firestorm of buying also includes some of the lowest mortgage interest rates in recorded history. The average interest rate for a 30-year fixed-rate mortgage with conforming loan balances up to $500,000 fell to 3.11% from 3.13%. The slight drop in rates was made up in the increase of origination fees and points from .36 to .38.
Buyers Jump First, Think Second
There’s no second chance when it comes to putting an offer in on a property that meets your criteria for a home.
It’s a seller’s triple play: inventory shortage, low mortgage rates and too many buyers looking to buy a home.
The single-family home is the apple of every buyer’s eye. The work-from-home economy is clearly here to stay, with the evidence of New York City’s transit system about to implode due to rider shortages.
Cities with commercial buildings in densely populated urban areas may become as obsolete as the Tyrannosaurus Rex.
Even Ocean County, where inventory supply had at one point been 15 months, is now seeing single-family inventories fall precipitously to 2.6 months-supply; that’s 61% down from 2019 levels. The median sales price, a record, has escalated the price of a single-family home from $310,000 to $360,000 in just 12 months.
It seems that the hordes of buyers are not just coming from New York City, but also from northern New Jersey and Philadelphia.
One of the reasons why properties are selling so quickly in many cases is that when a home is viewed with an agent, it is most likely not the first time they have seen the inside of the house. The internet and online viewing and virtual videos have made the inspection of a house by a potential buyer usually the second or third time they have seen the property.
The pandemic has only caused buyers to spend more time online searching for their home, then in the neighborhood looking at houses. They are ready to buy, with mortgage limits pre-approved and agents who know which houses will most likely become targets of a bidding war.
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.
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