For the last two-and-a-half years the real estate market has been in such an accelerated trend that it was acting more like the stock market rather than the real estate market. In contrast with the inflated market that led to the 2008 crash of the stock and real estate markets, this market is based upon historic shortages of inventory, low interest rates, and a supply of buyers that has been pent up for a number of years.
We are now starting to see a flattening out of this curve from prices of the extravagant to a more reasonable level.
Recently, the robust summer rental market for the Hamptons has found a large number of unexpected vacancies, which are producing some very harsh price cuts. Some of this excess demand has a great deal to do with the inflated rental prices that the Hamptons have often seen to command. There are other factors that are affecting the lack of enthusiasm: the historic inflation rates that had been stripping household budgets and the ridiculous increase in the cost of a gallon of gasoline. Today it seems that a gallon of gas goes for $5 a gallon, which is nearly 90% higher than it was just a few years ago. And now a barrel of oil is going for over $117 a barrel: this hasn’t been seen since the time when inflation was out of control back in the ’70s and early ’80s.
One report stated that rental prices in the Hamptons have fallen off a proverbial cliff by at least 26% in 2022. According to some articles, owners and brokers are cutting rental prices by 30% or more just to keep the vacancies at bay.
And in a recent article, one waterfront rental cut its price from $70,000 a month to just $45,000 a month.
The New Jersey Market
The New Jersey summer rental market was, for all intents and purposes, fully rented by February or at the latest March.
“The Jersey Shore summer market has been very strong for the last few years. What we are seeing is that with the work-from-home economy, families are able to book vacation family times in September and October when the crowds dissipate, and the water temperature is still warm,” commented Anthony DiMaio, a New Jersey- based real estate blogger.
The average rents nationwide have hit over $1,800 a month, adding fuel to the inflationary fires that have been hit by the supply chain blockages. In Monmouth County, some good news is that in March the month supply of inventory increased by 9% from 2-month supply to a 2.1-month supply. That was not an anomaly, because in April the supply increased even further from a 2.1-months to a 2.4-months’ supply which represents a 14.3% increase year-over-year. This is encouraging news because it points to an increase of supply which flattens out the price hikes for single family homes. One other point: the increase in the median sales price for a single-family home in Monmouth County increased from $590,000 in March 2022, to only $605,000 in April of 2022. All of this seems to be pointing to a healthier real estate market. Let’s see how long this lasts.
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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