For the last year I have been writing about how the available inventory in South Orange and Maplewood, and across the country, has reached critically low levels. This is a complicated problem and it is explained beautifully in this New York Times article from a couple of weeks ago that I think you will find interesting. There has not been enough new housing built in this country for a long time and this shortage has been compounded by some COVID related trends:
- Pandemic lifestyle changes that have people craving more space, particularly in single family suburban homes
- Sellers being reluctant to to have people in their homes for showings and feeling unable to look for new housing options because of fear of the virus
- Low interest rates making it possible for longtime homeowners to stay in their homes longer or hold them as rentals
- Entry level buyers being concerned about job security during COVID and being reluctant to “move up” to a larger home
- More millennials entering the housing market increasing demand for housing
- Declining rents and very low interest rates making purchasing a home more attractive and driving up demand even more
This severe inventory shortage simply cannot continue as it has. We are seeing homes selling routinely with 10 or more offers. Sometimes 20-30 offers and this makes it close to impossible for even the strongest buyers to compete. I predict some near term changes that will make the supply of homes more plentiful–
- The prevalence of vaccines and lower infection rates will make more sellers inclined to look at new housing options, retirement homes and relocation destinations and put their homes on the market. If you are considering selling this will mean more competition.
- Recent government stimulus programs will cause a rise in interest rates, making homes less affordable to buyers and cooling demand and prices. If you are considering selling, higher interest rates make your home worth less.
- Demand for suburban locations will fall as urban markets rebound with falling virus rates. This will make our towns less attractive to urban dwellers who may choose to stay in the city. If you are considering selling, the NYC suburban home may not be as desirable in the near future.
- As mortgage forbearance programs end some owners who have been negatively impacted by COVID related changes to the economy, unfortunately, will not be able to continue holding on to their homes and these distressed homes will start to come on to the market. This will increase inventory (competition) and depress prices for local sellers.
In sum, in the coming months the market factors that have created a perfect storm for SOMA sellers may not be quite so perfect. If you are considering selling your home, we have eager and well qualified buyers looking from the $400-$3 million range in SOMA, West Orange, Montclair, Short Hills, Summit, Bloomfield and Glen Ridge. Please let us know if you would like to discuss your plans and the current market by emailing me at [email protected]. I am happy to consult with you.
The Allison Ziefert Real Estate Group is a top producing real estate team based at Compass in Short Hills, NJ. We are local market experts, specializing in real estate and homes in Maplewood, South Orange, Millburn/Short Hills, Montclair, West Orange, NJ and the surrounding towns. We are driven by earning great testimonials and referral business from happy clients. You can read our testimonials here.