Lately, everyone I speak with is asking the same question…. What is going on in the real estate market right now and what do you think 2024 will bring? Here are some insights that I can share that provide current market trends as well as thoughts about the future as we start the New Year:
- Housing inventory remains extremely low right now, which is driven by a few factors: The time of year, with Winter historically the slowest time of year for sales in the Northeast, as well as current homeowners not moving because of the low mortgage rates on their current homes, as they don’t want to move into another home with significantly higher finance costs.
- Making it more challenging for buyers is that this lack of inventory is not just a recent issue. NJ residential real estate in 2023 had 20% less inventory than 2022 and 2022 had 20% less inventory than 2021. As you can imagine, given this multiyear inventory issue, there is still significant pent-up demand, with more buyers looking to purchase than houses for sale.
- Given the lack of inventory, prices are still high, but they are increasing at a slower rate than we saw at the beginning of the Pandemic and the few years that followed. With some houses, we are still seeing multiple offer situations. However, it is not all bad news for buyers. Some listings are sitting a little longer while buyers shop around and realize there isn’t anything much better before they come back to the house. The one sector where we are seeing a slight increase in inventory and lowering of listing prices is in the luxury market, comprised of those houses over $1,500,000.
- As I alluded to above, interest rates have increased the last few years and ticked above, 7% in the 4th quarter of 2023. Although no one knows for certain, there is speculation that the US Federal Reserve is expected to cut short term interest rates three times this year. News of this pushed mortgage rates under 7% at the end of December but the unknown of when the Fed will actually cut rates pushed them back up a bit last week. The thought is that mortgage rates will be in the 6% range for most of 2024.
- Some buyers did decide to wait on the sidelines once mortgage rates shot up in Fall, 2023. If you are waiting for the 3% or 4% rates to return before you purchase a house, that is not likely to happen anytime soon. My advice would be to continue to save more of a down payment to lower your mortgage amount or purchase a lower priced home/smaller home than you had expected and upsize as you build equity and save.
- New Jersey real estate has proven to be a great investment year over year for the last 5 decades. There have been periods of time where the real estate market has gone down but the average year over year increase in value has been 5%. Don’t put off moving on and planning your life as a home has utilitarian value and current rates are not bad when looking at it from a historical perspective (look back at the double-digit rates from the 80’s!).
It would be my pleasure to discuss whether it makes sense to buy or sell right now and to assist in developing a plan that meets the current and future needs for you and your family.
Tis the Season for Property Tax Appeals