How is the market?
Real estate is local!
The market depends on many factors, such as access to public transportation to NYC, school ratings, and a vibrant business district.
The price range is important too. In some towns, higher priced homes take longer to sell due to the limits on yearly tax deductions. The market looks at your home differently if you house is unique, or on a main street, or in a flood zone, or if the layout is unusual.
We have seen a strong influx of buyers in Northern Bergen County due to the pandemic. Strong buyer demand is expected to continue to add pressure to the already low inventory market, and we will continue to see multiple offers on many houses coming to the market.
I am a buyer – Should I wait?
No, for a few reasons:
First, if you wait, your buying power is likely to erode. Thanks to low mortgage rates, housing is more affordable than it has been in years. Mortgage rates are expected to remain low during the spring. But they will increase eventually, and you will then lose buying power.
If you are purchasing a home with a mortgage, a 1% rise in mortgage interest rates (e.g.from 2.75% to 3.75%) increases your monthly mortgage cost by about 10%. Consequently a 1% rise in rates will result in a 10% decline in your pre-approval and your buying power.
For example, if you are pre-approved for a 600K purchase and rates tick up by 1/2%, the bank will reduce your pre-approval by 5%. Now you are qualified to purchase a home for 570K. But, home prices are still rising, by about 5% annually. So the home that was 600K a year ago is now 630K, but your purchasing power has been reduced to 570K. You will either need to set your sites lower, or bring a lot more cash to the closing table.
In addition, lending standards often tighten when the economy is starting to get into full swing. If your credit score is less than stellar, or if you are carrying debts, such as student loans, your purchasing power could erode even further.
I am a buyer – Should I wait out the next correction?
No. Currently, there is no anticipated correction on the horizon. And the next correction will NOT be a collapse like we experienced in 2008. That crisis was caused by subprime loans that artificially inflated home values.
We have a much stronger banking system now and healthier lending standards (no subprime mortgages to fail). Therefore, banks will not collapse and will not drag down the housing market.
The pace at which houses are selling may slow down once the pandemic is over, but our tight inventory will not cause prices to drop precipitously again. Economists say that the next correction is still a few years out in which the housing market is expected to correct itself s-l-o-w-l-y this time.
When deciding whether the time is right to buy, consider your goals, dreams, and lifestyle.
If a good school system is the reason for your move, your children may have graduated by the time a correction has reached the bottom. If you are renting now, you could miss out on years of paying down your mortgage, enjoying tax benefits, and enjoying rising property rising property values in the upcoming years.
So, buy now, but buy smart! We always make sure that our buyers make an educated decision that will lead to happiness and wealth building. We are looking for clients for life. We will not sell our clients a home that we cannot sell ourselves again!
I am a buyer – Should I try to “time the market?”
No one can time the market exactly. It is always a rear-view mirror event. While prices will be lower after a correction, predicting the end of the correction is difficult and is only recognized after a sustained period of accelerated price appreciation.
During that waiting time, if you do not buy, you will lose out on tax benefits, lose out on paying down principal for many years … not to mention that you are moving for a reason, such as more space, a better school system, a better lifestyle, etc.
Owning real estate is a tried and true a path to greater wealth. We are here to help you make a wise decision. We will tell you the “good, bad, and the ugly” for each home that we look at together, so you can feel confident about making a sound financial decision.
I am a Seller – What should I do?
List soon – but price it right!
As prices rise, buyers get more price sensitive, resulting in lack of urgency and fewer multiple offers – even in this market driven up by the pandemic.
DO NOT “test the market” with overpricing. Statistics in NJ show that a house priced right will achieve its fair market value, and sometimes more, because of the low inventory and multiple offers, in any market! But the same house overpriced beyond the fair market value will need to drop the asking price at least once, creating more bargaining power for the buyer, which results in lower offers and nets the seller less in the end.
Now is the time to prepare to sell your home 2021. We will create a plan for repairs, painting, decluttering, and staging based on our years of experience in knowing what is important to the buyer, as well as what steps to take BEFORE listing in order to have a smooth home inspection.
A good listing strategy is one that starts weeks, or even months, before your home hits the market, resulting in the highest net profit for you as seller.
Contact us for an appointment at 201-310-1260 (Till) or 201-970-8183 (Lisa) or email us at THorkenbach@gmail.com or LisaSammataro@kw.com