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buying a home in nj, nj real estate

Is the New Jersey Housing Market Softening?

While the current New Jersey housing market is certainly still a seller's market, it's now possible for buyers to enter this market with confidence.

On Behalf of Veitengruber Law | Aug 03,2022

The last two years have seen a hot New Jersey housing market with soaring home prices, intense bidding wars, and enticingly low-interest rates. And while all of this was generally good news for sellers looking to maximize their investment, many would-be home buyers struggled through the chaos of a hot market. As we head towards Fall 2022, the NJ housing market may be cooling a bit, restoring the homeownership hopes of many who've been unlucky in the market over the last few years.

A report from New Jersey Realtors shows that buyer activity in NJ has slowed throughout the first half of 2022 because of high home prices and a rapid increase in mortgage interest rates. Sellers are seeing fewer buyers and longer times between listing and getting that first offer. At the same time, inventory is increasing steadily as more homes sit on the market longer. These factors could put pressure on the market, leading to lower home prices.

While the current NJ real estate market is certainly still a seller's market, several good reasons a buyer should confidently enter this market are emerging. Here are some of the things buyers can look forward to in a cooling market:

1. Higher interest rates mean fewer buyers on the market.

The historically low-interest rates of 2020-21 drove buyers into the market in droves. The recent interest rate hikes have caused people to pause before purchasing a new home. Fewer buyers on the market mean less competition. With less competition, you can take your time a bit more. While you may still end up in a bidding war, it will likely be with one or two other people instead of twenty.

2. Interest rates are still pretty good.

While interest rates are 2.5% higher than they were a year ago, they are still low compared to the historical average of 8%. Some experts also predict an interest rate drop at the beginning of 2023. Motivated buyers should focus on increasing their credit score over the next few months to get the best interest rate possible. A lower interest rate can save you significant money over the life of your loan.

3. Bigger inventory means more options.

A year ago, buyers were forced to make decisions at the drop of a hat and settle for real estate they potentially weren't 100% thrilled about. Some desperate buyers opted to forego home inspections to get a competitive edge. As the market cools, buyers will have to make fewer sacrifices regarding their ideal home. Buyers will also have more room to negotiate with sellers concerning property repairs and problems. With more options to choose from, you can feel more confident passing over a property you don't love.

Veitengruber Law is a New Jersey law firm with years of experience in the housing market and real estate contracts. If you are a buyer looking to take advantage of the cooling NJ real estate market, we can help you achieve your goals and protect your investment.


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