New Jersey has finally begun to see a leveling out in home prices in the second half of 2022. As interest rates climb, the demand for housing has slowed. With a sense of significant housing market changes, people have many questions about what all of this means for the average buyer or seller. Here are some of your most common NJ housing market questions answered.
Q: Should I wait for housing prices to drop before buying a home?
A: If you are a buyer financially prepared to purchase a home, now is as good a time as any to enter the market. Would-be buyers waiting for a market crash to snag a house with a low price tag are likely to be disappointed. Real estate experts surveyed by Zillow predict it will take at least two more years—if not more—for home prices to drop to pre-pandemic levels. Waiting around for home prices to fall could cost you many great opportunities that are available right now. You also have no way of predicting the future of interest rates. If you wait for lower home prices, you could negate your up-front savings by paying more in the long run with a higher interest rate.
Q: Should I sell now before the market cools too much?
A: Homeowners looking to sell currently face a dilemma: take advantage of today's warm but cooling market or wait until the next big real estate boom. The NJ housing market is still low on inventory, which is good news for sellers looking to maximize profit. But sellers should use caution: homes are staying on the market longer now with buyer concerns over inflation, rising interest rates, and high home prices. As a seller, working with an experienced real estate agent who knows your local market is crucial to determine if it is a good time for you to sell. Generally, sellers are still experiencing a favorable market, and experts predict this trend to last for some time.
Q: Will interest rates drop again?
A: One of the major driving forces behind the real estate boom of the last two years was historically low-interest rates. Now, as interest rates begin to climb back up, low rates are no longer the primary driving force in the market. Buyers shouldn't expect lower rates anytime in 2022. While some more conservative guesses predict rates will moderate throughout the rest of 2022 and early 2023, others are predicting rates to get higher. Bottom line: don't count on lower interest rates to entice you back into the market.
Q: How can I battle inflation to purchase a home now?
A: As with most things, inflation drives home prices up. Buyers are worried the changing economy will price them out of buying a home forever. However, you can do a few things to mitigate the impact of high home prices and rising interest rates. You can put your down payment in a high-yield savings account. Higher interest rates apply to savings accounts as well. With a high-yield account, you could cushion your down payment should you need to spend more than you thought. Also, consider locking in your rate upon receiving approval for a loan. A rate lock ensures you do not lose the rate if you spend significant time looking for a home.
With a market as complicated as this, working with an attorney who understands real estate law's complexities can save you major time and headache. Veitengruber Law is an experienced NJ real estate firm with solutions to virtually all of your New Jersey real estate problems.