We all know mortgage interest rates have been rising in recent months. But how has this affected the New Jersey real estate market?
In North Jersey, the real estate market is still very active. But as always, we find that when a house is priced right at a competitive market rate, home sellers will see a lot of prospective buyers come through, bidding wars continue (although now at more moderate levels than in recent years), and the seller is likely to see five to ten contracts.
Strategic pricing yields the best home sale results
“The age-old wisdom about listing prices still applies,” said John Sass, broker owner of CENTURY 21 Cedarcrest Realty. “When you price a home at market level, you’ll get a lot of buyer interest and activity. There is still a high likelihood of a bidding war with homes selling at around 4% over asking.”
Sass notes that the market has shifted regarding pricing strategy. “Years ago, you would price a house slightly below market and if it was truly worth more, the buying public would bid it up. Today, I advise sellers against overpricing a home. You can’t do that and hope it will increase in value. The best practice is to price it according to comp sales in your neighborhood, which makes it competitive.”
He said that pricing a house competitively will yield a lot of interest and showings, and result in the home selling for several percentage points over asking price, an ongoing trend in NJ that he foresees continuing through the rest of 2022.
“Even in a market that’s in flux, as we are experiencing now, strategic pricing is king.”
NAR report on NJ home sales and pricing
According to a report from New Jersey REALTORS (NAR) of home sales data in June 2022, rising inflation, interest rates and prices are slowing the housing market. However, some trends have not changed according to these June statistics:
- Pending home sales pace weakened by 8.6% and fell 20% from a year ago
- Closed sales were down 15.2%
- However, the median sales price statewide increased by 10.8%, showing that demand is still high; buyers are hungry and willing to pay
- In fact, NJ sales prices were 104.4% of asking price (buyers paid 4.4% over asking)
Rising appreciation puts buyers ahead
John Sass noted that over the lifespan of real estate record keeping, the average percentage increase in home appreciation has risen from 3.5% to 4.5% today; so, although prices may be declining somewhat and sales are slowing down, the NJ market is still going strong. And for buyers looking for a long-term home, it is still a great time to buy, even with the interest rates on the rise.
“For home buyers who plan to stay in the house for 10 or more years, they will end up ahead of the game when they go to sell,” he said. “Even though mortgage rates may go up again in the next year or so, they will eventually drop. At that point, the homeowner can refinance the mortgage and when they’re ready, they’ll sell a home that’s worth more money than when they bought.”
Buying or selling a home? Start at Cedarcrest Realty
CENTURY 21 Cedarcrest Realty has listings at all price ranges, in towns throughout North Jersey and beyond. If you’re on the market to buy, our associates will work with you to find the house that best fits your needs and help you negotiate the best price. If you are listing your home, we help you price it right to get the most interest and sell quickly. Visit our offices in Caldwell and Little Falls to get started.