Are all the news and social media headlines catching your attention about the real estate market? In this video, I’m going to tell you why not everything you hear about the market is true. We’ll look at the past and current housing trends so you know what’s going on from somebody that works with buyers and sellers every day.
The Jersey Shore Market
While you might hear a lot about real estate in the news, I’m here to share with you what I’m actually seeing every day, boots on the ground, showing properties, and working with buyers and sellers here at the Jersey Shore. When looking at properties for sale and properties sold quarter by quarter, one of the concerns is that the number of transactions has decreased.
Some folks may think that this is part of a market correction or crash. However, I’m okay with it because the number of properties for sale and the number of properties closing are both down. If the property is not available to sell, it can’t sell. What we’re always looking for is whether this changes as the number of properties for sale are increasing.
Looking At The Numbers
Currently, the number of properties for sale is down 37% and the number of properties sold is down 26%. Median sold prices are still increasing, up 60% from 2018. These numbers, which are for the entire MLS in our area, give us a really good perspective of what’s actually going on.
When looking at the data, the average days on market are still very low; over the past three years, it’s down 53%. Right now, we’re still at just about 35 days on market on average. This is historically very low and still very much a seller’s market.
Supply And Demand
Remember, housing inventory (or supply and demand) is the biggest indicator of the real estate market. If inventory (supply) is increasing but demand is decreasing, that’s when you’ll see a significant shift or even a crash in the market. Though a lot of people are freaking out because the amount of inventory has increased a little bit, it’s important to look back.
What we might call a “normal” market is somewhere in the middle here—and we’re still significantly below that. We’re certainly not anywhere close to 2011, when the market started recovering after the poor market of 2008. We’re nowhere near a buyer’s market or a surplus of inventory. This is why we’re still in a seller’s market.
Interest Rates
The other thing that we’re seeing is that interest rates have crept up a bit. While you may be seeing on the news that they’re 6% or more, they’re actually not quite that high. Interest rates have gone down and in our Shore towns—like Brigantine, Margate, Ocean City, Sea Isle, Avalon, Stone Harbor, Wildwood, and Cape May—we have a lot of properties that are in jumbo loan territory.
These homes that require a loan of $650,000 or more have rates that are still in the 4s, which is still very low. We also have a lot of buyers that are taking advantage of adjustable rate mortgages, which is something to think about. You can get a much lower rate if you get a 7-year adjustable rate mortgage, so be sure to consult with your mortgage lender.
If you’re going to be in the house less than 10 years, it might make sense to do an adjustable rate loan. If you’re planning on being in the home for more than 10 years, it may not make sense. A good quote from Dave Ramsey is that the root issue of what drives house prices is almost always supply and demand. When interest rates go up, there are fewer buyers and demand goes down. This is going to soften the market.
Are We Headed For A Crash?
The folks who think that we’re headed into a real estate market crash may not always be correct. In fact, if we look back to other previous recessions, there was not always a real estate market crash. Of course, there’s a recency bias; the most recent recession in 2008 included a real estate crash. However, at other times in history, this hasn’t been the case.
We don’t always have to be so focused on 2008 when we’re comparing what might actually happen in the real estate market. There are virtually no bank-owned foreclosures right now, which tells us we’re not in a mortgage-type crash that we’ve seen before. Everybody has a ton of equity in their house; therefore, there are little to no foreclosures across the country.
I’m Here To Help
I hope this gave you a good idea of what’s going on in the Jersey Shore market. Of course, everybody lives all over the country, so you may be seeing something slightly different in your market. I have some experts in that area, so if you ever need someone to give you a good overview of your market, I can connect you with the best.
While this is what we’re seeing in this area right now, it may change. I’ll continue to keep you posted here on my channel, so make sure you subscribe so you never miss an episode. Stay tuned to see what I feature next!