Are you curious about what’s actually happening in the real estate market here at the Jersey Shore? In this video, I’m going to give you the market update for October 2022. We’ll look at everything from inventory to interest rates so you know exactly what’s going on with the housing market.
The Current Market
Now more than ever, I’m getting asked: how’s the market? Here at the Jersey Shore, we have seen a cooling off. This is a pivotal moment in the market right now, and I’ve seen some buyers who are taking a pause or a break to actually see what happens to it.
At the same time, what you’re seeing in the media is not true. We have not seen a housing crash, and we have not seen a drop in prices. What we are seeing is higher inventory. There are more houses on the market right now, not because of more new ones coming on, but because there’s been a slowdown of buyers purchasing.
This is probably because of interest rates increasing. We’re going to look at interest rates, where they’re at now, and where they might be going. We’ll also look at what’s happening to prices next year according to some of the experts. Let’s take a little closer look at the data to see exactly what I’m talking about.
Looking To The Future
Right now at the Jersey Shore, we’re certainly going to see fewer properties to sell in 2022. Things have cooled off and slowed down just a little bit. I look at the MLS and track the numbers every day, and properties are going under contract every day. Additionally, there are still new properties coming onto the market every day.
This means the market is still very active. I don’t necessarily want you to get fooled by some of the headlines that you’re seeing in the news right now. While they are true to some extent for particular parts of the United States, it’s not true for every part of the US.
Now more than ever, we’re going to have to be hyper-focused on where we’re getting our information from as far as the real estate market goes. I think that the second home market in this transition period is going to be affected differently than the primary home market.
Interest Rates
As we’ve seen increasing interest rates, that’s likely going to hurt primary home buyers more so than second home buyers. Freddie Mac, one of the largest federal mortgage purchasers, shows an average rate of 6.7% for the whole U.S. We know what the Feds have been doing; they’ve increased rates.
This has a trickle-down effect that is going to cause mortgage lenders to increase their rates as well. While there’s a whole long story behind this, what we know is that the Feds were purchasing an unprecedented amount of loans—trillions of dollars worth—over the last couple of years. While this was part of the COVID stimulus, that’s not happening any longer.
We’ve had crazy high inflation that the Feds want to temper. The way they’re going to lower inflation is by increasing rates. We’re now about double what the mortgage rate was just a year ago, and this is what everybody’s seeing in the headlines. The reality is that rates have gone up a lot, but they’re not quite as high as you might think—particularly locally, as we’re in a jumbo home market.
Will Rates Keep Rising?
A lot of local lenders have lower jumbo loan rates than they do conventional conforming loan rates. Additionally, on average, most people either sell or refinance their loan within five years. Most of the leading economists are predicting that interest rates are going to go down in the near future. If they do, you’re probably going to take advantage of refinancing your loan.
A lot of people are pretty comfortable with that 7.1 ARM right now. More than ever, it’s really important to work with a local lender who’s experienced and knowledgeable. The Feds seem insistent that they will continue to raise mortgage rates until inflation comes down, so I don’t know if we’re at the end of this yet. However, I also think that we’ve seen the most significant increases thus far.
Supply And Demand
You’ve heard me say before that interest rates do not control pricing; what does is supply and demand. Right now, we are seeing that supply and demand is increasing. It’s not necessarily that more houses are coming onto the market, as that stayed relatively the same. However, there have been some buyers who have taken themselves out of the market right now.
Since there are fewer purchasers, inventory has gone up a little bit. This is for a few different reasons. Number one, due to these headlines that we’re looking at, some people have gotten concerned about the uncertainty. They’ve withdrawn from the market until they become a little bit more certain about what’s going on. Hopefully, we’ll get some clarity on that soon.
There are more listings and less demand right now locally. When comparing the number of showings that sellers are getting or buyers walking through the door to look for a house for sale, we’re far below where we were in previous years. Again, this means there’s less demand right now than there was last year and the year before that.
This doesn’t mean that the housing market is crashing right now. Rather, it’s fairly normal. We saw an extreme market in the last two years, but it’s no longer extreme. Can you believe that in 2020, more buyers were walking through the door than ever? Now, things are just a little bit more normal. However, because fewer buyers are walking through the door, we’re having a little bit of an increase in supply.
Property Values
Everybody is asking what’s going to happen to home prices. Some people are a little concerned that they might purchase a home and suddenly lose value in their house. The only thing I know for sure right now is that property values haven’t gone down locally. However, if you’re getting a mortgage, the cost has gone up because of interest rates.
Most economists—along with the federal and housing agencies—predict appreciation to continue through next year. Here’s some really good news: the United States is seeing historic equity in their homes. Homeowners right now have a lot of equity, which is very good news. This is also why we probably will not see another 2008.
Foreclosure Fears
I have people ask me every day where the foreclosures are. We’re not seeing any foreclosures in our market because I don’t know anybody who’s underwater on their mortgage. Unless you’ve got a new home or mortgage in the last few months, you probably have a significant amount of equity.
Additionally, if you just purchased something recently, people are putting 20% down on their mortgage more often than not. They tend to have at least 20% equity. So if you could not afford your mortgage for some reason, you can go and quickly sell your house. This way, you won’t be a distressed seller and won’t lose your home to the bank either.
That’s why we’re not seeing a 2008-type circumstance right now. If interest rates go back down (like we believe they will), you’ll have the equity to just go do a quick and easy refinance in the near future. This is contrary to what you might be seeing on the news right now.
I’m Here To Help
I hope this gave you a better idea of what’s actually happening here at the Jersey Shore and Atlantic and Cape May County. If you’d like to know more about your particular property or town, please contact me today I’d be happy to help.
If you like what you’re seeing and want to be notified of future market updates, please make sure to subscribe so you’re notified of all things Jersey Shore real estate. Stay tuned to see what I feature next!