Market Update with Kevin Kern

Late Spring/Summer 2023

The Seller’s Market continues to ‘cook’ and we here at Pollock Properties Group are your loyal Chefs looking to drop some plates of knowledge, so your ‘bistro’ will be the hottest spot in town!  Sorry, I’ve been watching too much of The Bear.

“But I can safely say that, yes Chef…this is still a great time to sell your home.”

Season(ing) is Back

The first thing for all Homeowners to be aware of is that the Covid Craziness has morphed into something that more closely resembles a “normal” marketplace. We are definitely seeing the traditional, seasonal home sale schedule plant its roots once again. The basics of this seasonality in Northern New Jersey:

• We see a bustling Spring Market that runs from about the Super Bowl to Memorial Day.

• We then see a somewhat slower Summer Market that runs until the kids go back to school after Labor Day.

• And then we have a vibrant Fall Market, all the way until right before Thanksgiving.

The holidays tend to distract people on both sides of the housing market through the Winter months, but the “Spring” hits earlier and earlier, as listings historically do very well even in the first few weeks of January.

Why the limited Menu?

In an attempt to give you a bit of a 2023 market of the moment update, I’d like to highlight the "Late-Spring/Summer" (LS/S) market over the past five years in South Orange/Maplewood.

The larger picture of this market continues to be the perfect storm of:

• low construction during the Great Recession

• Millennials deciding to buy later than previous generations

• and the golden-handcuffs many potential Sellers feel from their current low interest mortgage.

The most current LS/S data fits this narrative but the inventory has actually almost doubled since this same period last year. See graph below:

The spike in interest rates in June of 2022 sent buyers reeling and sellers hiding. Even though the interest rates have not gone back down, the inventory has definitely returned this LS/S season. And the important part to make note of is that the buyers were right there to scoop them up. The increase in supply did not lead to lower prices because the Millennial wave is years from being satiated.

The chart below for Maplewood and South Orange combined shows that during the same LS/S period over the past 5 years, prices went up, independent of supply.

This trend is because the demand in our area is so great that we could probably sell every house in SOMA three times over and still have some stragglers looking to make offers! This is particularly true of the standard 4BR/2BA home in our area which regularly sells in the $900K range or higher.

No Prix Fix Here

It’s also interesting to note that as the supply has increased, the gap between list price and sale price has actually widened. See graph below:

The takeaway from all of this is that it is still a great time to sell your home. You certainly haven’t “missed the market”. And waiting for the interest rates to go down may be counterproductive because, as we’ve seen, the rise in supply that would be created would still be far outpaced by the rise in demand. Prices will go up until the Millennial diners have eaten their fill. (See what I did there with that call back?!)

We’ll take the Check

Bottom line for Sellers:

If you have a life event which would incentivise you to move, it may be better to sell/buy now and refinance someday in the future, when inflation subsides and rates come down as a consequence.

Bottom line for Buyers:

If you are on the fence about buying a home, don’t be. Home values continue to go up even in light of the higher interest rates, and owning (especially long term) is still better than renting. Like the Seller’s if inflation subsides and rates come down as a consequence, you can always refinance.

Article written by:

KEVIN KERN

Realtor/Sales Associate

Pollock Properties Group of Keller Williams Realty Premier Properties

mobile: 917-405-6998 email: kevinkern@kw.com

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