Bulletin Board Magazine 2020, Volume 2

2020 Real Estate Market

THE 2020 REAL ESTATE MARKET: Is this the “new normal”? by Suzzane Kronenfeld, Director of New Homes and Luxury Properties KellerWilliams Realty

Suzzane Kronenfeld Director of New Homes and Luxury Properties Keller Williams Realty

R emember late winter 2020? It seems like a lifetime ago, but the real estate market was on robust footing with buyers facing low inventory, low mortgage rates and no snow in this area that would hamper buyer traffic. (for those who think the “spring” market starts in the spring, it starts the weekend after the Super Bowl. And the best weekend for traffic? The weekend before the Super Bowl-since there are no games scheduled, it turns out to be a great weekend for open houses!). Then Covid-19 hit, and builders and resale agents alike were forced to rethink how buyers were going to see homes and how sellers were going to list their homes. Rules for showing homes were put into place and technology took over. Buyers viewed homes online, sellers took videos for their agents so their homes could be listed, and the market kept moving. Housing inventory remained low and an abundance of buyers, many who were moving to NJ from out of state, created multiple bids (and an increase in pricing) with buyers so anxious to win the bid they were forgoing inspections and appraisals in order to make their office more attractive. It is now the fall and builders and resale agents have figured out how to safely open sales centers and manage public open houses. Inventory is still low (there is a segment of the

market that still is not comfortable opening their homes to the public), mortgage rates are still low, and traffic has leveled off. This market has created a few new trends: buyers are looking for outdoor space, multiple home offices (since many workers won’t be going back to their corporate office anytime soon), home school areas, storage space and a dedicated “Zoom” room. What a great opportunity for builders to incorporate these trends in their floor plans and be in the forefront with new designs. What is going on in the market now and what do we see going forward? Predictions are there will not be a homebuying slowdown in the fall. But the mix of surging buyer demand and low inventory threaten to “choke-off ” the first-time buyers from the market. More homebuilding is needed to relieve some of the market pressures. One of the reasons that new construction home sales are up is because there are not enough existing homes for sale, especially for single family homes. Buyers are flocking to new construction homes because the low mortgage rates give them more affordability, new homes are perceived as cleaner and therefore safer from COVID risks and working remotely gives people options to live further away from big cities, where single family home prices are

often more expensive. Research supports the trend that migration is out of the cities and into the suburbs. According to Dr Lawrence Yun, NAR’s chief economist, home sales will continue to amaze and there are still plenty of buyers in the pipeline ready to enter the market. Further gains in sales are likely for the remainder of the year. A shortage of homes has proven problematic in the housing industry over the past few years but has grown worse in recent months- demand is robust but the inventory is not. Dr. Yun also gives this snapshot: Properties stayed on the market an average of 22 days (August 2020), inventory was down 18.6% (August 2020 YOY) and first- time home buyers accounted for 33% of home sales (August 2020).

To all my friends and associates at Shore: Stay well and stay safe!

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