At first glance, housing costs seem to be rising. In Sussex County, NJ, a three-bedroom, two-bathroom home will go for $341,923 in 2021, up from $325,023. In Orange County, NY, it is now $369,000, up from $310,230 last year. And a three-bedroom home on the border in Milford, Pennsylvania, is $400,000, up from $325,000 last year.
But for the first time, the tide has begun to turn after the epidemic prompted city dwellers to buy homes in the suburbs.
“It was trending upward, but in the last 90 days or so, prices have started to flirt, if not come down a bit,” said Nicole Monahan, broker and manager of Realty Executives. Last year at this time, her PK County office might have seen a listing or two with price cuts. Currently, it’s over 20.
“I think we’ve definitely reached our peak,” she added.
Associate broker Jennifer DiCostanzo of Green Team Realty is seeing a similar pattern in Orange County. “We’re up 17 percent year-to-date through 2021… Sales prices closed to date are generally above asking. But in the last 50 days, he said, “we’re starting to see price adjustments that we haven’t seen in the last two years.”
And homes currently on the market “are softening in value,” DiCostanzou added. We still have low supply, but we don’t have that pandemic demand pressure.
Meanwhile, job changes and the cost of living are pushing homeowners to sell.
“We’re in a shift now,” DiCostanzo said. “In the last two years, we’re starting to see homes that were recently purchased during the pandemic come back on the market because of the change in the workforce.”
Monahan is also seeing a number of impulse buys return to sales — primarily, by families buying second homes and those who are working remotely. “Now some of these people are being forced back into the office,” she said. Or, some of these people who bought a second home, because of the economy and the price of gas, maybe they can’t use that second home like they used to, or they can’t afford it. And in the future, or more payments from now on.
Monahan predicted an increase in bans over the next 18 months. “It usually starts with car ownership, and car ownership is starting to pick up again.”
Interest vs. Stock
Dawn Corbo of Weikert Realtors, who has been a realtor in northern New Jersey for more than 30 years, says that because local inventory is still low, homes that are priced to sell or have the most desirable amenities are still getting multiple offers or selling for more than asking. “As long as we have limited inventory, I don’t see this going away any time soon,” she says. But interest rates have resulted in a “slight adjustment”.
Last summer it was on average 3.5 – 4.5%. Now, they’re more like 5 to 7 percent, according to Monahan.
“With interest rates rising… a buyer may be in a different price range, so we as real estate professionals are adjusting what we sell to these buyers,” Corbo explained. “Where they think they’re in a $400,000 house, it could be something a little lower, like $350,000-$375,000, with their money down, whatever they can afford, everything goes in.”
The increase is enough to change the buyer’s budget. After finally finding the perfect home in Vernon, NJ, teacher Ben C* and his wife almost lost on the deal two weeks before the expected closing date. Their attorney missed a contingency that would have allowed the sellers to stay in their home 60 days longer than expected.
Ben explained, “We were scared because we locked in the mortgage rate in January before everything went up, so we got it at 3.3%, and then it went up to 5%.
If you do not close in time, you will lose the minimum amount. In January, they agreed to buy the home for $365,000, but in the months between signing the contract and closing, the price of the three-bedroom, three-bathroom home went up to around $410,000 due to low home inventory.
“So we had to do a lot of convincing with the sellers to get them to close on the house and then rent it out so we could keep the mortgage,” he said. It wasn’t until the “last minute, last days” that the sellers agreed to close on time, before they risked losing their mortgage – but in return the sellers wouldn’t make the repairs originally promised. This has reportedly cost Ben’s family an additional $15,000 so far.
“We actually pushed for this house because of the loan,” he said. “Even when they said we’re not going to do the move, they said, ‘We can’t afford this house, so you can seriously burn the house down and we’ll take it. right now If this house is back on the market. We couldn’t afford anything.
*For privacy reasons, the paper has agreed to publish only Ben’s last initial for this story.