This is question #1 among buyer clients these days. Inventory levels continue to be very low. Much of that has to do with seasonality. Real estate is a seasonal business for a number of reasons, with more transactions done in the spring and summer months. There are a number of reasons for that, but in 2024 the major cause is what we in the industry call the ‘mortgage rate lock-in effect.’

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Let’s consider a scenario where a homeowner has been in their home for 10 years, but they refinanced two years ago and paying 3% interest on their $400,000 mortgage. Over the last 5-10 years they would have gained tens of thousands of dollars in equity in their home, if they’ve played their cards right. Typically, someone in that position would be considering a ‘step up’ home. Maybe they need more space or are just in a position where they can afford a nicer home, maybe in a better neighborhood. If they were to parlay that equity they gained in their current home and planned to take out a new mortgage they would have to pay around 6% on that new mortgage. So even if their mortgage is still $400,000, their monthly payments would increase OVER $700 per month just to pay for the higher interest rate. 

 

This is why some many homeowners are staying in their current homes, even if it no longer suits their needs. So what happens when rates do come down, as forecasted, in the spring and summer and that gap lessens? The result should be more listings, because homeowners would be less reluctant to list their homes. 

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Also, buyers will be incentivized to get back into the market due to those lower rates. There could very well be a scenario similar to the summer and fall of 2020 when every listing had multiple offers and went well over asking price. As a matter of fact, today that is the case with many listings in the typical first-time homeowner price range. For example, recently a buyer client submitted an offer $60k over asking price. There were 9 total offers and the seller accepted another, presumably higher, offer. This is typical today, when a home is priced property at this price point. 

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So here’s my advice to buyers, the market is only going to get more competitive. Talk to your lender (or ask me for a referral to one of the best) and get pre-approved so you can start looking immediately. If you see a home on the market that suits your needs, make a serious offer. Don’t let today’s rates stop you from moving forward with buying a home. Buy now before rates drop and the market becomes even more competitive. When rates do come down you will already be in your new home and you will always have the option to re-finance.

For sellers, when you’re ready to list your home, understand the importance of pricing your home properly. There is no bigger mistake a seller can make in 2024 than pricing your home too high. The key to getting the most money possible for your home is driving potential buyers to the home. If a home is priced too high, it will have the opposite effect.

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Typically, in today’s market if a home is worth more than asking price, the market will adjust accordingly and over-asking price offers will come in, so be more concerned with over-pricing your home than under-pricing it. 

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We are looking forward to a great 2024 season at the Jersey Shore. Hope to see you here soon!!