Low inventory and rising interest rates will likely be a factor in the spring real estate market in North Central New Jersey.
The recently released February 2023 market report from Turpin Realtors, which covers Essex, Hunterdon, Morris, Somerset and Union counties, is a predictor of the upcoming prime season.
“February typically is when we begin to see spring trends percolate,” said John Turpin, president of Turpin Realtors.
Here are some takeaways from the report.
The number of new listings at all price points is down more than 32% compared to February 2022, from 1,435 to 975.
Turpin doesn’t see that changing anytime soon with higher interest rates.
“People saw a good opportunity to sell their houses when interest rates are low,” Turpin said. “A lot of people locked into low mortgage rates.”
The shrinking inventory has led to fewer sales. The number of homes sold was down 28% year over year in February, from 834 to 604 sales.
Pending sales were also down by nearly 20%, with 1,113 contracts signed in February of last year and 914 signed this year. That’s down from a pandemic-era high of more than 1,300 pending sales in 2021 and 2020.
The tightening inventory has led to higher prices, with the median listing price of pending home sales increasing to $625,800 from $596,700 in February 2022.
That’s great news for sellers, but “for buyers, it’s challenging,” said Turpin.
A Busy Starter Home Market
Competition is extremely high for starter homes, or those priced under $1 million, where new listings are down 35%. There were 1,194 new listings in February 2022 vs. 782 at the same time this year.
The one segment that has seen movement is the market for homes priced at $3 million or more. While sales were half of what they were in 2022—three vs. six—there was a 133% increase in pending contracts and a 27% increase in new listings.
Turpin said he thinks the Northern New Jersey market is on solid ground after an influx of new residents starting in 2020.
“The pandemic drew so many new people that I think our foundation is so solid now,” Turpin said. “When inventory does come into line, I’m very optimistic.”
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