What’s happening in the market? The real estate forecast for this year and next.
2020 was on pace to be the most active year ever for New Jersey real estate. January and February sales volume was the highest on record. Then the pandemic hit. The tri-state area became the hotspot for Coronavirus in the U.S. and New Jersey was one of the first states to go into lockdown mode.
When the Governor first limited business activity to essential services in mid-March, it was unclear whether real estate activity was included. Real estate agents were advised by their office managers and by state REALTOR® organizations to stop showing homes. A couple weeks later, the Governor specified that real estate is an essential service as long as proper protocols are followed. Sales activity resumed on a very limited scale. Most but not all sellers who planned on selling in the spring market did not list their homes for sale. Some buyers continued looking for a home and making offers.
By the first week of April, new contracts were down 51%. By the time the month is over, contracts are expected to be down 70% – 90% year over year. Most buyers and sellers are staying home alone.
Meanwhile, real estate service professionals including salespeople, appraisers, attorneys, inspectors and title people are learning to comply with the COVID-19 protocols. Masks, booties, gloves and hand sanitizer are used by everyone. No more than two or three people are in attendance for any function from showings to inspections to closings. Salespeople have shifted to virtual showings and Zoom is being used heavily for meetings. Sales can and do happen. Personally, I had three homes go under contract between mid-March and mid-April.
Surprisingly, the inventory of homes on the market has actually shrunk. Sellers have pulled back even more than buyers. So when the economy does return, there will not be an oversupply of homes for sale.
The Real Estate Forecast
According to Jeffrey Otteau of the Otteau Group, the best case scenario is a re-opening of the economy around Memorial Day. Worst case is at the end of summer. He predicts the 2020 spring market will be pushed into the fall and it will be quite healthy. Activity will be high, but home prices will be down 3% to 12% on average across the state. Bergen County will fare slightly better than average because it began the year better than average. Otteau expects Glen Rock prices to dip 5% this year, for example.
Over the next two years, home prices will recover. In 2021, sale prices will increase 5% to 8% with an additional 4% increase in 2022.
For detailed information on the forecast for your borough and price point, please call me at 201-421-0506. We can discuss the best strategy for you whether you’re buying or selling.