Recently, the Los Angeles Times reported a shortage of available quality homes in several different real estate markets, as buyers are competing over those that are currently available. Locally in Central Jersey, we've seen similar trends, where quality homes that are priced well in certain markets are selling quickly, whether it's new construction townhomes in North Brunswick or larger colonial homes in neighboring South Brunswick. Even investment properties are beginning to pick up.
What is behind this current trend? The LA Times noted several factors that are affecting our New Jersey market as well:
Foreclosures - With all of the defaults in the country, there was an expected deluge of bank-owned homes to hit the market. That hasn't happened. According to the LA Times, "The much-predicted foreclosure wave that was expected to dump more homes onto the market has not materialized. Fewer borrowers are entering default, and banks are better managing the properties they do have on their books." To compound it, foreclosure is an extremely lengthy legal process in the state of New Jersey, and with a backup in the courts, the number of homes hitting the market each month will be limited.
Investors - Investors across the nation are recognizing opportunities in the market and are rapidly picking up real estate, often before the average home buyer even has a chance. The Times reports, "Professional investors bankrolled by private equity firms and hedge funds are pouncing on bank-owned homes, often turning them into rentals." Sometimes, this happens before the home even hits the market, meaning that it isn't seen by the general public, and thus, doesn't have the same impact on pricing.
Inability to Sell - Many homeowners simply can't afford to sell their homes. Whether due to high mortgage balances or a loss of equity, many are choosing not to put their homes on the market, but simply to stay where they are. According to the Times, "The inventory problem has been exacerbated by the plunge in home prices since the go-go years. Many people who bought at the top of the cycle are so deeply underwater, they can't get the price they need to sell and are therefore not bothering to put their homes on the market." Considering the tremendous number of homes purchased in Central Jersey in the last 8 years that are likely worth less than their purchase price, there are fewer homes that are hitting the market. With the growing number of home buyers, this is creating tremendous competition for well priced, quality homes.
While there may be a temptation to price a home significantly higher, the reality is that homebuyers in Central Jersey continue to show restraint, preferring to wait for homes that are priced well and competing for them, rather than making an offer on a higher priced home. However, for those pricing for the current market, they are having tremendous success in selling their homes. For more information on the current real estate market and selling your home, whether in North Brunswick, Milltown, East Brunswick, South Brunswick, Monroe, Edison, New Brunswick, Somerset, Piscataway, or anywhere else in Central Jersey, contact Gloria Zastko Realtors at 732-297-0600 or visit www.zastko.com.