I was reviewing the state of the market with a dear friend and fellow Realtor® last night and I kept thinking… I need to write this down, so here I am!
Where we’ve been…
Well, to say that 2020 has been unusual is the understatement of the century, right?? 2020 threw us curveball after curveball and the arena of real estate certainly followed suit. Many of the usual “rules” went out the window – seasonality, sale prices, tactics… – while many variables were simply amplified.
- Shutdown -> Exclusive deals (March-June?) – In the initial “let’s hunker down and ride this out for a few weeks” mode, we saw buyers who were not willing or able to wait and sellers who needed to move for one reason or another.
- Prices remained consistent with the market at the time and even adjusted slightly downward in recognition of the smaller buyer pool
- Deals were made in private conversations, to limit exposure (in the literal sense) to the sellers
- Showings were limited, no open houses, virtual showings were more important as previews
- There was a steady flow of new buyers looking to leave the city — main factors: safety/health concerns, virtual school, no longer needing to be in the city for work, need for 1 or 2 home offices + home school space, more private outdoor space
- Sellers leaving the area — many to return “home”/closer to extended family
- We saw many NYC buyers leaving the city and camping out temporarily with family or in short-term rentals elsewhere while looking for their new homes in NJ
- Many NYC buyers seemed to be looking in Westchester and then redirecting to NJ for more inventory and better value
- Mortgage rates dropped and refinancing kept lenders busy
- Zoom, zoom, zoom!
- Delayed “Spring Market” – June-September
- Prices started to creep up as sellers opened up their homes to more buyers and competition increased; sales regularly clocked in at $100K+ over list price, leading some buyers to retreat and decide to wait out the craziness, while many doubled down
- Timing was less driven by school starting and registration pressure
- Buyers started feeling more comfortable viewing homes in person
- Open houses (broker previews and public) resumed carefully and with safety precautions
- Buyers looking in more towns simultaneously because of lack of inventory, leading to more competition for any available homes, especially move-in ready ones with 4+ BRs $700K+
- Many more buyers in the luxury market ($1 million +)
- Many more buyers straight from Manhattan
- Most families still need space for home offices and virtual schooling + exercise
- While the weather was nice, outdoor space and porches were coveted and a high priority
- The dramatic reduction in travel meant that space at home was/is more important than ever
- Mortgage rates fluctuated and with continued refinancing + new buyer activity, lenders were busier than ever
- Busiest Fall Market in years (Oct-present)
- When the weather got colder, buyers started to feel cramped again and the pressure to find a bigger home renewed for many
- List prices adjusted for recent sale levels and new sale prices reached record highs
- Inventory remains way too low for buyer demand (which hasn’t abated), leading to frenzied competition
- Mortgage rates dipped again to all-time lows, mitigating the increase in home prices
- Exclusive sales have continued and we are starting to see more of them as COVID numbers have shot back up and safety concerns have renewed
Factors that will likely influence the market in 2021:
- Many/most people will continue to work from home, at least part-time, so the need for dedicated home office space will continue to be a strong driver of moves and home selection
- Schools will be virtual or offer hybrid options at various times for the remainder of the 2020-2021 school year so dedicated space for online school and the accoutrements will be desirable
- Most travel (for work or pleasure) will not resume fully anytime soon
- All of this will continue to adjust buyer desires for layout — flow from kitchen to dining room or family room continues to be highly sought after as families spend so much time together at home. However, fully open concept is not as preferable as dedicated work spaces are needed
- Mortgage rates will remain low, providing much needed purchasing power to mitigate high sale prices
- As communal indoor and outdoor spaces are less available, private space becomes more important — space for pools, swing sets, exercise equipment, etc. are in higher demand than ever
Things are ever changing and we are not missing a beat! Because we work with both buyers and sellers, we are sharply attuned to how the shifting winds are affecting all parties. We are studying data, talking to clients, colleagues, and experts. Reach out!! We would love to connect with all of you!