Jersey Shore home buyers in 2025 hope for lower mortgage rates
January 2, 2025
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The real estate market of Monmouth and Ocean counties, hampered by a lack of inventory for the past four years, is expected to remain squarely in favor of the sellers in 2025, with buyers continuing to wait for mortgage rates to fall, experts say.
It sets the stage for home prices, already at their most unaffordable levels since the housing bubble of the mid-2000s, to continue to climb.
“It’s hard for me to imagine that the supply issue is going to resolve quickly,” said Ryo Tashiro, outreach economist and advisor with the Federal Reserve Bank of Philadelphia. “It’s just that it’s going to take some time for people to say that, ‘OK, now is the time to put my house on the market.'”
The local housing market sizzled when the COVID-19 pandemic began in 2020, as throngs of buyers moved from densely populated places in North Jersey and New York to the Jersey Shore in search of safety.
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But as the pandemic eased and the economy recovered, mortgage rates soared — from less than 3% in the summer of 2021 to 7% in the summer of 2023.
Owners who have rock-bottom mortgage rates — nearly a quarter of the New Jersey market, according to Tashiro — are less likely to move.
The result:
- Inventory dried up. The inventory of single-family homes for sale in Monmouth County dropped from 4.8 months of supply in October 2019 to 3 months in October 2024. In Ocean County, it fell from 5.1 months of supply to 3.1 months of supply during the same time, according to New Jersey Realtors, a trade group.
- Prices soared. The median price of a single-family home sold in Monmouth County rose from $439,500 in October 2019 to $742,500 in October 2024, or 69%. In Ocean County, the median price rose from $320,000 to $572,500, or 79%, during that time, the Realtors group reported.
- Buyers get stretched. As median prices and mortgage rates climbed, housing costs this year hit their least affordable level for median-income residents in Monmouth and Ocean counties since 2007, just before the bubble collapsed, according to data from the Atlanta Federal Reserve Bank.
Bidding wars and mortgage rates
Buyers are running into lots of competition. Rick and Jenny Buyens moved last August from suburban Minneapolis to Tinton Falls, giving them a chance to be closer to their daughter, who lives in New York City.
They quickly found themselves in a bidding war and agreed to pay 20% above the asking price, Jenny Buyens said, even though she thought they would have an advantage; they made an all-cash offer and waived contingencies.
Buyens said she is happy with the move, but came to realize she wasn’t the only newcomer. She often runs into people who moved from New York, and she is still trying to get used to the traffic.
“The biggest difference (from Minnesota), other than the weather, is the concentration of population,” Buyens, 67, said. “It’s just so much more crowded right here, specifically where we are. Lines everywhere you go. Lines at the bank, lines at the grocery story, traffic at the stop light.”
Xem thêm : Average rate on 30-year mortgage hits 6.91%
Without a sharp increase in new home construction, the fate of the Shore’s housing market will be tied to mortgage rates, said Jeffrey Otteau, chief economist for the Otteau Group Inc., an Old Bridge-based real estate consultant.
When rates rose in 2022 and 2023, New Jersey homes sales declined by 38%. When rates slipped to about 6.1% in September, home sales picked up, Otteau said. But rates rose once again at the end of the year, dousing the housing market with cold water once again.
Mortgage rates could decline modestly in 2025 if the economy slows down and inflation continues to ease, Otteau said.
“Inflation and interest rates are joined at the hip,” he said.
‘They want to live there’
Still, if mortgage rates fall, and owners put their homes on the market and move, there could be a backlog of buyers who have been waiting on the sidelines, hoping for a chance to buy a home. In that scenario, home prices would only continue to rise.
Longtime real estate agents at the Shore have marveled at the demand.
“These little ranches that I used to sell for $399,900 in Point Pleasant (borough) are now going for $650,000, $700,000, and people aren’t thinking anything of it,” said Diane Turton, president and founder of Point Pleasant Beach-based Diane Turton Realtors. “They want to live there.”
“People want to live where the (good) schools are,” she said. “And they’re packing up and geting out of their areas and working off their laptops and phones. And you’re going to see that more and more.”
Michael L. Diamond is a business reporter who has been writing about the New Jersey economy and health care industry since 1999. He can be reached at [email protected].
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