Market Trends And Insights
Is The Market Softening In Bridgewater? No seller wants to hear that the housing market is softening. Afterall, there has been a solid seller’s market in the Township over the past few years, incenting buyers and driving up home prices. A lot of seller’s took advantage and are now smiling. But some market statistics are suggesting that this strong seller’s market may be weakening.
Was 2018 a great year for seller’s in Bridgewater? No doubt. But when compared to 2017, sales were actually down. In 2018, there were 497 homes sold to date, compared to 548 homes during the same period 2017. A drop of 9.3%. In addition, inventory has been increasing during the last quarter. In August there was a 2.36 month’s supply of available homes, 4.21 month’s supply in September and now 4.91 month’s supply in October. Adding to this is the real possibility of a continuing rise in interest rates which impacts borrowing power and home affordability. Last month, interest rates were around 4.72% for a conventional 30 year mortgage. Now, quotes are just under 4.9% with predictions of rates going as high as 5.4% this time next year.
So, is the seller’s market softening? All signs point to it. But we are not approaching an epic downturn similar to the one 10 years ago. In fact, according to Michael Fratantoni, Chief Economist with Mortgage Bankers Association predicts some home sales growth next year, even with somewhat higher mortgage rates. But he states, “the pace of home price growth will likely slow”. Note the term price growth, not sales growth. Sales are predicted to increase, but prices are going to appreciate at a slower rate, probably closer to the inflation rate. Again, home prices will not depreciate, but will appreciate at a slower rate. It is important to note the difference.
And that makes sense. As discussed in prior Market Watch newsletters, home prices are a function of supply and demand. Less supply, demand is not met and prices will increase driven by buyer competition. More supply, more buyers can find homes, competition for available homes is less, and pressure on prices is not as great.
What will bolster sales, as suggested by Mr. Fratantoni, in light of rising interest rates along with some price appreciation? Two positives. First, as mentioned above, more supply will limit price increases going forth, due to less overall buyer demand for available homes. Second, is wage growth. Wages in the Northeast have increased 2.4% over the past year. This will help keep homes affordable for potential buyer in each of the different home price segments.
If you have questions regarding local market conditions, market values or what it takes to market your home, contact me. I would welcome the opportunity to meet with you and discuss your concerns and plans.
Al Fross is a Coldwell Banker Residential Brokerage Sales Associate based in the Bedminster/Bridgewater office. Al has lived in the Bradley Gardens section of Bridgewater since 1993 and has been an active volunteer in many recreational and community organizations including serving as a current member of Bridgewater’s Board of Adjustment and as past Chairman of the Township’s Planning Board. His knowledge of the Bridgewater and surrounding areas makes him the perfect “partner” when selling your existing property or buying your new home.