2023 Housing Market What’s Happening
What’s Happening to the 2023 Housing Market
The National housing market is different from New Jersey’s; national houses increased a lot higher than New Jersey because the prices here are already up there. Our “correction” will NOT be the same as the rest of the nation.
Yes, the pace of home sales has noticeably declined. Yet there are pockets of areas in New Jersey that are still very active even with multiple offers.
Talking about a recession well that can be a self-fulfilling prophecy.
Housing markets that have not seen a rapid growth during the pandemic such as New Jersey, will continue a slower and steady appreciation this year.
It’s GOOD to be in New Jersey right now where there is a study demand.
Why this is not 2008…
Mortgages now are written with stricter credit guidelines than in 2006-2008.
In 2008 house prices dropped fast because borrowers could not afford the payments and did not have any equity cushion. Also there was a large inventory of new construction.
Today we have a severe shortage which will help boost the market.
Even if there were to be a severe recession, we’re not likely to see many foreclosures, because homeowners have a lot of equity in their properties and are more likely to sell before going into default.
New Jersey was a tight market before the pandemic and people were not selling because there wasn’t anything to buy.
Rates will definitely come down the second half of 2023, but not down to the 3% level.
Of course mortgage rates impact the supply and demand in the housing market.
When the rates come down or dip as they did last summer, we will see buyers coming back into the market very quickly.
Sellers right now are locked into very favorable rates, and they have no incentive to put their homes on the market, therefore the lack of inventory will persist.
The biggest issue is with the first time home buyers being squeezed out of the market between the higher rates and the high prices. We need first-time home buyers because it causes a chain reaction that allows move up buyers.
For every first time home buyer there are five transactions that happen.
We need creativity to keep the market moving.
NJHMFA New Jersey Housing Mortgage and Finance and the down payment assistance program is an incentive for first-time home buyers. The max down payment assistance is $10,000 and in 2023 it has been increased to $15,000 in 12 counties. This program is for qualified first-time homebuyers to use as down payment and closing cost assistance when purchasing a home in New Jersey AND is an interest-free, five-year forgivable second loan with no monthly payment.
Also NJHMFA offers competitive mortgage rates for those who use the down payment assistance program.
Another option for buyers is to consider a renovation loan most notable is the 203K from FHA, which combines remodeling costs and purchases into one loan.
Buyers are not taking advantage of this program.
Sellers offering to pay closing costs is coming back.
The other item sellers are starting to offer, is buying down the rate for the first couple of years because that is less expensive than reducing the price.
Buyers are now opting for ARM’s that are fixed for 5 to 7 years with plans to refinance before the ARMS adjust.
While the economy is in for a bumpy year, New Jersey housing market is likely to thrive.,
It’s good to be in New Jersey now.