As we settle into the official start of our fall season the normal ebbs and flows of the real estate market usually signal a slowing down. While there is some reality to this phenomenon, right now the pace of autumn activity has barely moderated since the summer. True, there are slightly fewer homes on the market now than there were at the height of the summer season but this is certainly not because homes aren’t selling. Many homes continue to come to market and still many more buyers show up ready to become homeowners.
Single family homes firmly remain a rock solid investment with home values maintaining or surpassing recent gains in valuation. This has made homes quite desirable to an ever increasing class of buyers under the rubric of “single family home investors.” Many, if not most, of these investors continue to remain on the sidelines, though not because of lack of interest or ability to purchase. There simply are not enough homes available and when push comes to shove, a buyer looking for a family home will outbid the investor looking to make a safe return on cash.
At the onset of higher interest rate hikes we have already mentioned on these pages that the legendary investor Warren Buffett of Berkshire Hathaway had disclosed he was investing heavily in three new home building companies around the United States. Reading through the commentary regarding this investment you had a sense of a strategy rooted in the belief that existing single family homes would continue to remain unavailable for the time being. The only game in town vis-a-vis real estate points to homes unencumbered by an existing low mortgage rate or a seller that simply needs to find a new home. This would largely leave new home construction as the best option for home buyers who have had very little luck in existing neighborhoods where homeowners, enjoying their low interest rates, are just not moving. This is not referring to the new home construction that we are familiar with locally, whereby an older home is torn down to make way for new construction. We are referring to wide tracks of land where single family homes never existed. I tried reaching out to Warren for a discussion on the Teaneck market but I have yet to hear back from him. I have a feeling I know what he would say. If you could get your hands on a piece of Teaneck Real estate…. buy, buy, buy.
What remains to be seen now is how the prevailing wisdom of an inevitable Fed rate cut will impact the market. I personally do not see it having such a big effect. Buyers have proven time and again that they will purchase even at higher rates. The older cohort of homeowners in this community are not necessarily incentivized to sell due to the impact of interest rates, but rather their desire to remain firmly planted in the communities they helped build.
Nechama Polak is the broker of record and owner of V&N Group LLC located at 1401 Palisade Avenue in Teaneck. Send your thoughts and comments to [email protected] or call 201 826 8809.
