November 29, 2023
November 29, 2023

Linking Northern and Central NJ, Bronx, Manhattan, Westchester and CT

Second Annual Housing Market Prediction

Last year we wrapped up 2021 with predictions for the upcoming 2022 market. We certainly called interest rate hikes correctly, but what we did not anticipate was the near total halt of inventory coming up for sale. We did predict that the driving force of the real estate market would be right around the $1 million mark, comprising homes built in the 40s and usually renovated in the late 90s or early 2000s. The “would be” sellers of these homes are often families who have raised their children in Bergen County and as their children move out, a large home no longer seems necessary. What no one anticipated were interest rate hikes of such enormous proportions. We have seen that selling the family “homestead” and moving into a smaller place does not, in the current environment, necessarily lower your monthly cost of living. The interest payments on any new loan would be much higher than the low interest rate already in place on one’s larger, more expensive house.

So what happens next? I think as any good gambler would tell you, if something doesn’t go right the first time, you need to double down. That’s right. I’m betting that these homes will find their way to the market one way or the other with this coming spring market. I’ve had too many contemporaries call me and ask if now is the right time to sell and, at some point, I don’t think these potential sellers will continue sitting on the sidelines. Yes, the equation is clear and it is not a simple one. How can anyone justify “abandoning” a 3% mortgage when rates are topping 7%? Furthermore, prices are still relatively high, therefore, buying now may not be the wisest choice.

Herein lies the answer and how I think the market is heading. There is a growing mass of potential sellers who either have no mortgage on their home or even if they do, it has been paid down over decades and the remaining balance is minimal. Should they choose to sell now, while prices are at historic highs, they can downsize with “cash” thus eliminating the mortgage rate hike affecting so many others. While it’s hard to anticipate a housing market as vital as we have witnessed over the past 10 years, the sellers “waiting in the wings” will steadily and surely put their homes on the market thus stabilizing the availability of inventory.

We have seen that no inventory leads to higher prices and, conversely, too many houses flooding the neighborhood could potentially crash the market. We are hoping for a steady stream of new inventory, no matter how slow that stream may be, to carry us through the coming year and perhaps back into a period where interest rates begin to come down.

Nechama Polak is the broker of record and owner of V and N Group LLC located at 1401 Palisade Ave in Teaneck. [email protected] 201 826 8809.

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