In March of this year, we first began seeing cases of COVID-19 in our area, in a short time thereafter, businesses and schools were forced to shut down. Along with the shutdown came a drop-off in the number of homes being sold, at least in the early on. As March turned into April, and into the first half of May, the numbers of contract sales (homes entering into Under Contract or Pending status) fell dramatically. April, 2020, saw less than half the number of homes entering into contract compared to the same period in 2019.
Eventually, things began to reopen and Real Estate Professionals began showing properties. But now we and our buyers are wearing masks, and exercising social distance. The buyers coming out were now very serious, and they didn’t just come out to look, they were there to buy!
All of a sudden, well-priced homes were seeing immedeiate showings and multiple offers, often the day it came on the market! We experienced it with our listings, seeing lots of showings and multiple offers, most of them well over list price. Bidding wars have become commonplace. Our buyers have lost out, in some cases on homes they bid on. While this was disappointing, with counseling from Team Zuhl, we were able to help them win their bids and get their dream homes.
Why the bidding wars? Two simple words: Urban flight! This is really happening and we have the reasons and the numbers to prove that it is going on. Here's the why: due in part to the pandemic, people in urban areas are tired of living on top of each other, they want more living space for their families and they want to experience the freedoms and comforts that accompany suburban living. Additionally, more people are now working remotely, so there is less need for “easy access” to NYC. On top of all that, interest rates are now at historic lows; it is far less expensive to pay for a mortgage to own a home in the suburbs than it is to pay rent for an apartment in the city.
Here’s the data behind this reasoning: In the Greater New York City Area (NYC’s 5 boroughs, Westchester County, Bergen County, and Hudson County) have seen rental vacancies rise at unheard of rates. The 3rd quarter of 2020 has seen nearly 26,000 more rental vacancies than during the 4th quarter of 2019. So, the data is showing that people are leaving the NYC Metro area. Based on year over year contract sales since mid-May, June, and then July of 2020 became record-setting months for having the most homes go into contract. In fact, June, July, and August of 2020 saw more homes sold in any June, July or August ever in NJ! In fact, August saw 15,343 homes go under contract, the most homes to do so ever in the NJ. For comparison, August of 2019 had only 11,185 homes go under contract, meaning that more than 4000 more homes were sold in August of 2020 than August 2019, an increase of 73%!!
Looking at the rate of sales it appears that 2020 will see MORE homes sell than in 2019, and 2019 saw a record number of homes sold in NJ. The experts are predicting that this Urban Flight will continue for the next several years, sending NJ into record sales numbers higher and higher.
So, what does it all mean? Well, that depends on whether you are considering buying or selling a home.
If you’re buying, it’s important to work with an agent who is a skilled negotiator and who can help you determine the current market value for a home and if necessary, help you figure out how much higher than market value you may need to go to be the winning bid. It’s important to have your financials ready, get pre-qualified or even better pre-approved for a mortgage and make sure that your down payment and closing cost funds are easily accessed and that you can provide documentation of where the monies are held. Not having to sell a property to make the purchase, known as a contingency, will work in your favor. You can still have a contingency, but if you do, make sure that your home is listed, priced right, and hopefully already under contract.
If you’re selling, be prepared for a lot of people to be coming through your home. Make sure that your listing agent is marketing your home well, and the best thing that you can do is to price your home right! An overpriced home usually only has one bidder, the seller. In this market, we’re suggesting pricing your home 2-3% less than market value to expose it to the most possible buyers. Doing this will in most cases result in showings and multiple offers, usually well over list price.
If you’re interested in buying or selling a home, please reach out to me for a free, no-obligation consultation. Remember, with Team Zuhl, everything we touch turns to SOLD!!!
Some source data was provided by Otteau Group, a Real Estate Valuation & Advisory Company.