Well hello Essex County NJ homebuyers! We are two months into 2021, welcome to this year’s unusual melange of housing market variables. We thought we’d compile some defining factors at play so you are armed with info when you are ready.
As you peruse the following, don’t get discouraged – just keep in mind you will likely need patience, determination, and a well-schooled agent!
- Interest rates are currently still low. But considering that the impacts of COVID have been the driving force behind market trends over the past year, progress against the pandemic could change this.
- While interest rates are currently still low, inventory is also extremely low, so home sale prices are high. Many homeowners would put their homes on the market to reap the benefit of the scarcity, but because of scarcity, there is very little for them to purchase were they to sell. Many other would-be Sellers are hesitant to put their homes on the market for fear of COVID exposure…and again, because there is very little for them to purchase. Thus the cycle of low inventory and high sale prices is self-perpetuating.
- If progress against the pandemic, well, progresses, and more Sellers start to feel safer putting their homes on the market, they will create more inventory. But it is not likely that there will be enough inventory for all Buyers seeking to purchase. Beyond all, COVID has thrown the economy into such a tailspin that no one is sure how any of this will play out.
- Millennials spurred by COVID to seek next-stage homes with more space will likely continue to be a large sect of the 2021 homebuying public. But because COVID introduced the work-from-home model, less commutable areas farther from the city have become viable options for some. Then again, the return of NYC might stop that trend in its tracks before it even begins. Enjoy Jerry Seinfeld’s thoughts on that here.
- Meanwhile, elder Gen Z’ers have presumably been saving up money sheltering at home and could start to dip their toes into the homebuying waters of 2021.
- First-time homebuyers might receive a tax credit in the amount of $15,000 under Joe Biden’s proposed housing plan. The tax credit would be received at the time of purchase rather than upon the following year’s tax returns and could alleviate some of the struggles of coming up with a down payment. While this could be a boon for new Buyers, some believe it will boost the need for inventory that is already sorely lacking, compounding the issue of low inventory.
So there you have it. Should be an interesting year! Give us a call to discuss, ask questions or toss options around. We’d love to help!