“Don’t blink or you’ll miss it!” is an expression we use to describe the way the real estate market in the NYC bedroom communities of NJ Essex county commuter areas, such as Maplewood and South Orange, change seasonally. But during the age of Covid-19, a blink is more like an eternity – things are micro-shifting at the speed of light, even amid what feels like a standstill of activity.
Prior to March, SOMA and its Essex county commuter town cousins were poised for one of the best spring housing markets in history based on the economic growth of past years. Danbrot + Labianca had both Maplewood and South Orange listings in early 2020, and an arsenal of new listings planned to come out throughout the year.
But everything changed in March. We saw a radical downturn of activity in the market due to Covid-19 and its effects on the global, national, regional, and local economies. As March progressed and Covid-19 spread, sometimes affecting our most intimate circles, inventory and buyers halted further.
Governor Murphy locked down the state for public safety. Governing bodies in the real estate industry such as The North Central Jersey Association of Realtors and New Jersey Realtors made it clear that while real estate was an essential business, the conducting of business would be anything but “business as usual”. Here are some key factors:
- The term “Essential” in the realm of Covid-19 NJ real estate crosses over with “immediate need”, i.e., “a renter whose lease ends during the EO, end of a winter rental, those who needed to buy or sell for health or financial reasons that existed before COVID-19, those in pending transactions who needed guidance, or a vacant property, to name just a few.”
- “Open houses will be considered impermissible gatherings”, said Murphy. We understood and agreed! Nothing is more important than the health and safety of our family, friends, neighbors, clients, community, and beyond.
- We pivoted from our former reliance on live experience to a realm of virtual experience and turned to Zoom to show listings. Working with clients to compose tours that offer a comprehensive experience of the home to prospective buyers and their Realtors has proven to be an effective means of conducting business!
- Having watched the SOMA market through April (what would have been a very active time otherwise), we saw fewer homes listed, but more off-market home sales and purchases. This affirms the fact that people need to buy, to sell, to move.
- Behind-the-scenes industry protocol has included a variety of approaches to Covid-19 – from virtual tours in lieu of in-person viewings, to requirements/requests that visitors wear masks, gloves and booties and limit the number of individuals in the property, all the way through little or no mention of any precautionary measures.
- Interest rates are (still) low. Which is good. And if you need to buy now, you can still get a great rate. But while rates are low, banks are tightening their requirements. For instance, J.P. Morgan Chase announced new requirements; a 700 credit score and a minimum of 20% down.
An Expert’s Perspective Based on Hard Data
A few times a year we attend the workshops of a renowned appraiser-turned-real-estate-economist of sorts, Jeffrey Otteau. He is “a recognized industry expert who has been actively engaged in real estate consultation and valuation for more than four decades”. He is, in short, a maven of all things NJ Real Estate market and offers a macro to micro vision of the outlook from global to local.
This month, he held a special edition, The Covid-19 Housing Webinar. One striking feature of the webinar was that he received real-time information from his staff throughout the course of the webinar, which he entered into the presentation to share at the moment. This information sometimes affected, even altered what he had planned to share with us. It was evidence of the lightning speed at which things are changing in our economy and thus the Real Estate Market as a result of Covid-19. Disclaimer: By the time you read this piece, things may have changed. But here are some key points:
- Otteau stressed that sellers who list on the public market during this time will most likely take a price hit on their sale. Being on the public market now indicates a need to sell, and Buyers will take advantage of that. This might result in a sale price of 12-15% less than list price. Otteau strongly suggests waiting until the market opens back up to list a home, unless absolutely necessary.
- He offered two scenarios for the beginning of the recovery of the NJ Real Estate market. The first, and best-case scenario is for signs of recovery around Memorial Day. The second, and worst-case scenario is for signs of recovery in July. His predictions offer that the spring market will be pushed back to the fall, suggesting that the months between late summer and November will be active months.
From a personal perspective, Carla and I are looking forward to the future. Signs point to the market in Maplewood, South Orange and the NYC bedroom communities of NJ bouncing back stronger than ever! We have experienced an onslaught of emails and phone calls from people in urban areas (NYC, Queens, Brooklyn, Jersey City, Hoboken, etc.) who have expressed a strong desire for more space and a different landscape once Covid-19 and its effects subside. Buyers, we are here for you.
We have encountered people in our communities who realize that once we are out of the woods, the stage will be set for successful sales due to the influx of Buyers. Sellers, we are here for you. We are here, even more savvy than ever from this experience. We look forward to meeting you on Zoom soon, or in person when it is appropriate.
Until then, be well and stay safe.
Jeffrey Otteau’s Covid-19 Webinar Information Disclaimer
This publication has been prepared for general guidance on matters of interest only and does not constitute professional advice. The analyses contained herein have been based in whole, or in part, on data supplied by a compilation of information sources and may therefore not reflect all real estate activity in the market.
While believed to be reliable, we cannot guarantee, nor assume responsibility for the accuracy of information which has been supplied to us by others. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Otteau Group, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication, or for any decision based on it.