Robust Home Buying in April

The month of April is turning out to be quite a month in the real estate business.  Sales of existing homes continue to be robust, and we see in our own data from Bergen County how that activity is translating into an increasing pace of homes going under contract, which means that buyers are quickly placing offers on homes in order to lock in the deals.  So this leads one to wonder, what is driving this demand and can it be sustained?  Let's dive into a few clues as to why this is happening:

The Evidence is in the Mortgage Data

Even as the pandemic continues to place a damper on the economic outlook for many businesses and by extension, the people behind them who also are homeowners and/or homebuyers are still very much active in the real estate scene.  According to a recent report by the Mortgage Bankers Association, new mortgage applications for the week ended April 18th jumped up 8.6 percent compared to the previous week, which correlates with the higher bidding volume we have observed recently.

Normally, we would want to corroborate our pending home sales data with the stats published by the National Association of Realtors, but their report for the month of March is not due out until April 29th.  But the mortgage bankers data referenced in the previous paragraph, combined with our own weekly data, appears to indicate that the outlook is promising nonetheless.  While this is exciting news for us realtors, it does beg the question, is this sustainable given that there is talk of mortgage interest rates rising in the second half of this year?

This Rally Has Legs and Will Keep Going

As it turns out, there are other ways to correlate our data about real estate activity with the data shared by others in this business, and their analysis of the same.  For instance, the folks at Norada Real Estate Investments are convinced that the prospect of rising interest rates will not deter the markets in the remainder of this year.  They determined that the inventory of available homes for buyers to bid on equals only about 4.8 months worth of supply.  This figure is normally higher, and they noted that since home building continues to be on the weaker side due to rising lumber costs, there is no reason to expect a big boost in inventory anytime soon.  Thus we are sort of stuck with the ongoing reality that people need homes for a variety of compelling reasons, and even the threat of rising interest rates will simply not hold them back.

The Waiting Game is Not Worth the Risk

Given the seller-dominated markets we are seeing, and buyers continuing to line up to bid on homes, we do not think it is wise for those waiting on the sidelines to keep waiting.  This is especially true now with the need for people to work from their homes more than ever, and also to enjoy the summer season to cope with the stress.  Since buying a home can take a month or two to complete, it would be wise for homebuyers to get started today.  If you do decide to jump in, please be sure to reach out to me with your questions or requirements and I would be happy to help!

We have been keeping tabs on the real estate trends for a while now, and as noted in our recent post about high likelihood that the markets doing well this year, we are picking up more signals that hint at a nice warm-up in home sales right here in New Jersey.  While some weakness here and there is to be expected, we do not think that this will have much adverse impact - quite the opposite will happen!  Let's review a few leading indicators...

Many Towns in NJ Expected To See Boost in Home Sales

While doing our research on New Jersey market trends we came across an article containing excerpts of an interview with a prominent local realtor, Katie Severance, who noted that several towns such as Millburn (which includes Short Hills) and South Orange will be seeing an increase in home sales in the spring and summer seasons during this year.  She explained that as the pandemic begins to fade, communities with direct connections to midtown Manhattan will do well with home sales as people will want quick access to the city and back home.  I tend to agree, as many of my clients ask about this when looking for luxury homes in the areas that I cover in New Jersey.

Bidding Wars Starting Sooner Than Most People Expect

Ms. Severance had also pointed out that she is seeing bidders lining up to fight over houses in this area while targeting a closing date in April or May.  This is easily understood by me as many of my clients prefer to be in their new homes by the start of the summer season, or close to that time frame.  This is also boosted by the fact that mortgage interest rates are still at historically low levels so this gives home buyers an extra incentive to get into the real estate of their choice sooner than later to lock in a low rate.

Early Data Shows Market Beginning To Pick Up

My own data for the Bergen County real estate activity (based on MLS data) is also starting to corroborate the turn toward increased real estate transaction volume.  Check out the chart below:

Chart source: http://www.greatnorthjerseyhomes.com/bergen-county-market-report/#recent-real-estate-data

As we can see from the chart above, the first week of March 2021 is where we noticed a pick-up in the active listings volume, and this is also corroborated within the pending sales transactions data as well.  Although the overall home sales total (gray line in the chart) spanning a rolling window of preceding six months of data at each data point is still light due to the normal winter season lull, the leadiing indicators of active listings and pending sales show clearly that we have reached a turning point.  The sales totals are sure to follow as the markets warm up in the coming weeks.

Conclusion: The Time to Start Taking Action Is Now

All of the above information is exciting news for us realtors, and it should also serve as a reminder for astute homebuyers that now is the time to start taking action!  You can get better-priced deals sooner than later, and the saying about early birds and worms is well worth heeding.  If you have not yet checked out my showcase home listings now would be a good time to do so, as I am currently booking appointments for tours for interested buyers.  Remember, it normally takes between 30 to 60 days to close on a real estate transaction and since it is halfway through March already, you want to get started now so you can enjoy summer 2021 in your new home!

While the pandemic continues to exert pressure on the U.S. economy as a whole, there is still substantial opportunity in the real estate market segment targeting luxury homes.  As a realtor, it is my job to ensure that I am up-to-date on this topic as much of my work is specifically within the luxury home market here in New Jersey.  So, with that being said, let me explain why I think this is still a great time to buy a luxury home:

New Industries Create New Wealth

Surely we have all heard of the amazing news headlines about the explosion in valuations of companies like Tesla and Apple and even Ford Motor Company is up quite nicely, and these examples all underscore my point here: new business models create new wealth and that new wealth will be driving the luxury home sales for many years to come.  While many industries were in a downward cycle recently, at the same time we are able to behold the changes announced at companies like Jaguar Land Rover, where the goal is to go fully-electric by year 2025 which is only four years away.  These are all very positive leading indicators for the luxury home market, which is why I am looking forward to helping people buy and sell homes in this category of real estate for many years.

Stock Market Growth is a Positive Influence

It goes without saying that having a feeling of wealth, be it in the form of plain old money in the bank, or in the form of stock holdings with valuations that have risen dramatically in the last 12 months, entices people to go out and buy homes, especially in the luxury home realm.  I have seen this before, after the great financial crisis of 2008, where people who found new ways of accumulating wealth needed to upgrade their housing status to a tier more in line with their financial status.  So why would it not be the case again in 2021?  I say bring it on, let the selling and buying commence!

New Administration and Political Effects

Many people are concerned that the new administration will be looking to raise taxes as compared to the previous president and his tax plans, the simple truth is that neither republicans nor democrats are interested in raising taxes for the time being because the country needs to recover from the adverse impacts of the pandemic.  This means that pro-growth strategies will be their main focus, and taxation should remain fairly stable for the time being, so the luxury home market will likely remain unaffected for now.

Nothing to Fear in the Luxury Home Market

There are many reasons why people buy homes in this market segment, but the points iterated above all give us encouraging signs for health home buying activity in this year and beyond.  Sure, the markets always move up and down at various times, but people who buy homes in the high end of the real estate market know this and are generally not swayed by short-term fluctuations.  I am only optimistic that we will do well in this business for many years and thus I have no reason to worry at night.  :)

Back to my NJ luxury home real estate website home page.

Applying for a Mortgage? 3 Easy Ways to Make the Process Easier -- and Reduce Your Stress

There are more than enough details involved in getting a mortgage and moving into your own home that you'll want to know how to make the process as seamless as possible beforehand. However, there's a chance you might not be aware of the things you can do to make it a little easier on yourself. If you're currently looking for a home and are wondering how to streamline the approval process, here are some things to do before applying to minimize mortgage-related stress.

 Get Electronic Documentation

 In order to get approved for your mortgage application, you'll need to provide documentation that will likely include bank statements, federal tax returns and recent paystubs, but providing or acquiring all of these documents in paper form can require a lot of drudgery. Instead of paper, get your documentation together and ensure it's in electronic form so it can be easily accessed or sent from anywhere. This means you'll have it on hand as soon as it's needed.

 Choose A House You Can Afford

 As a potential homebuyer on the market, it's easy to be swayed by your dream home, but if your dream home doesn't come with an acceptable price tag, it's important to move on to the next best opportunity. It can be very easy to be invested enough in a particular home that you can convince yourself you'll budget for it, but the market can shift and this can push your monthly payment from difficult to not-doable. Choosing a home at an affordable cost will not only improve your chances of approval, it will also minimize your stress after the move-in date.

 Have Your Down Payment Ready

 It may be all well and good to know that your down payment money is in the bank, but it's important that it's in the appropriate account at least 3 months prior to your application submission so you can ensure you'll be seen as financially sound. While it's great to have money held in investments and RRSPs, it's important that this down payment money is kept in an easily accessible account where it can be withdrawn without any time delays or financial losses.

There are many different steps and small details associated with obtaining a mortgage, but by having your electronic documentation and down payment ready, you'll be well on your way to an approval. If you're currently on the market for a home, you may want to contact one of our mortgage professionals for more information.

If you're in the market for a mortgage, you may want to set up a pre-qualification meeting with a bank or lender. Even if you're not sure which lender you'd like to apply for a mortgage with, pre-qualification can still be a valuable step to take. And given that it only takes a few minutes, it's something every potential homeowner can do.

So why should you go to a mortgage pre-qualification meeting with a lender? Here are just a few reasons why it's a great idea.

It Will Give You A Good Idea Of How Much House You Can Afford

A mortgage pre-qualification is not the same thing as a pre-approval. When you pre-qualify for a mortgage, your lender will use information that you provide – information like your debts, your income, and your assets - to determine what size of a mortgage you can afford. This affordability information discovered during pre-qualification is then verified during pre-approval.

Pre-qualification doesn't involve a credit check, and it only takes a few minutes. The advantage of a pre-qualification is that it helps to guide your house hunt. When you know what kind of a home you can afford, it's easier to navigate the real estate market.

It Will Help You To Budget Your Expenses

A pre-qualification is a great way to get your household budget sorted out as a homeowner. When you pre-qualify, your potential new lender will tell you what kind of a mortgage you might be able to get. That means you can easily budget for estimated mortgage expenses and know what to expect before you apply for a mortgage.

Many Agents And Sellers Require Pre-Qualification

The pre-qualification phase is the first step in the mortgage process. When you're buying a home, agents and sellers will want to see that you have a good chance of getting a mortgage, as this makes the sale much easier. For that reason, a number of sellers and real estate agents highly prefer buyers who have been pre-qualified – and many of them simply won't sell to a buyer who hasn't been pre-qualified.

Mortgage pre-qualification is a great way to sort out your budget, determine what kind of a home you can afford, and persuade a seller to sell to you. And given that it only takes a few minutes to get pre-qualified, it's a simple step that simply should not be skipped.