Real Estate Prices More Likely To Plateau Than Freefall: Staten Island/New Jersey Market Report November 2022
by Hannah Jay
on Tuesday, November 8th, 2022 at 8:55pm.
Many buyers are hoping for a fall in prices while mortgage rates rise, but they might be disappointed.
While sales are down across the country, newly listed properties are down quite a bit as well. Housing starts have lagged behind, reaching a year and a half low. And with interest rates still on the rise, builders are not likely to become energized anytime soon.
The average 30-year mortgage rate is now up to 7%. According to Yahoo Finance, the average mortgage premium is $965 higher than it was one year ago on a median-priced home. Mortgage applications are down 41% since last year, and refinance applications have plummeted 85% from a year ago. But with a shortage of available housing, even high mortgage rates probably will not slow the demand for new home purchases too much.
Prices are up in both New York and New Jersey. In Staten Island, the average home sale price climbed over $15,000 from September to reach $721,838. That's an 8.5% increase from the prior year when the average home sold for $665,532 in October 2021. In New Jersey’s Monmouth and Ocean Counties, the average sale price was up 13% from 2021, to reach an impressive $586,958. In October 2021 the average home in these two counties fetched $519,305. This figure was also up over last month’s $571,282.
Price changes have remained steady in New Jersey over the past 5 months, after sharply increasing in the preceding 5 months. Price changes in Staten Island have been decreasing for four months straight after increasing sharply over the preceding 5 months.
However, these price increases are known as a trailing market indicator. Average sale price is usually indicative of where the market was a few months ago when the offer was first accepted on the property. With the sharp yearly drop in sales, home sellers seem to be having difficulty. Price reductions may soon follow. In our own office, we have also observed a larger than usual number of Staten Island and New Jersey listings that have expired recently without selling.
Homes are taking longer to sell too. In Staten Island, homes are taking 30% longer to sell than they did one month ago at 74 days. The Jersey Shore market has crept up slightly from its incredible low of just 21 days to an average of 28 days to sell a home.
Sales are down a full 30% in Staten Island since last year. In Monmouth and Ocean Counties, sales have fallen 24.5% year over year. While these numbers look stark, it is important to remember that the market peaked in 2021. 348 monthly sales for October in Staten Island and 1,715 in the Jersey Shore market is still respectable. New listings are also down 22.5% year over year in Staten Island and 14.5% in New Jersey. If supply continues to fall, we face a continued inventory shortage. Prices may pull back because of affordability issues, but demand and competition for available homes will keep them from falling too low.
In both New York and New Jersey, the economic fundamentals are fairly strong. Price trends are steady overall compared to bubbly markets across the U.S. Nationally, the median home sale price has fallen from a peak in June 2022 of $413,800 to $384,000 in September. In addition, U.S. home sales have fallen for 8 straight months. Interestingly, the average home price in Staten Island mirrors the national US average as well, which is up 8.4% from one year ago.
We may see some trouble brewing on the national housing front. According to Fortune.com, the housing market is about to witness the second-biggest correction since WWII. U.S. home equity declined 7.6% in the third quarter of this year- the biggest drop ever recorded at $1.3 trillion. Areas without strong fundamentals, particularly in the southern and western markets, are getting hit the hardest.