Runaway Price Growth Gets Major Blow: Real Estate Market Report September 2022
We all knew it couldn’t last, so here it is: US real estate’s wild sellers market is coming to an end.
That being said, your local market has a big impact on where home values are headed. An area with strong economic fundamentals (like New York) is likely to fare much better than an overvalued market (like Phoenix or Boise). The Jersey Shore market is a bit unique as it is connected to (and benefitting from) the NYC metro area.
In Staten Island, home prices dropped more than we have ever seen them drop in a single month- over $50,000. The average home now sells for $689,747. In July, Staten Island homes averaged $743,320. In New Jersey’s Monmouth and Ocean Counties, the price remained almost exactly the same, at just $581,000 for both months.
Active listings seems to explain why. On the Jersey Shore, active listings decreased from last month and last year’s 4,279 to 4,033. In Staten Island, active listings have increased slightly over the previous month, from 1,805 to 1,812. Months Inventory is also lower in New Jersey, falling to an astounding 1.95 months over the previous month’s 2.86. Staten Island’s increased notably from 3,82 to 4.53 in one month.
Monthly sales are also up on the Jersey Shore but down since last year. For both Monmouth and Ocean Counties combined, 2,067 homes were sold in the month of August. Last year, 2,345 homes were sold here. This 13% decline has been felt by our own office. Sales in Staten Island were down even further. Sales for the county fell from 537 last year to 400 in August 2022. This drop amounts to 25% year over year.
Interestingly, new listings are also down in both markets. In Staten Island, new listings decreased 12% year over year from 594 to 523. On the Jersey Shore, new listings decreased 9% from 2,731 to 2,482. This mirrors a national trend which is a paradox- inventory is falling at the same time that prices are. How can this be? Normally a supply constraint drives prices higher.
There are a few factors at play. First, home affordability has become a real problem. With interest rates now over 6%, a mortgage is now out of reach for more and more people when coupled with higher prices. Investment purchases may be down too. Real estate investments drove purchases over the past few years, as landlords profited heavily on rentals and flips. But when we consider the failure of Zillow’s iBuyer and the subsequent layoffs of a quarter of their staff, investors may be hesitant about home buying in the current climate.
