6 NJ Housing Trends to Watch for in 2017
In these unpredictable times, it may seem difficult to gauge how the housing market in New Jersey will perform. To a certain degree, it will be influenced by the policies of the Trump administration. On the other hand, certain factors should prove reliable in the coming months. These six trends will probably play a significant role for the remainder of the year:
Higher mortgage rates
Mortgage rates have not stopped rising since November’s election. The Federal Reserve is expected to boost interest rates several times this year, with mortgage rates expected to follow. Buyers are not necessarily expected to balk, just yet, but their prospects will narrow if rates get any higher than already predicted. Refinancing will no longer be a viable method of saving money.
Mortgage rates may be on the rise but the unemployment rate has remained low, since it hit 4.7% in December 2016. The job market is considered robust and wage growth is expected. Known for their reluctance to buy homes, Millennials are now hoping to start families and careers. As a result, the home-ownership rate is expected to rise. Expect a fresh and diverse crop of new homeowners to emerge within the next year.
Rising home prices may not be a good thing but slow-rising ones make for better news, at least. Apparently, nationwide property values have only risen 5% over the last year. This region has not shown much movement at all. Home values have hit a wall due to fast increases over the last few years. Home values can only go so high until homes are no longer affordable. We are beginning to hit that wall. First-time buyers may be discouraged but prospective sellers, encouraged by the overall job market and their home equity, might start listing their homes.
Drop in home-building
Unfortunately, there is no bright side when it comes to the construction of homes. It is a nationwide problem due to lack of land to build on and strict lending standards still in place since the financial crisis. Aside from being the most densely populated state in the nation, New Jersey’s building projects tend to be more complicated due to environmental factors that delay approvals. Again, cities along the Hudson River with multi-family homes still see plenty of activity but the single-family construction more common to this region is all but stalled.
New Jersey is still struggling with the foreclosure crisis that exploded in the wake of the housing crash. By the end of 2016, the mortgage industry was on track to file 29,000 foreclosures in the state. They sell at a discount. Lenders continue to work at reducing the state’s backlog but until progress is made, the value of homes will continue to be negatively affected.
Cool-down in rent prices
We are not saying that the rent in New Jersey is affordable. In fact, it will likely continue to rise. The silver lining is that the increase is not expected to come at as fast a rate as it has in the last few years. An increased supply of newly constructed apartments means an increase in vacancy rates which means more leverage for consumers.
It helps to know the trends when shopping for a house, especially in the Garden State. If you are searching in Mercer County or the lower parts of Middlesex, Somerset and Hunterdon, please contact this office for an appointment.
Please be advised that this blog is for informational purposes only, is not legal advice and does not create an attorney-client relationship.
The Law Office of Joseph C. Falk, LLC
I provide Real Estate services, Call (609) 213-4097 or click the button below and fill out our contact form.