Current Market
Over the past several years, we’ve seen that the fall real estate market tends to be quieter and shorter compared to our ‘spring market,’ which often kicks off in the new year. However, this year is different; pent-up demand remains robust, leading to quick sales of condos and homes, particularly in Hoboken, where the current absorption rate stands at just 1.5 months. We’ve listed several properties that received eight offers in less than a week, with winning bids surpassing the list price by 7-9%. Movement is evident across all price ranges, including the highest categories, with a notable increase in activity this month. Homes that are move-in ready and professionally staged are selling the fastest. While the absorption rate across Hudson County remains relatively low, it has seen a slight uptick since the spring in some other cities.
Rate & Loans
Current interest rates range between 7.5% and 8%, and they are expected to remain in this range for the foreseeable future. For many buyers, achieving a rate as low as 7% feels like a win. The recently announced loan limits for conventional loans have been increased as follows: $750,000 for single-family properties, $960,000 for two-family properties, $1,160,750 for three-family properties, and $1,442,600 for four-family properties. This increase in loan limits offers several advantages, as 3% and 5% down payment loans can now cover larger amounts, making loan approvals more accessible.
Another noteworthy change is that 2, 3, and 4 family homes are now eligible for 5% down financing under the new loan limits. Prior to this adjustment, buyers were required to put down 15%. However, as of November 18, 2020, they will have the option to put down as little as 5%. This change could expand opportunities for buyers who have struggled to find a suitable condominium and lack a larger down payment.
Market Outlook
As we approach Q4 2023, Goldman Sachs anticipates a shift in the mortgage rate landscape. They project that rates will begin to decrease, reaching 7.1% by the end of the year and further dropping to 6.8% by Q4 2024. These projections reflect an increase from their prior estimates of 6.6% and 5.9%, respectively.
In addition to the changes in interest rates, the investment firm also forecasts a modest 1.8% appreciation in home prices in 2023 compared to the end of 2022, followed by a 3.5% increase in home prices in 2024. Some experts are also predicting an economic slowdown, which could potentially lead to lower mortgage rates. While these expert forecasts are compelling, we recommend our clients make decisions based on factual information rather than speculation. We are here to assist you with any questions you have about the home buying process, provide rate data, and help you understand the connections between rates, inflation, and the real estate market.
