expert gives his point of view on the residential real estate market | West Windsor Plainsboro News
Understanding the Central New Jersey residential market as it continues to fluctuate, more than before due to the Covid-19 pandemic, is no small task.
But for professionals like Judson Henderson, the Official Broker and Managing Member of Callaway Henderson Sotheby’s International Realty, that understanding is made easier with his years of experience.
Henderson has been active in the real estate world since earning his license at age 18, becoming a full-time professional four years later. His agency is based in Princeton, but their reach and exposure goes beyond helping all Central New Jersey residents meet their match in the perfect home, even when the process of doing so has been complicated by outside factors. like the coronavirus and a capricious economy.
Translating it for the rest of the world, Henderson shared his take on what to expect for the market, which has gone from dramatic highs to roller coaster lows of real estate values.
“I can talk not just about what’s going on in Princeton or not just what’s going on in West Windsor, but looking a little bit broader, in terms of our area of expertise, which is this central segment of New Jersey in whole,” Henderson said. . “Markets generally run out of inventory, and that’s certainly a theme in our region.”
Inventory refers to new listings on the market, which means that if homes aren’t consistently coming up for sale, potential buyers have less land or buildings to choose from.
“It’s no secret there, it’s expensive to live in this area. Part of it is high property taxes, high state income taxes, all those things,” Henderson continued. “But because of that, we don’t have a ton of our rental inventory.”
According to New Jersey Realtors “Local Market Update for January 2022,” home-for-sale inventory dropped dramatically across single-family homes (-25.1%), condominiums (-27.4%) and community homes for adults (-31.8%). This is accompanied by an increase in median sale prices and a huge decrease in new listings compared to the previous year, in particular for community homes for adults (-61.1%).
Using Princeton as an example, Henderson recalls that people who initially had trouble selling their homes started renting them out to others as a fallback.
“Over the past two years, that’s no longer a problem,” Henderson said, with now-profitable sales quickly depleting rental inventory. “[There’s] so much extra pressure on people who come here to buy a house or to rent a house, because even [with] choices from a rental perspective, there’s not a lot of plan b for people right now. There’s no part of this market that hasn’t been completely turned around.
To appeal to a range of potential homeowners, property structures and designs vary from condos, townhouses, single-family homes on smaller postage stamp lots, and larger estates with equestrian facilities.
“It’s really a much more diverse housing stock than people realize, so it’s hard to generalize about this market, in our area, what’s happening across the board, because it’s very specific to individual counties, and even to certain products, within those municipalities. “, explained Henderson.
If a house is in “excellent turnkey condition” and needs little or no work, adds Henderson, its price is likely higher. Due to the pandemic’s supply issues and inevitable delays, people are more willing to pay a higher amount for a home that doesn’t have or need renovations to function.
The converse of this means that residents who are able to make these improvements have the upper hand, as any successfully completed project is likely to increase the financial value of the property.
“There are values for people who are willing to take on this job because there are fewer people in this position,” adds Henderson.
Outside of the pandemic and in a “normal” market, he said, trends vary over time.
“Some of them are desirable and some of them are not,” Henderson said, illustrating his point with details of the 2008 recession. According to Henderson, after the economic crash, people began to prefer smaller and more efficient with minimal walking distances to town.
“We’re in a post-pandemic world where they say they’re still desirable, but there’s been a renaissance for properties that have a little more wiggle room and a little more lifestyle at their fingertips. “, he remarks.
With the possibility of being “stuck” or working from home more relevant than ever, the pandemic has changed not only what homeowners tend to value, but even minute details such as “floor plan changes that have emerged” in recent years.
At the start of confinement, Callaway Henderson Sotheby’s International Realty, alongside other players in the real estate world, saw everything come to a halt.
Then, an explosion of interest revitalized the housing market, creating a surprising, yet appreciated, new reality for the area.
“We were completely inactive for a few months, not knowing what was going to happen, and then all of a sudden real estate almost took a complete 180 degree turn, where we’re as busy, if not bigger, than ever.been,” Henderson said.
The company was then tasked with managing both the perils of a pandemic and the constant risk of exposure to Covid-19.
Kiplinger’s Daniel Bortz reported that 2021 had “record mortgage rates” surpassing the high level of stimulus checks and rising wages, driving the market higher. “This surge in demand, coupled with the weakest home supply in more than two decades, has sent U.S. home sales prices skyrocketing to stratospheric heights,” Bortz wrote in a September 23 post. February of this year.
But now selling prices are higher than ever, making today’s market suited to sellers rather than buyers. According to estimates by the Redfin website, in February 2022 there was an increase of around 10 points in the number of homes sold above list price to 48.3%, but a sharp decrease of 16.4% in the number homes for sale to 26,723. Only 6,936 homes were actually sold with Redfin, resulting in a 17.1% drop.
While the majority of 2022 is yet to come, early forecasts argue that this year is unlikely to simulate the spring revival of 2021, where the newly revitalized market took on a life of its own.
Going forward, Henderson sees that some market changes will not be tradable.
“Affordability is always key,” he says. “When house prices are going up as much as they are, the biggest thing that’s going to influence the year ahead is what happens with interest rate affordability.”
“It’s really starting to have an impact on what people can afford, and that’s going to be key to whatever happens this year,” Henderson said. “Last year when interest rates were so low and the market was in a bullish environment, people were there to afford those homes or at least people were there to pay higher prices. .”
Henderson gave his insight into the future at the Princeton Mercer Regional Chamber’s 2022 “Central NJ Real Estate Forecast” event on March 4, sharing his predictions with an audience, peers and other speakers. His projections ultimately revolved around what New Jersey tenants and landlords are willing to tolerate.
“How much more price appreciation and higher interest rates can people really handle?” he asked about trends. “People are going to chase affordability. They will find what they want from a housing standpoint and then move to a secondary character municipality.
Henderson’s conclusion is that these traditional boundaries may no longer be as important as they once were, with residents feeling more inclined to move for their ever-changing needs, which would mean markets could change based primarily on movement.
“If people don’t like what they see in a municipality, they’ll venture into a more affordable municipality,” he said, envisioning one of the conceivable changes.