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Home » Is it just pent-up demand or a long-term trend?

Is it just pent-up demand or a long-term trend?

June 29, 2020

There must be some light showing at the end of this tunnel. How do I know? More people are looking ahead to what our economic recovery looks like AND to what our real estate market will look like.

What I find interesting is the diverse array of opinions about what will happen next in real estate.

When we talk about “the real estate market”, it is important to define the area we are talking about. Broad national numbers don’t necessarily apply. This was certainly true in the last downturn and the subsequent recovery – and it remains true now.

The most reliable information about “the real estate market” is local, and here is what has been happening in Bergen County: The number of homes coming on the market and the number of homes accepting offers both dipped substantially in the initial weeks of the quarantine. After mid-April, despite the lockdown, those numbers started to improve. And as this chart shows, they continue to increase weekly:

The COVID-19 and Bergen County's Real Estate Market I Residential Properties (Single Family, Condos & Coops, 2-4 Family) First two numbers for each date range are New Listings (2020 compared to 2019), next two numbers for each date range are Accepted Offers (2020 compared to 2019). 03/23-03/29 119 389 116 354 03/30-04/05 115 486 95 357 04/06-04/12 104 505 109 374 04/13-04/19 133 283 97 317 04/20-04/26 142 389 130 303 04/27-05/03 195 552 166 348 05/04-05/10 261 414 201 379 05/11-05/17 275 481 238 363 05/18-05/24 339 342 331 365 05/25-05/31 289 380 285 297 06/01-06/07 434 420 367 347 06/08-06/14 445 390 404 304 06/15-06/21 488 395 432 326

In fact, week over week, we have far outpaced last year's numbers. (Contrast this to national reports of a slowdown in May.) The question everyone is asking is whether or not this is pent-up demand that will fade away, or whether it's a long-lasting trend that will lead to increased prices.

Well, the experts are all over the map on this one! The virus and other challenges currently impacting the industry have created a wide range of views regarding the future of home prices. Here's a list of analysts and their projections, from the lowest depreciation to the highest appreciation:

  • CoreLogic: Year-Over-Year decline of -1.5%
  • Haus: Year-Over-Year decline of -1%
  • Zillow: Year-Over-Year change is forecast to bottom out at -0.7%.
  • Home Price Expectation Survey: Decline of -0.3% in 2020
  • Fannie Mae: Increase of 0.4% in 2020
  • Freddie Mac: Increase of 2.3% in 2020
  • Zelman & Associates: Increase of 3.0% in 2020
  • National Association of Realtors: Increase of 3.8% in 2020
  • Mortgage Bankers Association: Increase of 4.0% in 2020

Even with this range of predictions, no one is expecting wild price swings - and certainly not the crash we saw in 2008.
It's been a crazy, uncertain year - but not for real estate. Our prediction? Don't try to wait out this market.

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