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Home » Predictions for the 2021 Bergen County Real Estate Market

Predictions for the 2021 Bergen County Real Estate Market

January 20, 2021

SO – what happens next? We start off 2021 filled with high hopes for a much happier and healthier year than the one we left behind. There also is plenty of speculation about what will happen going forward in what has been a sizzling hot residential housing market.

For starters, let’s look at what some of the best minds in real estate have to say:

  1. Interest rates will stay low and steady. No one anticipates a jump this year, although there may be a slight increase by the time 2021 is fading into 2022.
  2. Home sales will increase again this year.
  3. Housing starts are up but will not meet the demand.
  4. Home prices will continue to inch up.

Notice I said “inch up” – not “jump up.”

When I am meeting with clients or just talking real estate in general, there seems to be a consensus that home prices have skyrocketed. Not to burst anyone’s bubble, but this is NOT the case. In Bergen County over the past year, prices have ranged from a DROP of 1% in some places to an increase of 8% in others – and everything in between. This means that, on average, a home that was worth $500,000 in January of last year is now worth maybe $525,000 – not $600,000 or $700,000.

That being said, first-time buyers will have a harder time purchasing a home at the end of 2021 than they do today. Why? Because a small increase in prices, coupled with a slight increase in interest rates, can make a big difference.

Nationally, predictions are that home prices will increase between 2% and 6% and that interest rates will increase to the low 3% range. With the increase in mortgage rates and the increase in price, it will cost a buyer almost $200 more a month at the end of the year to own the same $300,000 home. And you can see what this adds up to over the life of a 30-year loan in the chart below:

The bigger the price tag for the home, the bigger the payment gulf. (Here in Bergen, average home prices are closer to $500,000.)

The bottom line? if you’re thinking about buying a home this year, think harder NOW.

Remember: “You don’t live in the price, you live in the payment.”

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