While Central Jersey’s real estate market has seen a lot of positive growth in the last couple of years, the market is currently experiencing a slight slowdown of sales and a calm in the rising interest rates. This decrease in sales along with a decrease of over 2.5% in listing prices offers buyers an opportunity to take advantage of more affordable inventory. Middlesex County would be a good example of what is happening in Central Jersey. Middlesex County zip codes that have seen average listing price decreases are 08816, 08820, 08857 and 08854. Compared to last year’s numbers, Middlesex has also seen a 22.3% decrease in price per square foot.
Despite the first quarter’s weak start, economists are confident that New Jersey will see more positive growth in the very near future. The negative sales momentum has been due largely in part to the severe weather conditions that the region has experienced this past winter. As we move into spring, the market is expected to rebound and this fast approaching rebound gives the current buyer’s market an ever shortening lifespan.
With the rise in property values quickly approaching, interest rates will also be on the rise. As properties appreciate, buyers lose saving on good interest rates. For example, with a property value increase of 2% on a $250,000 home (with 20% down), buyers would lose out on an additional $4,000 off the listing price and this rise would cost them the interest on that $4,000 over the next 30 years.
Broken down by interest rate, a $200,000 loan can range from an $843 per month mortgage payment to an $1,135 per month payment. An interest rate of 3% costs a buyer 4.21 per thousand, or a monthly payment of $843. With the current interest rate at approximately 4%, the buyer’s cost per thousand is 4.77, which is a cost of $954 per month. With an interest rate increase to 5%, the cost per thousand jumps to 5.36 per thousand or a cost of $1,135 monthly. If buyers don’t take advantage of the current interest rate and listing prices, an increase could potentially cost them an average of $65,160 over a 30 year loan term.
To benefit from the current market, buyers must act quickly. According to HouseHunt.com, home prices are still on the rise in most of the country. Some areas are seeing over a 90% increase from the prior year. While the low housing inventory does keep these numbers from rising too quickly, more and more owners are getting ready to list again as seen by HouseHunt member agents.