By Johanna Wiseman
N
ow that 2024 is more than half over, it’s a good time to examine changes in the local real estate market. For the past four years, we have seen remarkable increases in the selling prices of homes, exceeding the highs previously established in 2008 before the Great Recession.
In my opinion, limited inventory was the greatest factor influencing the soaring rise of home sale prices. Housing inventory refers to the number of homes that are available for buyers to tour and consider purchasing in any given period. When the pool of potential buyers is greater than the quantity of homes for sale, motivation increases. That drives up prices. Buyers are willing to act quickly, offering more money to defeat their competitors.
Consider the approximate number of Somerset County homes listed for sale in June, from 2021 to 2024: *
2021 – 580 homes listed for sale
2022 – 526 homes listed for sale
2023 – 334 homes listed for sale (*relative low point)
2024 – 404 homes listed for sale
*(Data from Garden State Multiple Listing Service, primarily concerning sales of existing homes. New construction not listed on GSMLS is excluded. Withdrawn/Expired listings are excluded.)
There was a sharp drop in available homes between 2022 and 2023. As inventory declined, an impression of scarcity influenced frenzied buyer behavior, leading to competitive bidding and price increases.
The takeaway from the ongoing 2024 real estate market is that inventory is on the rise. Why? Following a couple of years of newsworthy returns, longtime homeowners realized that they wanted to capitalize on the opportunity to sell their largest asset. In many cases, it took time to arrange an exit plan consisting of downsizing, retirement, relocation, and other logistical challenges. As this large segment of homeowners reaches readiness, the selection of homes listed for sale has begun to expand. Buyers now have more homes to choose from, resulting in a relaxation of pressure and competition. We’re seeing homes taking weeks longer to sell than in recent years, with an uptick in price reductions for homes that have not sold in the first 30 days.
This leads me to conclude that we have reached a tipping point in the market, and we will gradually return to a more balanced real estate market between buyers and sellers.
For more information, contact Local Real Estate Expert Johanna Wiseman of RE/MAX Preferred Professionals at 908-705-0652.