The US housing market is still hot and industry sources indicate it is not showing immediate signs of slowing down as tight market conditions continue with the demand for housing exceeding the supply of available homes. In fact, home listing site Zillow recently released its latest forecast that predicts the year-over-year rate of home price growth will hit 22% in May, representing an acceleration in home price growth. Beyond May, Zillow’s forecast model predicts only a subtle slowdown in the rate of growth with that Y-O-Y home price growth to be nearly 18 percent by February 2023. 

As this seller’s market environment persists, common issues such as low inventory, bidding wars and increasing mortgage rates make for a competitive and all too often, a stressful experience for potential home buyers. To make matters worse for the home buyer, new additional requirements for mortgages obtained for condominiums and cooperative residential units are making it harder for buyers to obtain mortgages following the collapse of the Champlain Towers South in Surfside, Florida, in June 2021. In fact, if certain criteria are not met by the community’s Association prior to closing, potential purchasers will not be able to obtain mortgages from traditional banks and lenders that seek to sell those mortgages on the secondary market. In addition, with rising interest rates, banks are shortening their mortgage rate locks in an effort to avoid inflation risk. Finding the balance of when to lock in the rate versus having a place to live becomes a game of dominos for buyers and sellers.

Although the process of buying and selling a home today comes with unprecedented challenges, it is also extremely exciting and ideally financially rewarding for all parties involved. Additionally, there are proactive steps that buyers can take to increase their options and likelihood of finding and closing a deal. For example, although cash buyers are in an advantageous position, buyers who require financing may want to consider the secondary mortgage market, which unlike big banks, aren’t confined to one set of terms and rates. Other considerations include Use and Occupancy clauses to help lock in lower rates for the buyer and close sooner, while providing the seller with more time to reside in the property post closing but having the certainty that their funds are in hand and giving them the confidence to figure out their next purchase or move sooner than later.  

Clearly today’s market is a precarious one that needs to be navigated carefully and diligently. To ensure the most successful and smoothest transactions, it is critical to use a professional team of realtors, bankers and attorneys who are responsive and experienced with the current market conditions. Felix Nihamin Law has been representing New Jersey buyers and sellers for nearly  30 years and works with a network of respected, seasoned professionals who collaborate and are committed to serving their clients with the best possible representation.