March marks the one-year anniversary of the World Health Organization declaring COVID-19 a global pandemic, sending societies around the world into lockdown. As the months unfolded and the virus raged, millions of Americans changed the way they worked, learned and lived. With remote schooling and work in place, city dwellers fled crowded urban areas in search of more green and personal space. Companies told employees to pack up their laptops and work from home – at least until April – and yet almost one year later, office vacancies are rising as remote working is still very much in effect. This pandemic-related migration has had significant and lasting implications on the housing and commercial real estate market, specifically in suburban areas like New Jersey.
As COVID-19 plunged the United States into a recession, leaving millions of Americans unemployed and businesses shuttered, the housing market boomed. The exploding housing demand of the past year, in conjunction with a historically low supply of housing, has led buyers to desperately bid up the prices of available properties, sending home prices soaring. In addition to the low supply high demand factor, people are also scrambling to take advantage of low mortgage rates, making the process of buying a home seem more attainable.
In New Jersey, this extremely competitive environment continues today, resulting in bidding wars that oftentimes leads to an over-inflated offer from an eager buyer which is uncovered during the appraisal process. If the buyers are relying on bank financing to purchase the home, this will most likely stop the deal in its tracks. In fact, on average, for every deal that closes, three will fall apart due to overbidding and the subsequent inability to qualify for the loan a buyer may be seeking.
However, for sellers and financially solid buyers, the current New Jersey real estate landscape is an exciting market to play in. The soaring demand and limited supply have been great news for homeowners who have seen their home values increase. For buyers who can take advantage of historically low mortgage rates, deals do abound, but need to be negotiated and handled carefully and with eyes wide open in terms of potential risk.
Patience, logic and sound legal advice are critical to navigating today’s market. Working with experienced realtors, responsive counsel and mortgage professionals help buyers and sellers negotiate and reach mutually beneficial agreements that recognize all parties’ best interests, especially in today’s stressful market environments.