Should You Act Now or Wait?

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Real Estate


Here are my thoughts on what’s keeping the real estate market at record low pending contracts in NJ

When we look generally at the market right now following a normal slow down from end of year holiday festivities, we will notice that the motivation to relocate increased but taking ACTION has slowed.

So what is keeping people “stuck” right now?

Blaming the recent interest rate rise has many layers to it because there are buyers with nothing to sell and then there are buyers who already have a home and would need to sell.

The buyers that have nothing to sell are motivated and ready and this is what our demand consists of that I am seeing.

The buyers that need to sell in order to buy likely wish to trade up or trade down due to many factors from needing more space or needing less space, to simply wanting to move into a different neighborhood.

That all being obvious, for the buyers that need to sell in order to buy, in the end, the motivation to move must outweigh the strong desire to remain locked in to a previous incredibly refinance from 2 years ago like 2.75%.

A person can easily argue against selling and moving as it would mean surrendering this great rate.

Arguing that it is a poor financial decision would also keep that person “stuck” in a lifestyle which is not satisfying to their new life circumstances and needs.

Staying stuck is a conscious decision that needs to be personally examined by objectively comparing the financial loss of losing their “fabulously low rate” to the reward and affordability of stepping into their new lifestyle.

It has been predicted that our economy is headed into a recession. Basic economics will argue that during a recession the economy will eventually have to be given the medicine to restore itself which would mean eventually rates will again be lowered. Around and around we go chasing inflation and causing inflation.

So when weighing the financial loss maybe don’t do the math for the entire life of the loan as it is likely the rates will eventually be back down enough to capture a more favorable forever rate refinance in the future.

Another option commonly considered is to secure a lease agreement to rent out your existing property so that the renter builds your equity for you, and you can cancel out that monthly payment as debt when applying to your new mortgage for the purchase.

Problem solved right? Maybe not, because unless sellers have ample liquidity in savings some sellers will need the equity from their home sale as a down payment so they can effectively trade up to the price point they need.

The current demand and supply is somewhat suppressed and what we are feeling currently in the real estate market here in NJ is largely due to this inability to get “Unstuck”.

I advise anyone who is on the fence to reach out to me so we can examine your personal situation and discover which way for you to lean in your decision.

Mapping out different scenarios with actual calculations will paint a very clear picture of your end result before you set out to make a mistake we can prevent.

Whichever plan of action makes sense that you seek to accomplish, I have the strategy, experience, expertise and resources to get it done without stress.

Joanna Renner
The NJ Feng Shui Realtor