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More buyers in New Jersey’s red-hot real estate market are relying on an old virtue to get their offers accepted — cash is king.

Real estate agents throughout the state have said their buyers are often losing bidding wars to offers that are cash, meaning the sale is not contingent upon the buyer getting a mortgage to close. Cash buyers also run the risk of losing their deposit, so their offers are seen as more committed. And an appraisal isn’t needed for a cash purchase, eliminating another contingency.

According to a data comparison prepared by the Otteau Group, the number of cash closings in March 2020 compared to the number in March 2021 rose 4% statewide. But those sales that closed in March were likely inked in December or January, so the trend is expected to continue to emerge in closing data.

“This is a bit of a lagging indicator,” said Jeffrey Otteau, a real estate economist and president of the Otteau Group. “It’s likely to accelerate as we get to closings later in the year.”

The biggest increase in cash purchases was for homes that were above the median price of $355,000.

“These are all symptomatic or a byproduct of a sparse market in which buyers need to sweeten the offer to get the house and one of the ways to sweeten the offer is to remove the mortgage contingency,” said Otteau.

The buyers are panicked, he said, that they’re not going to be able to find a home before the prices go even higher so they’re willing to put their deposit at risk to make their offer more competitive.

Home prices increased about 12% last year, Otteau said.

“What it really is, is an indication of the desperation homebuyers are feeling now to find a home, lock up a house and get it under contract,” Otteau said.

“We are seeing it across the board at all price points. And it’s very creative,” said Robert White, President-elect of New Jersey Realtor, and managing broker at Coldwell Banker Realty in Spring Lake.

But just because the homes are being purchased with cash, doesn’t mean there is no mortgage. Some high-end buyers are borrowing from their investment portfolio to make the purchase and then paying all or part of it back with a mortgage.

“Mortgage money is so cheap and a lot of the investment advisors are recommending their clients borrow the money instead of divesting their portfolio,” White said.

The mid- and entry-level markets are also seeing an increase in cash purchases.

Pat Settar, of Berkshire Hathaway Fox & Roach Realtors in Mullica Hill, had a buyer who was trying to purchase a home in Haddon Township. The market there is very competitive, she said, due largely to investors who are flipping homes.

“I just kept hearing over and over it’s a cash buyer,” Settar said, for the reason her client’s offers were turned down. “When I told this young girl, she told her parents what was going on and they borrowed out of their 401k to give her the cash and, after she settled, she paid them back with a mortgage.”

Agents also attribute the cash buying trend to the high-prices, and low inventory market.

“Everybody is cashing in on their homes because the shortage of inventory is so severe,” Settar said. “People up north are cashing in and buying down here. I’ve never had so many cash buyers in my life.”

Brian Morganweck, the broker/owner of Power Realty in Hackensack, said 90% of his buyers in high rises are empty nesters who are selling their larger home for a big profit and downsizing to a condo with the cash profit.

“If the seller has 12 offers and one is iron clad because it’s all cash – no appraisal, they’re not going to change their mind — they edge out all the ‘what ifs’ in a seller’s mind,” Morganweck said.

READ MORE:

— These are the N.J. counties that saw the biggest spikes, dips in homes sales

— The housing market is hot for many reasons. Millenials are one of them

— Fistfights. Free tacos. This is how crazy the N.J. real estate market is, agents say.

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Allison Pries may be reached at apries@njadvancemedia.com.

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With well documented reports of people moving out of the crowded Northeastern cities and towns, an annual survey of real estate industry professionals predicts Northern New Jersey could be the country’s fourteenth hottest market in 2021.

The Urban Land Institute’s Emerging Trends in Real Estate 2021 also gave North Jersey real estate high rankings in other categories, in some cases beating out New York, its outer boroughs and Long Island.

“Northern New Jersey moved from 55 to 14 this year and we think that is a reflection of the move toward suburban areas,” said Anitia Kramer, senior vice president of ULI center for capital markets and real estate.

Original Article Appeared at : Source

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Typically this time of year in Randolph, there are 120 to 140 homes listed for sale. Right now there are just 23.

It’s a trend agents and buyers are seeing throughout the state brought on in part by COVID-19 concerns — and the intense competition for the few houses that are on the market.

“The inventory is ridiculously low. Unprecedented,” said Missy Iemmello, office manager for Weichert Realtors corporate sales office in Morris Plains, which has 120 real estate agents doing business in Morris, Sussex, Warren, Bergen and Essex counties.

Throughout the state, there were only 23,011 single-family homes, townhomes and condominiums, and adult community properties available for sale in the month of January. Last January, there were nearly double that amount, 41,005 listed for sale, according to a report from New Jersey Realtors.

The low inventory and high demand are pushing sale prices higher, causing houses to sell for tens of thousands of dollars over the asking price and generating bidding wars.

The median sales price for a single-family home in New Jersey in January was $504,585, a 22% increase over the median price in January 2020.

A lot more buyers have equity in their homes during this surge in the market, unlike back in 2006, said Iemmello. “They’re financially comfortable where they are. Because of the activity and the rising prices, it’s a great time to sell, but where would they go,” she said.

Those who are selling are likely retirees who are moving out of state or people who have a second home, for example at the shore, that they can go stay in and work virtually from. “That’s where we’re seeing people take advantage of this market,” she said.

Another reason for the low inventory is a moratorium on foreclosures and evictions, signed by Gov. Phil Murphy last March.

But Beth Kimmick, Broker manager for ERA Central Realty in Robbinsville, doesn’t think there will be a flood of foreclosure listings hitting the market when the moratorium is lifted.

“Everything I read and hear shows there’s going to be a small percentage of properties that actually get foreclosed on,” she said. “A majority of people will be able to make that up or sell their house and not go into foreclosure.”

So, is this a good time to buy, if you can find a property?

Eric Anderson of Alexander Anderson Real Estate Group in Hackensack says yes — if you’re buying for the long term.

“What goes up, must come down,” he said. “If you’re looking for the short term, you would be better off renting.”

Some other key findings from the latest trends, according to a report from New Jersey Realtors:

• Single-family homes are selling for 100.2% of the listing price, up from 97.3% in January 2020
• Single-family homes are on the market for just 44 days on average, down from 72 last year
• Pending and closed sales on single family homes in January are both up by 14% and 17%, compared to the same time last year

Please subscribe now and support the local journalism YOU rely on and trust.

Are you buying or selling a home in New Jersey? Tell us about your experiences. Allison Pries may be reached at apries@njadvancemedia.com.

Original Article Appeared at : Source

Are you interested to learn more about the Greater Princeton, New Jersey Market Conditions, feel free to contact me at 609-915-9665.

People also looked for:

• listing agent and selling agent
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• princeton nj real estate agent