Since the pandemic, we have witnessed fluctuations in the pricing of apartments in New Jersey. They have been gradually increasing over the past twelve months due to several reasons. Income streams have been inconsistent, and as a result, post-graduates are holding back on buying homes. Twenty and thity year olds have started to move back in with their parents due to job-loss and uncertainty. All in all, the pandemic has severely affected the apartment market.
We will be discussing the 2021 apartment market in greater detail below, discussing critical aspects such as interest rates, lack of inventory, and particular market trends. Continue reading to learn more…
1. PRICES WILL RISE DUE TO A LACK OF INVENTORY
The 2021 New Jersey Apartments market lacks the availability of property as we neared closer to summer months. The limited housing options were evident when young adults and millennials were looking for apartments upon return to the metropolitian-area in the early summer months, and the price of apartment units went up – for rent and for sale. This indicated the demand was, and still is, high, and the early-mid pandemic lower rental prices were in the past. The housing market was a different story for 2021 where home purchases resulted in bidding wars and sales going for more than their asking price. We can’t say if the pre-pandemic price rebound will have staying power in the rental market into the fall and winter months, but time will tell.
2. ALTHOUGH INTEREST RATES HAVE RISEN, THEY REMAIN EXTREMELY LOW
A significant concern when purchasing a new property is the interest rate, which can have a significant impact on the housing market. Generally speaking, an excellent time to buy a property is when the interest rates are on the lower end of the spectrum.
The central banks and federal government have put particular measures in motion to assist economic recovery to suppress the burden of the pandemic. These steps also include the commitment to minimize and maintain low interest rates in the coming years. We may start referring to bond and stock market volatility for a better understanding, and then we can anticipate rates to rise modestly while continuing to stay low.
3. THE NUMBER OF SALES IN THE SUBURBAN AREA IS INCREASING
We understand that this article aims to discuss the standing of the New Jersey apartments market, but let’s also look at how the suburbs and housing market faired in 2021 and what they have had in store for the buyers and sellers up until now.
City living has traditionally been associated with crowded apartments and close contact with others on the sidewalks, restaurants, everywhere! As Covid spread, a fair number of city dwellers left the metropolitan centers for a more suburban and rural way of life; especially, families with children and who had the finances to do so.
Experts underline the buyer’s growing desire for additional space, particularly in open areas for organizing safer outside social gatherings and preference of a more outdoor, less-crowded lifestyle. Suburban houses are in extremely high demand as city inhabitants seek larger house sizes, and in few instances, more distance between neighboring houses. Many first-time home buyers found themselves in bidding wars, often having to submit offers way over asking price to even be considered. Whether to flock from the city, benefit from the low-interest rates, or to accommodate growing families, many young adults purchasing property were entrenched in a very competitive market throughout 2021.
4. CURRENT STATISTICAL STANDPOINT OF THE PROPERTY MARKET IN NEW JERSEY
Nonetheless, according to data from the New Jersey Realtors, the overall average sales price increased by 24% from May 2020 to May 2021. Pricing is projected to rise further towards years end. According to the Otteau Group statistics, home prices grew by 12% in 2020 and are expected to grow by 12% once more in 2021.
Now we have to stay put and see how things unroll for the buyers and sellers – the uncertainty and incredibly active market indicates a continuous increase in pricing.
5. IN THE RENTAL PROPERTY MARKET, THERE IS STILL A DEGREE OF AMBIGUITY
All renters know that finding the right property to rent out is not a straightforward task. There is a rigorous process you have to undergo which includes documents, credit checks, and monies to front first month rent and security deposits.
If we take a look at the current rental market, the screening process mentioned earlier has been significantly impacted. As a result of the pandemic, many individuals had to face unemployment, and this had a direct impact with the rental market. Luckily, governments have protected tenants from being evicted if they lost their job during the pandemic; however, the uncertainty of these protections is still up in the air.
If an individual some how lost their rental in the pandemic and they still don’t have a job, property-owners will be unwilling to take the risk of renting to them – unless they were able to apply for rental assistance. In contrast, if you have a decent credit score and you have a steady income, you do not have much to worry about. Property owners want to have that peace of mind before they lease out their apartments so that they know their due rent will arrive on time.
CONCLUSION
As discussed above, there are many aspects to cover before meticulously analyzing the standing of the current apartment market in New Jersey. We have to consider particular factors such as interest rates, the season, ambiguity in the rental market, suburban perspective, and disparity between supply and demand.
We have complete faith that we will witness stability as time passes by. We also hope individuals who have been deeply affected by the pandemic find ease on their end and find suitable apartments to reside in that will not be a burden to their financial standing.