The Jersey Shore by Karl Hess

Is the Barnegat Housing Market Returning to Normal?

The Barnegat housing market has been anything but normal for the last eleven years. In a normal real estate market, home prices appreciate 3.7% annually. Below, however, are the price swings since 2007 according to the latest Home Price Expectation Survey:

After the bubble burst in June 2007, values depreciated 6.1% annually until February 2012. From March 2012 to today, the market has been recovering with values appreciating 6.2% annually. In Barnegat sold home prices have risen by over 11%!

What’s Your Barnegat Home Worth? Get a FREE, instant valuation!

These wild swings in values were caused by abnormal ratios between the available supply of inventory and buyer demand in the market. In a normal market, there would be a 6-month supply of housing inventory.

When the market hit its peak in 2007, homeowners and builders were trying to take advantage of a market that was fueled by an “irrational exuberance.”

Inventory levels grew to 7+ months. With that many homes available for sale, there weren’t enough buyers to satisfy the number of homeowners/builders trying to sell, so prices began to fall.

Then, foreclosures came to market. We eventually hit 11 months inventory which caused prices to crash until early 2012. By that time, inventory levels had fallen to 6.2 months and the market began its recovery.

Over the last five years, inventory levels have remained well below the 6-month supply needed for prices to continue to level off. As a result, home prices have increased over that time at percentages well above the appreciation levels seen in a more normal market. 

That was the past. What about the future?

Nationally, we currently have about 4.5-months inventory. This means prices should continue to appreciate at above-normal levels which most experts believe will happen for the next year. However, two things have just occurred that are pointing to the fact that we may be returning to a more normal market.

1. Listing Supply is Increasing

Both existing and new construction inventory is on the rise. The latest Existing Home Sales Report from the National Association of Realtors revealed that inventory has increased over the last two months after thirty-seven consecutive months of declining inventory. At the same time, building permits are also increasing which means more new construction is about to come to market.  In Barnegat, there are about 7 months of inventory currently, but a lot of those homes are “yet to be built” and are in adult communities.

2. Buyer Demand is Softening

Ivy Zelman, who is widely respected as an industry expert, reported in her latest ‘Z’ Report:

 “While we continue to expect a resumption of growth in resale transactions on the back of easing inventory in 2019 and 2020, our real-time view into the market through our Real Estate Broker Survey does suggest that buyers have grown more discerning of late and a level of “pause” has taken hold in many large housing markets.

Indicative of this, our broker contacts rated buyer demand at 69 on a 0- 100 scale, still above average but down from 74 last year and representing the largest year-over-year decline in the two-year history of our survey.”

With supply increasing and demand waning, we may soon be back to a more normal real estate market. We will no longer be in a buyers’ market (like 2007-February 2012) or a sellers’ market (like March 2012- Today).

See Barnegat Homes for Sale

Prices won’t appreciate at the levels we’ve seen recently, nor will they depreciate. It will be a balanced market where prices remain steady, where buyers will be better able to afford a home, and where sellers will more easily be able to move-up or move-down to a home that better suits their current lifestyles.

Bottom Line

Returning to a normal market is a good thing. However, after the zaniness of the last eleven years, it might feel strange. If you are going 85 miles per hour on a road with a 60 MPH speed limit and you see a police car ahead, you’re going to slow down quickly. But, after going 85 MPH, 60 MPH will feel like you’re crawling. It is the normal speed limit, yet, it will feel strange.

That’s what is about to happen in real estate. The housing market is not falling apart. We are just returning to a more normal market which, in the long run, will be much healthier for you whether you are a buyer or a seller.

Karl Hess & Keller Williams Shore Properties provides expert real estate services to residential buyers and sellers in Barnegat and the surrounding communities. Contact us today for more information on Barnegat Real Estate and for professional assistance navigating this complex home market.

As always, thank you for your time and feel free to get in touch if you have any questions. Karl Hess, Keller Williams Shore Properties - #1 Real Estate Office in Ocean County

 

 

 609-553-7926

Find Your Dream Home on The Jersey Shore in Ocean County!

www.TheJerseyShoreHomeFinder.com

 

 Licensed in New Jersey.  Keller Williams Shore Properties 

1400 Hooper Ave. Toms River NJ 08753 Phone: 732-797-9001

 

 

 

Comment balloon 1 commentKarl Hess • September 21 2018 01:34PM
Is the Barnegat Housing Market Returning to Normal?
share
The Barnegat housing market has been anything but normal for the last eleven years. In a normal real estate market, home prices appreciate 3. 7% annually. Below, however, are the price swings since 2007 according to the latest Home Price… more
Reports Show It’s A Great Time to Sell Your Home!
share
We all realize that the best time to sell anything is when the demand for that item is high and the supply of that item is limited. The last two major reports issued by the National Association of Realtors (NAR) revealed information that suggests… more
Rent or Buy in Barnegat: Either Way You're Paying A Mortgage
share
There are some people who have not purchased homes in Barnegat because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize, however, that unless you are living with your parents rent-free, you are paying a… more
Myths and Facts About Today's Housing Market
share
There are many conflicting headlines when it comes to describing today’s real estate market. Some are making comparisons to the market we experienced 10 years ago and are starting to believe that we may be doomed to repeat ourselves. Others are… more
Are You Moving Out of Ocean Co? Get the Most Bang for Your Buck!
share
We all know that New Jersey can be an expensive place to live, right up there with Hawaii, New York and California… even in relatively low tax Ocean County, it can be expensive in comparison to other states. So, if you’re thinking of moving and… more
The Wave of Millennial Homebuyers Continues to Swell
share
Many have written about the millennial generation and whether or not they, as a whole, believe in homeownership as a part of attaining their American Dream. Comparatively speaking, millennials have taken longer to obtain traditional milestones.. more
Competition is Coming to the Barnegat Housing Market
share
If you’re thinking of selling your Barnegat home, be aware; competition is coming!! There are multiple new home construction projects going on in Barnegat at the moment, including at least 84 listings for homes that have just been built, homes… more
Are We in Another Housing Bubble?
share
A housing bubble is described as a run-up in housing prices fueled by demand, speculation and exuberance. Housing bubbles usually start with an increase in demand, in the face of limited supply, which takes a relatively extended period to replenish… more
The Right Ocean County House for Your Retirement
share
As more and more baby boomers enter retirement age in Ocean County, the question of whether or not to sell their homes and move will become a hot topic. In today’s housing market climate, with low available inventory in the starter and trade-up… more
Lack of Listings Slowing Down the Manahawkin Housing Market
share
The absorption rate in in Stafford Twp is at 4. 4 months; in a “neutral market” that rate would be between 6-7 months. The absorption rate is the rate at which available homes are sold in a specific real estate market during a given time period. It… more