Since June interest rates have risen roughly 1% causing renters who were on the fence about their buying timetable to speed up their searches. In the Essex County market we have seen a huge surge in buyers from areas such as Hoboken, New York City, and Jersey City. A lot of these young couples were renters who became active buyers.
The surge in buyers has caused record lows in inventory and made prices appreciate above normal appreciation rates. We've even seen bidding wars break out in the luxury home market which is usually not common due to the "jumbo" loan process.
However, is this boom sustainable? The answer is, it depends. If the fed continues to buy mortgage backed securities to keep interest rates low, we should continue to see buyers come out in the droves in all price ranges. Once interest rates hit roughly 6% and the cost of renting vs. buying become even, then we'll see the market slow down and appreciation scale back. Until then, we will continue to have a booming sellers market.
-Kyle Kovats, New Jersey Realtor
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