Where is the Central NJ Real Estate Market Headed? – Fall 2022

30 year mortgage interest rates have risen significantly over the last 6 months with much of that increase coming in just the last 45-60 days with many product rates closing in on 7% this past week.  What impact this most recent increase will have on pricing is yet to be determined.  While the financial markets are global the impact on home prices is likely to vary from state to state and even within municipalities in the same state because real estate is local.  Some of the unknows are if prices will roll back at all with interest rates at these levels or if they will hold on either for a period of time or indefinitely until rates come back down.  Inventory levels are sure to come into play as a factor – do we finally see an increase in inventory as sellers get off the fence and list their homes to get out before prices slide back or do we see inventory levels stay tight because so many homeowners refinanced down to rates of 2.5%-3.5% over the last couple of years and they are hesitant to list in an environment where selling would potentially mean giving up that super low rate locked in for the next 15-30 years to get a significantly higher interest rate, and thus higher payment on their new house, in hopes that even if they can afford that higher payment that in the years to come they will get a chance to refinance at a lower rate and bring their payment back down some.   Personally, I think this is going to keep a good number of sellers on the sideline, some of whom will decide to upgrade their current home instead of moving and that some otherwise potential sellers will not have a strong enough motivation to sell in Fall of 2022.   If this happens it might keeps inventory and the number of transactions occurring in our local market with the result being that continues to bolster home prices and keep them at or near current levels.