MILLBURN, NJ - The typically busy spring real estate season exceeded expectations this year. Traditionally, the spring market sees both the highest demand for new homes as well as the highest inventory of homes available. However, evidence suggests that demand for homes outpaced supply this year, leading to the surprising reappearance of bidding wars. Armed with greater purchasing power due to continued low interest rates, buyers came out in large numbers. But, with the number of homes on the market down significantly this year, there just wasn’t enough supply to satisfy them. The result: bidding wars and multiple offers throughout many of the surrounding towns.
In the towns of Millburn, Short Hills, Summit, Maplewood and South Orange, approximately 33% of home sale closings between March 1, 2013 and May 31, 2013 sold at or over the asking price. Market watchers can expect that percentage to rise in coming months. Homes under contract typically close 45-60 days later. Their sales data will appear in market statistics once the transactions close. As a result, the most dramatic evidence of spring’s bidding wars will become apparent in closings over the next few months.
Local realtors were on the front lines of 2013’s hot spring market. They witnessed the majority of Spring 2013’s sales enter multiple bid situations. According to Shira Rost, Sales Associate at Prominent Properties Sotheby's International Realty in Millburn, “over the past six months we have seen an influx of qualified buyers moving from cash positions or looking to upgrade due to the expectation that interest rates will climb. The smart buyer knows this is the time to buy even if it means going well above the asking price. With inventories still at very low levels, these buyers have been stepping up to create bidding wars at each price point. This is the perfect sellers market for those who have some flexibility on finding their next home.”
In addition to paying higher prices, some buyers are making further concessions. Real estate attorneys see first hand the pressure that homebuyers feel when the buying market becomes so competitive. Mark Tolstoi, a local real estate attorney and principle of Law Office of Mark J. Tolstoi in Roseland, NJ notes that he has “seen a tremendous increase in multiple offers on residential properties. As a result many purchasers are more willing to waive or shorten mortgage contingency time periods, accept conditions that would have previously been at issue during the home inspection process and waive appraisal and home sale contingencies.”
While this spring market was stressful for many buyers who lost out on purchasing homes, sellers were pleased. If this trend continues, those who unsuccessfully attempted to sell their homes during the past few years may finally be able to sell at prices close to their expectations.
Shannon Aronson is a local real estate expert and REALTOR® with Keller Williams Realty Premier Properties. She can be reached at www.ShannonAronsonRealEstateTeam.com or by email at Shannon@ShannonAronson.com. She is also a licensee with The Alternative Press.