SPARTA, NJ – It is not surprising that the “Stay at Home” restrictions announced in response to COVID-19 are now beginning to impact local and state residential real estate sales. Sparta sellers, however, are projected to feel less of an impact in terms of sale prices than the average New Jersey seller according to Lynn Garafola, New Jersey-Licensed Salesperson, Broker and Team Leader of Team Nest Builder, Realty Executives.
Garafola said a number of factors will contribute to New Jersey’s more positive response to the current crisis. A successful Realtor, Garafola is continually looking to the latest data to be able to advise her clients.
By the numbers
She said, both national and New Jersey residential sales finished at record highs in 2019. There were 119,754 residential properties sold in the state in 2019–a 4.5% increase over 2018–totaling $42 billion in sales volume according to Garden State Multiple Listing Service and Otteau Group, Inc.
New Jersey home prices rose as well in 2019 by 4.7% to a median sale price of $320,000.
Inventory levels in New Jersey finished slightly lower in 2019 than in 2018, “largely due to robust sales in the entry- and mid-level price points coupled with the low supply of new offerings to backfill the depleted number of available homes for purchase.”
In Sparta there were 380 homes sold in 2019 with a median selling price of $354,837 reflecting a .84% increase over the 2018 median price, nearly $35,000 over the 2019 state median sale price.
The available inventory of Sparta homes in 2019 ended slightly higher than the year before, with 156 available homes for sale on December 31, 2019 as compared to 151 at the end of 2018.
“This was largely due to sluggish sales of Sparta homes priced over $600,000 leading to a disproportionate inventory build up at higher price points,” Garafola said.
Before the coronavirus pandemic hit, residential homes sales began strong during the early part of first quarter 2020 throughout New Jersey and also in Sparta.
February was particularly robust, with Sparta sales up over 100% from the year before–43 new pending contracts at month end, as compared to 21 new sales during February 2019.
“This increase can be attributed to low mortgage rates, coupled with strong underlying economic conditions in the northern New Jersey market area,” Garafola said. “The vigorous sales activity in February had 152 Sparta homes available for sale on March 1–5% fewer than a year earlier.”
Even the first two weeks in March 2020 had new sales in Sparta off to a good start, Garafola said. “In Sparta there were 17 new sales contracts pending by March 15, even with the impact of the COVID-19 pandemic beginning to set in as well as the governor initially deeming real estate sales activity as non-essential.”
For Sparta March 2020 month-end sales were only down slightly with 37 logged versus 39 in March 2019. Garafola said it is possible the “shelter in place” mandate, coupled with a mix of volatile and record low mortgage interest rates, actually accelerated sales activity late in the month. She said it was a “relatively strong finish for new sales in Sparta for the month of March.”
While Sparta seemed to finish relatively strong in March, the same could not be said throughout New Jersey. Statewide 2020 March sales volume was down 25% as compared to March 2019.
“This dramatic fall-off statewide was likely largely due to the impact of the onset of the COVID-19 pandemic earlier in the month in the more densely populated towns closer to New York City,” Garafola said. “Additionally, active sellers who were fearful of coronavirus exposure from buyers visiting their homes began withdrawing their homes from the market, while sellers who had planned to introduce their homes during the spring market also began holding off.”
These factors likely caused new buyers to sit on the sidelines statewide, while at the same time previously active buyers who had already rejected the early spring inventory now had no new offerings to select from, according to Garafola.
Even though people are home adjusting to “sheltering in place,” Garafola said, “in the past week or so, national, state and local on-line real estate browsing stats declined significantly to 50% or less in most markets.”
She said Sparta home sellers are now also seeing buyer foot traffic fall off as both buyers and sellers adjust to the new normal that comes with sheltering at home.
“We expect that trend to continue until the shelter in place state mandate is lifted,” Garafola said. “There are rare exceptions in the past two weeks with new well presented, well priced listings being introduced to the market and attracting multiple offers with few–if any–in-person showings.
Business is still going on
Some people have to move. Garafola said a client moving to north Jersey for a government job set to start in June is an example. They had planned a second trip to the area in March. Now they are doing virtual tours.
Garafola said some home showings are still happening, just in a new “socially distancing” appropriate way. She is doing virtual home tours during which she and a videographer will walk through a home with the buyers looking in through the camera. She said she is able to talk with the buyer, looking in every corner and cabinet, wearing gloves of course.
Sellers that are making the virtual home tours available are leaving the homes during the tour and willing to disinfect the home when they return, according to Garafola.
Home inspections and closing are still going on. The home inspector and one of the buyers will enter the vacated property, but not be in a room together. The realtor is remaining outside.
For closings, Garafola said Title companies handling the closings set the protocol, which may vary slightly for each transaction, always with safety as a priority. For one closing they took the closing documents in an envelope into a room for a signature, left the envelope on the table and returned to retrieve the documents.
Potential market impact
The Otteau Group, a Real Estate Valuation & Advisory Company based in Matawan, New Jersey, currently estimates that New Jersey home sales prices will decrease by over 8% on average by the end of 2020 due to the impact of the COVID-19 pandemic.
Otteau’s forecast for Sparta home sales, however, suggests that Sparta sellers will fare better than the average New Jersey home seller, with prices only declining 4.5% and falling back to 2018 year-end levels and wiping out the entire gain in 2019.
“The negative impact on prices is expected from a result of several factors,” Garafola said. “The impacts could come from;
- drop-off in qualified buyers, stemming from the combined effect of interrupted or lost employment,
- some pull-back of lenders in the jumbo loan market,
- an exodus of private financing players and
- a tightening of lender credit requirements for all borrowers.”
Tech savvy Realtors like Garafola and Team Nest Builder from Realty Executives’ Sparta office are adapting to meet the needs of home buyers and sellers during this challenging time, primarily by re-tooling their current online presence and harnessing a wider variety of technology platforms.
They are now using on-line meetings, buyer and seller video consultations, virtual showings and open houses and comprehensive social media marketing campaigns to help connect buyers and sellers online.
“Gone are the days when you can throw a listing up on MLS and expect a sale,” Garafola said. “We are positioned to continue to have successful outcomes for our clients, having a history of embracing the newest technology and knowing our market.”
Team Nest Builder is a client rated 5-star full service home-buying-and-selling team with over 63 years of combined experience having closed hundreds of millions of dollars in Morris and Sussex County residential sales. They offer expertise, energy, integrity, and cutting-edge technology to home sellers and buyers in the Northern New Jersey area.
Sources are the Garden State Multiple Listing Service and Otteau Group, Inc. as of 3/31/2020