2023 Real Estate Market Overview and Why We Are Bullish on 2024

This month, I want to share an overview of the 2023 market and some predictions for 2024.

Here in South Orange and Maplewood, just like the rest of the country, we felt a noticeable change in the market in 2023. With mortgage interest rates climbing sharply throughout 2022 and approaching 8% in 2023, we saw a significant decrease in the volume of transactions. Year to date through November, the number of closed sales was down by 13.5% in Maplewood and 15% in S. Orange.

Some buyers, who suddenly could afford much less, were hesitating to buy at higher rates. Many sellers were unlikely to want to forgo their lower existing mortgage rate and jump into a purchase at a higher rate, so they stayed in their current homes. This created a dearth of supply in the market and kept prices high.

On the bright side for sellers, houses in SOMA that did come to market continued to sell over list price on average. Maplewood homes closed for an average of 109% over list, and S. Orange homes closed for an average of 108.24% over list. Interestingly, Maplewood saw a 5.25 percent decline in average sales price, whereas in S. Orange the average price rose by 7.56%. In sum, even though transaction volume slowed, homes continued to sell quickly in around 25 days and for more than asking.

Inflation has continued to slow. The job market continues to be strong. It looks like the US will avoid a recession. For the past seven consecutive weeks, we have seen mortgage rates coming down, and they are now in the 6% range for many products.

Last week we had some great news from the Federal Reserve. They declined to raise interest rates and predicted 3 rate cuts coming in 2024. Markets rallied on this news, sending the Dow to record highs. This is why I am feeling very positive about Spring 2024!

Both buyers and sellers have accepted that the days of 3% rates are something they may never see again in their lifetimes. People need to move and will move for lifestyle reasons. Think about the D’s: death, divorce, downsize, diplomas, diapers, debt, diamonds. The mortgage rate reduction will be the factor that incentivizes existing homeowners to move, freeing up some inventory and bringing transaction levels back up. Buyers who have been sitting on the sidelines waiting for rates to come down will be re-energized to buy. Spring market buyers will, unfortunately, have forgone the appreciation they might have gained over the last year and a half on a new purchase as prices continue to climb. They also may regret the new level of competition they will experience in the Spring market.

If any of the D’s are a factor for you in your plans for 2024, please contact Allison at [email protected] to discuss your goals confidentially and develop a strategy that is most profitable and convenient for you.

The Allison Ziefert Real Estate Group is a top-producing real estate team based at Compass in Short Hills, New Jersey. We are local market experts, specializing in real estate and homes in Maplewood, South Orange, Millburn/Short Hills, Montclair/Glen Ridge, West Orange, Morristown, and the surrounding New Jersey towns. We’ve also got you covered coast to coast with the best connections to top agents around the country in any market you are exploring. We are driven by earning great testimonials and referral business from happy clients.