It's not a good time to buy a home in North Jersey

Prospective home buyers can expect to go to war this spring and summer.

A low housing inventory coupled with high demand will spark bidding wars for houses in the entry- to middle-level home sectors, say local realtors, continuing a years-long trend in the residential real estate market.

“It’s a great time to be a seller,” said Ted Crocco, owner and broker of Bergen County Realty. “It’s not a great time to be a buyer.”

In the Montclair area, the number of days a home is on the market has plummeted, dropping from 77 days in 2012 to 36 days in 2017, according to the real estate firm Stanton Company. Diane Russell, a realtor at the company, said houses can sometimes sell in mere hours.

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“If you’re a buyer in the $600,000 to $900,000 range, it’s very competitive,” Russell said. “They’re going through multiple rounds of putting in offers.”

Delayed spring sales season

The busy spring season, which traditionally starts in March and quiets down in June, got off to a slow start this year because of the lingering winter and is likely to extend into late summer, Russell said. Homeowners who were planning to sell in the fall may be tempted to jump into the market earlier than planned, she said.

“It’s a quick sale process, which makes it easier for sellers,” Russell said. “It’s hard if you’re living in the house to keep it showing-ready.”

Zohar Zamir, founder of the North Jersey-based realty firm The Zamir Group, said he expects his team to remain busy until the back-to-school season.

Homes in towns that have convenient commutes to New York City and good schools are particularly in demand, he said. Houses that fit that description and are in the $300,000 to $800,000 price range receive multiple offers and often sell above the sale price.

Russell said she frequently has to educate first-time buyers on how much the asking price and sale price can differ. Stanton Company sold one home at 18 percent above the asking price last year, she said.

Homes in Montclair, Maplewood, Glen Ridge and other towns with train stations consistently sell above the asking price, while homes in towns without stations lag behind, both in sales price versus asking price and days on the market, the company said.

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Prices surge nationally

Home prices in North Jersey — and across the nation — have been rising steadily since the end of the recession, but as USA TODAY reported last week, price gains are accelerating in competitive, low-inventory conditions.

According to CoreLogic, prices surged 7% higher in March compared with a year ago — the biggest gain since May 2014. All 50 states saw home values increase, and prices are now higher than they were at the peak of the last housing boom, although that does not account for inflation.

"High demand and limited supply have pushed home prices above where they were in early 2006," said Frank Nothaft, chief economist at CoreLogic. "New construction still lags behind historically normal levels, keeping upward pressure on prices."

The price gains are greatest in the nation's largest markets. Half of the nation's 50 largest markets are now considered overvalued, meaning home prices are at least 10% higher than the long-term, sustainable level.

Prices are seeing the biggest gains at the lower end of the market, where supply is leanest. Sales of homes priced under $100,000 fell more than 20% in March, according to the National Association of Realtors, not because there wasn't demand, but because there was not enough supply.

Luxury inventory outpaces demand

The trend reverses in the luxury housing market, Zamir said. The inventory for homes selling for $1 million and above far outpaces demand, he said.

“We’re seeing more days on the market and less activity,” Zamir said. “The high luxury market is beginning to slow down."

In Ridgewood and northwest Bergen County, it’s all about appearances, said Jennifer Parsekian, a broker at Keller Williams Village Square Realty.

If a house is staged and looks like it belongs on HGTV, it will sell, she said. Quickly.

“Right now, the visual that the buyer receives when they walk in the door is important. They want the clean, open, airy look that they’re seeing on TV,” Parsekian said. “The homes that might have the color palette from the 90s — the red, yellow and gold — are not selling as quickly, and you may take a price reduction.”

Painted walls, fresh furniture and a photo-ready appearance can make some buyers overlook any deficiencies, like the lack of a central air conditioning system, and pay more than they would for a similar home without a shiny veneer, she said.

“For sellers, it is really is in their best interest at this time to stage their home,” Parsekian said. “Staging sells, in all price ranges.”

Buyers looking for homes in the $1.2 million to $1.5 million price range have a good inventory to choose from and can take their time, she said.

Entry-level buyers face challenges

For those wading into the residential real estate market for the first time, it will be tough to gain a foothold, said Crocco of Bergen County Realty.

“It’s a difficult time to be a young buyer right now,” Crocco said. “We have buyers that made several offers on several houses offering the asking price or more, and they’re turned down.”

Entry-level buyers are being forced into bidding wars and facing rising mortgage interest rates. The average rate on the 30-year fixed is at its highest level in more than four years and is not expected to fall back, as it did last year.

Higher mortgage rates usually cool home prices, as buyers can't afford as much and sellers have to accommodate. The difference in today's market is that there is so much pent-up demand from the largest generation, and the economy and employment are improving. That dynamic could outweigh higher rates, although at some level there has to be a breaking point, especially for young buyers with less cushion in their wallets.

"Affordability continues to slip away from the average buyer. Lower-priced homes are appreciating much faster than higher-priced properties, making the affordability crisis even worse," said Frank Martell, president and CEO of CoreLogic.

This article contains material from USA TODAY.

Email: shkolnikova@northjersey.com