COVID Buyer Concerns in the LBI Real Estate Market

COVID Buyer Concerns in the LBI Real Estate Market

Buyer’s Concerns About Overpaying in the Long Beach Island Real Estate Market

Click here to search all homes for sale in the Long Beach Island NJ real estate market

Long Beach Island Real Estate

There is no doubt that prices have risen in the LBI real estate market since COVID. While the increase in prices from 2019 to the present day is not as high as some think, many buyers are concerned about purchasing a home at the top of the market. This is certainly a valid concern, and while timing is everything in any market, nobody knows where the top or bottom is until it passes. When looking to invest in the LBI real estate market, there are a few things we can look at to determine if this is a good or bad time to buy. COVID buyer concerns in the LBI real estate market usually have to do with pricing and if the sales price of a home will fall as the world gets back to normal. To that end, there are a few market indicators we can look at in addition to a buyer’s personal timing of the investment. They are:

  • Overall conditions in the LBI real estate market
  • Overall conditions in the national real estate market
  • Interest rates
  • Personal choice

By : Nathan Colmer | The Van Dyk Group

Cell: 609-290-4293 | Office: 800-222-0131 | ncolmer@vandykgroup.com

www.BuyLBI.com

Click here to search all homes for sale in the Long Beach Island NJ real estate market

COVID Buyer Concerns in the LBI Real Estate Market

The LBI real estate market has started to see an improvement in the number of homes listed for sale, but inventory levels are still very low historically speaking. Add to that the extremely high demand, and there is only one way for prices to go up. Until either a large number of homes enter the market and/or a large number of buyers leave the market, prices most likely will continue to rise. That said, it is likely that the rate of appreciation will slow down as more inventory comes online.

Buyers who are concerned about timing their purchase in the Long Beach Island real estate market also need to look at the national market as a whole. While the LBI real estate market does have some insulation against downturns that a primary market does not enjoy, home prices on LBI are not immune to national real estate trends. Inventory levels nationally speaking are still very low, and like the LBI real estate market, prices will probably go up until that changes. Most national real estate models show prices and interest rates to increase over the next year, which will make the cost of owning a home more than it is today. Any buyer who examines that is likely to remain in the market rather than “wait it out” and that will continue to play on the inventory levels.

Interest rates are a massive variable in home prices nationally and to some degree in the LBI real estate market. While it is true that our market on Long Beach Island is not as influenced by the rise or fall of interest rates, the additional ownership costs associated with a higher interest rate can increase the cost of owning a home dramatically in the long term. Buyers concerned about paying too much should run the math on multiple scenarios to determine what costs more. In some cases, paying a higher price now (assuming prices drop in the future) with a lower interest rate may cost LESS than paying a lower price but maintaining a higher interest rate. Money is essentially free right now, which also opens up the investment field as buyers can keep their capital in other investments and pay very little in interest to own their LBI home. As interest rates increase, this opportunity will also diminish.

Lastly, all buyers need to do what makes sense for them. If this is the right time to buy a home, then a home should be purchased. If it is not, then a buyer should wait. Market timing goes beyond the high or low point in the sales cycle. The time spent with friends and family also needs to be accounted for to determine if a purchase should be made now or later in the LBI real estate market.

Buyer’s Concerns About Overpaying in the Long Beach Island Real Estate Market

COVID buyer concerns in the LBI real estate market are entirely justifiable given the rapid rise in prices we have witnessed. That said, it is very likely that affordability will worsen in the next few years, so waiting may actually cost more money. Nobody wants to overpay for a home, and unfortunately, there is no concrete way to determine if you are or are not overpaying by entering into a transaction. The timing of a purchase needs to make sense personally, but the cost of ownership should also be accounted for. Rates are so low right now that a purchase and hold scenario can make a lot of sense. Buyers need to focus on what adds value to a home and understand what is not a good investment. If the right home can be found that makes sense and the numbers work, then it is the right time to buy. If not, that it is best to wait. Every situation is unique, and each transaction in the LBI real estate market should be evaluated on a case-by-case basis. If you have any questions about buyingselling or investing in the LBI real estate market, please do not hesitate to contact me.

By : Nathan Colmer |LBI Real Estate Agent | The Van Dyk Group

Cell: 609-290-4293 | Office: 800-222-0131 | ncolmer@vandykgroup.com

www.BuyLBI.com

Click here to search all homes for sale in the Long Beach Island NJ real estate market

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