The state of local real estate: Low supply, high demand

Local realtors say buyers aren’t deterred by current interest rates – but potential sellers are, resulting in a limited number of homes on the market.

“There are a lot of clients that are sitting in their homes with a lot of equity who would like to upgrade – get something bigger, move somewhere else – but they just can’t do it right now because the interest rates are pretty high,” said realtor Mark Werner, owner of Werner Realty in West Milford, N.J.

Many current homeowners chose to refinance or purchase a home when interest rates were between 2 percent and 4 percent. Today, rates are hovering around 7 percent.

Because of this, the majority of people who are selling their homes are only doing so if they really need to due to major life changes such as divorce or death, said Werner.

“If they don’t need to move, it’s really hard for them to let go of that interest rate that gives them a lower payment,” added broker John Olivero of Keller Williams Realty in Goshen, N.Y. “So even though the value of the house has come up since they got that low interest rate, if they wanted to downsize, they may be buying less but still paying the same based on the interest rate plus the cost of the move.”

Buyers, meanwhile, are less concerned about interest rates. “You can always refinance,” said real estate agent Carly Longhenry, team lead of Davis R. Chant Realtors in Pike County, Pa. “Also, six to seven percent is not historically super high interest rates. If you look going back the last 20 years, they’ve been much higher.”

Added Werner: “If you have a great house and you price it correctly, and you put it on the market, you’re going to get multiple bids, because there’s just a lot of people waiting on the sidelines for the next one to come on.”

Heightened interest, higher prices

The lack of inventory is keeping prices high, according to local realtors. Climbing interest rates - which topped 6 percent in September 2022 for the first time since 2008 - have not significantly lowered sale prices.

According to data from RedFin:

• In 2019, there were 21,409 homes on the market in Orange County, N.Y.; the median sale price was $253,000, and homes sat on the market for an average of 69 days.

In 2024, there were only 9,212 homes on the market in Orange County (down 57 percent from 2019); the median sale price increased to $422,000, and the average home was on the market for 41 days.

• In 2019, there were 15,059 homes on the market in Sussex County, N.J.; the median sale price was $226,000, and homes sat on the market for an average of 72 days.

In 2024, there were only 4,239 homes on the market in Sussex County (down 72 percent from 2019); the median sale price increased to $399,000, and the average home was on the market for just 26 days.

• In 2019, there were 20,556 homes on the market in Passaic County, N.J.; the median sale price was $330,000, and homes sat on the market for an average of 68 days.

In 2024, there were only 7,510 homes on the market in Passaic County (down 63 percent from 2019); the median sale price increased to $536,000, and the average home was on the market for 35 days.

• In 2019, there were 9,426 homes on the market in Pike County, Pa.; the median sale price was $150,000, and homes sat on the market for an average of 119 days.

In 2024, there were only 3,861 homes on the market in Pike County (down 59 percent from 2019); the median sale price increased to $302,000, and the average home was on the market for just 32 days.

House rules

Many experts predicted that new commission rules set by the National Association of Realtors in August 2024 would lower home prices. The new rules no longer require the home seller to cover the commission costs for both the buyer’s and seller’s agents. The realtors interviewed for this story said this has not affected home values and agreed that low inventory is what’s keeping prices high.

Werner, whose agency serves both Northern New Jersey and Orange County, N.Y., said the changed rules resulted in realtors “educating the buyers a little bit more to under so they can understand the process and how everything works.” However, commissions haven’t changed much; he estimated that 90-95 percent of the time, sellers are still picking up the commission costs of the buyers’ agent commissions.

New, younger buyers

Who is bidding on homes locally? Olivero noted that he is now seeing a new demographic of single buyers in their 20s and 30s enter the market.

“Personally, what I’ve seen is the younger generation buying homes and doing it on their own,” he said. “So I think that’s pretty cool.”

Overall, local realtors said they are seeing a mix of locals and out of towners who are migrating north to save on home costs, leaving areas such as Bergen County to get more square footage for a lower price in West Milford or Vernon, N.J; or relocating to Pike County, Pa. or Orange County, N.Y. from New York City or Westchester for the same reason.

“There’s no shortage of people looking to buy homes,” said Olivero. “There’s just a shortage of homes to show the people who want to buy these homes.”