UPDATE 6/5/2025: Is the Market Cooling or Just Catching Its Breath?

Mortgage rates tick down, but affordability remains a hurdle! 🏡 This week on Mortgage, Markets, and More, Peter D'Angelo breaks down why a drop in mortgage applications isn't the full story. From cooling buyer demand to rising inventory across New Jersey—especially hot spots like Monmouth County and Jersey City—this update dives into how shifting psychology, longer commutes, and adjustable-rate mortgages are reshaping buyer behavior. 💼🔥

Plus, Peter hints at an exciting new chapter for the show. A rebrand is coming, and it starts with fresh interviews and broader conversations. Don’t miss this pivotal update as we head into a potentially sizzling summer season! ☀️

#RealEstateTrends #MortgageRates #HomeBuyingTips #NJRealEstate #MarketUpdate #InterestRates #HousingMarket2025 #MonmouthCounty #FedWatch #MortgageApplications #InventorySurge

Watch this episode on Youtube!

Interested in getting Pre-Approved? Submit your Pre-Approval inquiry here!
Interested in your Refinance options? Submit your Refinance inquiry here!

Follow me on:

• Facebook
• Instagram
• LinkedIn
• YouTube

Peter D'Angelo | NMLS: 885309 | Branch Manager | Guaranteed Rate, Inc., NMLS 2611
Peter.DAngelo@Rate.com

*All information, topics, discussion is my own personal opinion and insight, not reflective of Guaranteed Rate, Inc. May contain market information for informational purposes only, not to be used as financial advice.

Transcript

Podcast_Update_06.05.2025

[00:00:00] 

 Welcome back to Mortgage Markets and More. I'm your host, Peter DeAngelo, branch manager for Rate. I hope you're doing well. Some more housekeeping today to start the episode off. We will be rebranding our episodes and our podcast in general. Keep an eye out. Next week's update will be the pulse and perspective hosted by me.

I wanted to open this up so we can have some more conversations about different things, and I was particularly inspired by an interview episode that will be dropping on Monday and for our radio Fremont Claire listeners, you're going to get a taste of that today. With the housekeeping out of the way, let's move on to our market update.

Mortgage rates, we're dipping a little bit down here on Thursday morning and it's been some welcomed relief, but it's nothing that should give us cause to get too comfortable. There's still a lot of data reports, [00:01:00] particularly the employment report that's coming out on Friday that could have some propensity to move the needle.

We've seen that happen before quite a bit. So next week we'll see what the market digests from that. But as of right now, we're in the range of around 6.8 to 7.1%, but the average nationally right now is hovering close to 6.8%. So that's some good news. We're at least backed off a little bit further from 7%, but with the volatility of this market.

These things can change. The other thing that's worth mentioning right now is even though the rates are softening, they're not softening enough. That's really going to have a tangible effect on affordability. Yet we really wanna start seeing these averages start moving towards 6.5%. That will open up significant affordability for prospective buyers.

So we'll just bear that in mind. I also wanted to take a moment to talk about. The actual mortgage activity. Reason why this could be valuable is it [00:02:00] gives you a look at who's currently applying and how many people are applying to seek financing to purchase a home. And that gives you a good indication of competition in the marketplace in the coming month or two.

Now, pre-approval processes, I'm able to get those accomplished in the same day. Matter of fact, we're able to even approve some borrowers in the same day, with the technology that we employ here at rate. But this is not common for the industry. Some companies will take longer to complete preapproval, and then those buyers get into the market.

Right now looks like the demand is cooling and mortgage applications have dropped 3.9% week over week showing that people are holding back a little bit right now. That doesn't seem to be the case too much here in New Jersey and in the Northeast, 

nationally speaking, that's what we're starting to see. And the refinance volume has dropped down about 4% as well. That makes sense. We talked about how interest rates have reached a higher level than what we've been seeing over the past couple months. [00:03:00] That also translated to lower purchase loans down about 4% week over week.

And this is despite the fact that we talked last week about the increase in the inventory that we've been seeing. It could be an indication of the psychology of the buyer here because of the uncertainty with tariffs and things going on in the economy. Some people may be starting to hold off on even taking that first step and getting prepared to purchase a home.

The main driver right now continues to be that affordability is a challenge, even while inventory's increasing, so the demand is reducing slightly here in the short term. Now looking at New Jersey in particular, I know I made a mention of a little exception here, but in New Jersey, we're still looking at a median home sales value.

So the most commonly occurring sale price in New Jersey currently is 539,757. Dollars, that's [00:04:00] up 8.2% year over year. So now we see that needle starting to move back into that average. I wanted to establish from past episodes that we, we identified, looking back three years or so, there's been a cumulative annual growth rate of 10%.

So we're backed off of that a little bit and I know 2% doesn't sound like a lot, but that's showing us that this could be a new softening of home values. And that's going to be due because of the inventory. The inventory's starting to open up a little bit more. The sales volume is down though, and when the sales volume goes down, I think right now it's down 11.6% year over year.

The homes are selling fast, but the amount of homes selling is down. So the average days on market right now is 34 in New Jersey. So that's pretty quick. And as long as. The competition level stays intact in the marketplace, then we're going to see that speed [00:05:00] still occurring. And also there's a function of this that is industry related.

I could speak to my industry and for mortgage processing, the companies that are doing it right, right now. You can get your mortgage financing accomplished in a very quick and timely manner. So the average sales cycle is normally around 30 to 45 days when you're placing a contract on a home. There's a reality where that sales cycle starts to shorten up a little bit.

That's not captured yet. When we talk about the National Association of Realtors existing home sales, and when they tell you, month supply that's based upon. The data from how long it takes for transactions to close, as well as how long it takes homes to sell. So there's some market component, but my industry has an effect on that too.

And that could start changing the calculus a little bit. I want to do a quick local spotlight, and I'm gonna shout out Monmouth County this time. So Monmouth County, we're seeing that median home sales price up to [00:06:00] $675,000. 6 75 is up 3.85%. From the prior year and that also is a marketplace that has seen sales increase.

So the sales are up 7.8% year over year in Monmouth County right now, suggesting that this area is actually outperforming the average a little bit. You know, we saw that the home sales are up 6.8% across the state. So Monmouth County's a little bit of an outlier. The inventory there is at 2.3 months supply, which is.

Squarely a seller's market still and quite a bit lower than even what the national average is. We just talked, that's about three and a half months, I believe, the last time we spoke about that. So we're seeing trends moving in the right direction nationally. But looking here in New Jersey, Monmouth County's a little bit tighter still, and the days on market there, the average is 21 days, as I was mentioning.

Things can be done very quickly. There could be a little bit more [00:07:00] cash purchases happening there. Monmouth County, understanding that there's some shore towns captured in that market and in that county that could account for that. Also there's quite a few people that I know, in the north Jersey market that are moving there for retirement.

That's the downsize move here in New Jersey. Other spotlights that I wanted to give honorable mention to because of some interesting trends that are developing. First is Jersey City, median sales price. There is $713,000 and some homes are going pending in a matter of two weeks. So there's a little bit of a quicker market happening there.

A few others, Edison, Bayone, and Plainfield. There's an increase of demand in those markets, and the homes are now selling in a range of four to 22% above list price, and I believe that has to do with where the properties are possibly located. That's showing it as strong interest and demand in those markets, which is not what was the case [00:08:00] trending back for the past couple years and even starting out this year.

Looking at the inventory and the buyer behavior. We talked a little bit about the psychology of the buyer, and there may be some timidity because of some uncertainty in the market and some uncertainty in the economy right now. But overall, in the state of New Jersey, listings are up 14.6% statewide opportunity.

That's what that means, and that's giving buyers more choices. And hearing this, I hope, would start to open up the opportunity for more inventory. We've talked in the past, the sellers that are on the fence are on the fence because they don't know where they're going to go at this point, I think it's proper to say that most people have understood that the rate environment, the interest rates being what they are is what we have here, and there doesn't seem to be a clear pathway to where we're going to see lower interest rates.

With that then. People can manage prudently and accordingly, if they're sitting on a [00:09:00] lot of equity and they're looking to sell and then buy, there are ways and there are programs now available to make that a very easy process, and we certainly have some solutions that make you an extremely effective buyer in this market.

So those are a couple things to consider. This is a trend. Moving in the right direction though, in the northern Jersey area. So we're talking Essex, Hudson County, Morris County. There's a strong growth of listings, so more inventories even opening up further up north into the more suburban markets.

Despite more inventory though, there's still home selling for 101 to 102%. Of list price. And that's because the pent up demand, there's been years of people who haven't been able to purchase a home and they've been shopping for a long time, they'll dip their toe in the market for a couple months, get exhausted, get beaten up because of the high level of competition, and then they'll go and resign their lease and rent for another year.

[00:10:00] Those buyers though, are now starting to win a little bit more. So they're actually finding homes, but that means that they're being effective in that marketplace, still pushing those prices up.

The other thing I want to mention on the point rather of list price, when we look at those numbers, the list price is something that is approached by the real estate professional to properly market the property. List price is more of a marketing. Piece right now in this market. Then an indication of value and what they believe the home is worth, and this is due because of the dynamics of the high demand.

It sometimes is more advantageous for a home to be listed a little bit below where the actual value is because of the psychology of seeing it within, you know, oh, well it's under $450,000. Let me, let me check this one out. Then before you know it, you've got 30 offers and now the home selling for $550,000.

You know, when we look at that grain of salt is [00:11:00] required. The affordability continues to be. Part of the conversation and part of the struggle. But if we start to see interest rates make improvements, that could start paving the way, and at least the side of the equation that we're talking about with inventory is starting to improve.

So then if the inventory is starting to improve and we just start seeing a little bit more relief on interest rates, like I said to me right now, six and a half is a golden spot. That's delightful. If we can get ourselves to six point half percent. That's going to create quite a bit more affordability.

Then you move on from six and a half, we start moving down to six and hopefully that's the way the trajectory goes. Lastly, there's a trend developing in New Jersey and that more buyers are starting to consider smaller homes, farther from the suburbs.

So the buyer behavior's starting to change. They're starting to. Stomach a longer commute for work if it means actually being able to buy a [00:12:00] home. If they can get out and buy the home, they'll suffer through the commute. One of the other things that keeps popping up here and there, adjustable rate mortgages, they are actually sometimes providing some benefit.

So that's something that we haven't commonly seen over the past, almost two decades, but now we're starting to see that that's becoming a little bit more appealing 'cause of the possible savings of that can provide you in your monthly payment. 

Inventory's increasing. Good sign, especially here in the spring leading our way into the summer this week, Friday's jobs report, that's gonna give us a good indication of what kind of interest rate environment we're gonna be looking at for the next couple weeks. The Fed is also about to meet.

There's not any expectation really for a Fed rate cut. Again, it's going to be more about what is the Fed saying and what's their commentary on the market currently. That's what everyone's going to be really focused on at this point, unless something comes outta left field and then that could change the dynamics of the conversation and change their approach, I don't think we [00:13:00] have an interest rate cut to look forward to here in June. So they are meeting that's going to give us an idea of the short term interest rates. Expect midsummer to get really busy, in my opinion, so close to the holiday July 4th.

I think that's gonna be a big push, particularly 'cause that's a sweet spot in the middle of the summer, isolated from the school year. So families looking to establish Reg residency, register their children for school. I feel like June July is going to be a hot time. Let's put that into perspective then if that's going to be a hot time, which it could very likely be.

Well, right now it's probably a good time to start checking and start looking into the market. If you're thinking about buying, if the summer's going to be that hot, like it seems like it could be. With this increase in inventory we're seeing, you are going to be best served by trying to get in the game a little earlier while they're still inventory.

Homes are [00:14:00] selling fast, but the inventory is rising, and you do have some more options here in the springtime. Key takeaways for today. First, new Jersey's market's strong, but it is shifting. We're starting to see some more inventory and not necessarily the insane over ask all of the time. When we're seeing homes being sold.

The home sale price over list is getting to be a little bit more conservative, but it depends on the market. Each market area has very particular dynamics in New Jersey. That's it. So keep an eye out for that.

You can go across the street and it could be a different type of market and you maybe it's not appropriate to, you know, place a bid, two to 5% over list price in the place down the street. Buyers and sellers, here they are. Still weighing things, still taking into account everything going on in the economy.

I think that psychology is persisting, and we're going to see how that translates here in the next couple weeks as school is wrapping up. So I think it's going to be [00:15:00] fascinating to see on these updates on Thursday mornings. Now what happens? Because I think June could maybe tell us, a lot of people are busy with family things, graduations and whatnot.

If the activity starts picking up here in June while all that's happening, I think that could be a good gauge for us with how busy the summer's going to be and how much competition there's going to be in the summer. So that is it for our update today. I hope you found this information helpful and useful.

Next week. It's gonna be a new podcast name here, new rebrand. I'm very excited about it. I, I just thought, you know, there's a lot of things that I want to talk about here on the podcast and, you know, we, we spend a lot of time talking about mortgages, talk about the real estate market. I also was. Super thrilled by this interview that you're going to get to listen to on Monday with Aaron Bradley.

It was phenomenal, and that's the kind of stuff that I got a lot out of and I think everyone else could benefit from. So I'm going to have more content like that also being [00:16:00] shared with you, and please reach out if there's anything you're interested in, if you want to appear on the show. And if you have any questions or anything you'd like to talk about, does not necessarily need to be.

Mortgage or real estate related, we can start having some more conversations here about life and people's businesses and their careers, which I think would be awesome because a lot of people have a lot of amazing stories to tell. I hope you all have a great rest of your week. I look forward to catching up with you next week.

But in the meantime, have a great week and take good care.