Back in early March when New Jersey reported the first positive cases of the coronavirus and Gov. Phil Murphy declared a state of emergency, it hit the real estate market with uncertainty. Both homeowners and potential buyers were reluctant to meet in-person for the fear of catching the virus. The pandemic put quite a monkey wrench into “business as usual” for most real estate investors across New Jersey.
Yet, it was not the first time that our industry had faced such uncertainty. As an investor who survived and thrived during the housing bubble, I found it comforting to lean back on the knowns—the similarities between how both the situations demanded us to change how we do business and how the industry has adapted accordingly. The resilience of the industry to spring back from past financial crises highlights why the COVID-led recession has not been able to put a damper on things. The currently hot New Jersey real estate market just reflects this fact. Here’s why you should invest in New Jersey real estate during COVID and how to get in on the action if you haven’t already.
Current Uncertainties in the New Jersey Real Estate Market
When Gov. Murphy’s Executive Order 107 came down, you faced a lot of questions about how to go about investing in real estate. Was showing a house allowed? Could a deal still get closed? Was buying and selling houses considered an essential business? Thankfully, the executive order ensured that you could still help distressed homeowners facing difficult financial situations while following the social distancing guidelines.
However, social distancing guidelines changed the ways you need to conduct business. Homeowners started preferring virtual tours of their properties through apps like Zoom over in-person visits by potential buyers. Contractors inspecting the homes needed to wear masks when entering homes. The remote notary bill has made it possible to close a deal virtually, with audio and visual recordings, and e-signed documents being accepted by notarial officers.
Now that we are several months into the pandemic, most of those initial uncertainties about buying, rehabbing, and selling houses have been cleared up. As the New Jersey real estate market stabilizes with growing demand from potential buyers, let me walk you through why it is hot for investments and how you should capitalize on these opportunities.
Why You Should Invest in New Jersey Real Estate During COVID
Though the pandemic complicated the busy spring selling season in the real estate market in New Jersey, demand from potential homebuyers has not ceased over the past couple of months. The consistent demand from homebuyers, combined with low mortgage rates has outpaced supply, leading to a 5.3% year-on-year increase in the median sales price for homes across NJ counties. On the other hand, distressed homeowners facing difficulties to pay the mortgage due to job losses or layoffs are expected to cause a spike in foreclosure activities. Such homes going under the hammer can transform into investment opportunities for you. Let’s look at why these factors in the New Jersey real estate during COVID should influence your decision to invest in the market.
Consistent demand from homebuyers
Families living in densely populated urban areas are finding it difficult to work from home or manage virtual schooling for their kids while living in cramped urban apartments. They are looking for single-family homes with additional bedrooms and bigger yard spaces, something that urban areas lack.
So, which suburban areas are witnessing the homebuying spree? The homes in NJ counties such as Middlesex, Monroe, Woodbridge, Somerset, and Hunterdon offering open space, low-traffic, and lesser population density are among the preferred choices. Though many companies’ work-from-home policies are getting extended until summer next year, towns that are close to highways or train stations are receiving significant attention from homebuyers who intend to enjoy an easy commute when they eventually head back to their offices post-pandemic. Lack of inventory has further fueled the demand, with buyers trying to get their offers accepted fast by just viewing the properties virtually. For us, the real estate investors, this ongoing demand means there are plenty of takers for rehabbed properties in these areas.
Low mortgage rates
Mortgage rates have hit a record low since the pandemic began. The current 30-year fixed mortgage rate is averaging around 2.80% and potential homebuyers are finding this a perfect opportunity to lock a loan at a great price. This has also helped them to up their offers and compete with other buyers. The upshot for you is the increased upside potential for distressed homes that you fix-and-flip in New Jersey.
An expected rise in foreclosures
Under the CARES Act, homeowners facing financial hardships during COVID-19 have been given some temporary relief with mortgage forbearances. Though foreclosure activities in New Jersey have continued to be artificially low due to the extended moratorium in place since March 28th, seven counties in the state are expected to be significantly impacted once the foreclosure moratorium is lifted. New Jersey counties including Bergen, Passaic, Essex, Sussex, Camden, Burlington, and Gloucester will see an increase in the number of defaults when the forbearance program expires. This is your opportunity to help these neighborhoods by offering to relieve these homeowners’ financial troubles.
All these factors suggest an expected increase in real estate investment opportunities across the Garden State. But if you want to take advantage of the NJ real estate opportunities arising from COVID, you’ll need to set yourself up right—and it all starts with getting leads even when the competition is high.
How to Confidently Start Investing in NJ Real Estate During COVID
Searching for potential leads for wholesaling or buying is a challenge for most investors, more so if you are just starting out. In the middle of the pandemic, the struggle to reach out to distressed homeowners becomes even more difficult because of the social distancing guidelines in place. But as an independently owned and operated HomeVestors® franchisee, I don’t have those problems. Thanks to the nationally-known and trusted “We Buy Ugly Houses®” marketing campaign, when homeowners are ready to sell, they know to call on me.
This makes it easy to get local qualified leads on distressed properties, even during COVID.
Start setting yourself up as a real estate investor. Contact HomeVestors® today to know more about franchise opportunities in New Jersey.
Each franchise office is independently owned and operated.