In spite of the difficulties encountered by the US housing market, stability characterizes the housing market in New Jersey. As revealed in the January 2023 report by NJ REALTORS®, there was a reduction in finalized sales in all property categories. Single Family Closed Sales dropped by 35.0%, Townhouse-Condo Closed Sales declined by 39.6%, and Adult Communities Closed Sales decreased by 21.5%, in comparison to the same time frame last year. Nevertheless, it’s crucial to highlight that the median sales prices for all types of housing saw an uptick, signifying enduring demand in spite of the dip in sales.
The median sales price for Single Family properties saw a 2.3% surge, settling at $450,000. The Townhouse-Condo median sales price rose by 2.5% to $330,000, while the median sales price for Adult Communities jumped by 8.8% to $310,000. This growth in median sales prices presents an encouraging scenario for sellers, suggesting that property values are maintaining their ground or even escalating, despite the trials of the housing market.
With the cooling of sales, the average duration of properties on the market has lengthened, reaching 26 days based on the latest measurement. This prolonged duration provides buyers with more leverage and extra time for negotiation when searching for a property. As seller concessions are regaining traction, it signals that buyers are in a stronger position to negotiate, pointing towards a market that’s increasingly advantageous to buyers.
All in all, the January 2023 housing market in New Jersey seems to be finding its equilibrium, evidenced by a drop in closed sales coupled with a rise in median sales prices. The market persists in its stability despite the tribulations of the broader US housing market, as both buyers and sellers tread cautiously amidst the existing market climate.
South Jersey: Most Vulnerable Housing Market During the Pandemic
Although the New Jersey housing market is beginning to look up, things were not great just a few months ago. Real estate data provider, Attom, had highlighted in their 2021 year-end analysis that housing markets in Burlington, Camden, and Gloucester Counties were among those most susceptible to downturns resulting from the pandemic across the United States,.
The study took into account several factors including the proportion of homes facing foreclosure risks, the percentage of local average income required to manage monthly housing costs, and the percentage of homes that are underwater (where homeowners owe more than the property’s worth). These indicators serve as warning signs to identify where the potential for a market downturn is most imminent.
Attom points out that New Jersey, especially areas proximate to Philadelphia and New York City, has a high concentration of markets that are at risk. Atlantic and Cumberland Counties in South Jersey also feature in the top 50 most vulnerable markets, predominantly located on the East Coast.
New Jersey Housing Market Forecast for 2023-2024
Zillow’s data suggests that the New Jersey housing market is projected to maintain a stable growth trajectory throughout 2023 and 2024. The current average home value in the state stands at $440,368, marking a 6.3% rise from the previous year. The median ratio of sale price to list price as of January 31, 2023, is 1.000, suggesting that properties are selling at their listed prices. However, only 44.3% of transactions were above the asking price, while 40.8% were below. The median time to a pending sale is 24 days, pointing to a swift-moving market.
In Jersey City, the average home value is presently $539,353, registering a 1.9% increase year-on-year. The median duration to a pending sale in this city is 43 days, slightly higher than the state average. The housing market in Jersey City is projected to sustain its stable growth throughout 2023 and 2024.
Examining data for the Metropolitan Statistical Area (MSA), Trenton, NJ, is forecasted to witness a 1.2% rise in home values by March 31, 2023, followed by a modest 0.8% increase by February 29, 2024. Similarly, Atlantic City, NJ, is expected to see home values grow by 1.1% by March 31, 2023, with a further 4.2% increase anticipated by February 29, 2024.
Projected data for Vineland, NJ, suggests a 1.7% growth in home values by March 31, 2023, and a moderate 2.9% uptick by February 29, 2024. Lastly, Ocean City, NJ, is anticipated to see a modest 0.5% increase in home values by March 31, 2023, and a larger 3.5% rise by February 29, 2024.
In summary, New Jersey’s housing market is expected to persist in its steady growth in the coming years. Current market trends imply that prospective buyers should move promptly, given the quick sales pace. For sellers, it’s crucial to price properties judiciously and remain open to negotiations, considering not all properties are fetching more than their listed prices.
North Jersey Is the Hottest Rental Market of 2023
North Jersey has eclipsed Miami as the most dynamic rental market in the U.S., as per RentCafe’s Rental Competitivity Report for the onset of 2023.
RentCafe scrutinized the country’s 134 largest markets at the beginning of the year where data was available. The analysis focused on five elements influencing a location’s competitiveness – duration of apartment vacancies; percentage of rented properties; quantity of potential tenants vying for an apartment; proportion of tenants renewing their leases; and the fraction of new apartment completions. Based on these factors, the national Rental Competitivity Index (RCI) stood at 60 out of 126 at the start of 2023.
On a national scale, with an occupancy rate of 94.2%, the average tenant contended with seven other individuals to obtain a vacant apartment, which was typically filled within 38 days. Concurrently, the lease renewal rate stood at 60.7%, while new apartment openings only made up 0.43% of the country’s housing supply.
North Jersey, which includes Jersey City and Newark, boasted an RCI score nearly double the national average – 115. RentCafe reports that a severe housing shortage and an influx of high-income tenants elevated the occupancy rate to 96.6%. In this metro area, the average apartment was rented within 38 days, with a competition pool of 12 renters vying for it.
New Jersey Real Estate Investment Forecasts for 2023
The real estate market in New Jersey is presently witnessing a phase of equilibrium, with property values persistently climbing, albeit at a slower rate compared to previous years. As per Zillow, the median home value in the state stands at $440,368, reflecting a 6.3% growth over the last year. The median ratio of sale price to list price is 1.000, and an average property typically enters pending status within approximately 24 days.
A prominent trend in the New Jersey property market is the sustained interest in suburban homes. Triggered by the COVID-19 pandemic, many individuals have reassessed their living arrangements, leading to a spike in demand for larger residences featuring outdoor spaces. The work-from-home norm has further amplified the need for homes with additional rooms or dedicated workspaces.
Investment opportunities abound in New Jersey’s real estate sector. Rental properties, especially in the burgeoning urban landscapes of Newark and Jersey City, are an attractive option. Both cities are witnessing considerable expansion and redevelopment, with multiple residential and commercial projects in progress. These developments are boosting the demand for rental properties, particularly in neighborhoods blessed with convenient transportation links and facilities.
Commercial real estate in New Jersey is another lucrative investment avenue. Home to numerous major corporations and industries, including the pharmaceutical, finance, and transportation sectors, the state offers commercial properties that can yield consistent rental income, particularly those located near key transportation hubs or in coveted office districts.
Investing in New Jersey’s real estate comes with its own set of risks that must be taken into account. The state’s high property taxes, which could dent potential profits, represent one of the primary risks. Additionally, state regulations can be intricate and demanding, especially for landlords and property managers.
Another risk factor is the state’s susceptibility to natural disasters, notably flooding. Located in a region prone to hurricanes and tropical storms, New Jersey can experience significant property damage. Therefore, potential investors should diligently assess the flood risk and opt for properties situated in areas with lower flood risk or ones covered by flood insurance.
Despite these potential risks, projections suggest a steady growth trajectory for New Jersey’s real estate market in the coming years. The MSA-level forecast data anticipates modest growth of 1.2% by March 2023 in the Trenton area, with an additional growth of 1.4% expected by May 2023. The forecasted growth rate for February 2024 is a more cautious 0.8%.
Resources
NJ REALTORS® January 2023 Report
Attom Housing Markets at Risk From Pandemic Report
RentCafe’s Rental Competitivity Report 2023
