NJ Housing Market Still Heated, Even As Homes For Sale Dwindle

NEW JERSEY — People who are in the market to buy a home in New Jersey — whether it’s their first home or a change of residence — continue to face a challenging search, as the number of houses available for purchase continues to shrink.

Across New Jersey the number of home sales have fallen from the level they were a year ago, according to New Jersey Realtors, the organization representing realtors across the state. That decrease isn’t a sign the market is slowing down, however; it’s a reflection of the decrease in the number of homes being put up for sale, the group said.

The inventory of single-family homes for sale in New Jersey in March 2022 was 13,278, compared with 18,118 in March 2021 and 30,193 in March 2020 — 56 percent fewer homes for sale now than at the beginning of the coronavirus pandemic, according to data from the realtors association.

But the median price those single-family homes are selling for continues to edge higher. The median was $380,000 in March 2020, just before everything shut down. In March 2021 the median was $435,000, and in March 2022 the statewide median price was $440,000, the group said.

It’s a nationwide issue; the US Census Bureau’s Housing Vacancy Survey says housing vacancy rates for both homeowners and rental housing are at or near historic lows.
Vacancy rates for rental housing are lower than at any point during the 35-year period from 1985 until the start of the COVID-19 pandemic in early 2020. The vacancy rate for homeowner housing is lower than at any point from 1980 until early 2020.

Inflation and rising interest rates have not, so far, curtailed interest, said Robert White, president of New Jersey Realtors.

“We thought there would be a little bit of a slowdown with the increase in interest rates,” White said. “But the first-time homebuyers are out there in force.”

With inflation surging, the Federal Reserve has raised its federal funds interest rate — the rate it charges banks for loans — for the first time in more than three years. A quarter of a percentage point increase in March was followed by a half a percentage point increase May 4, putting the Fed’s interest rate at .75 percent to 1 percent, CNBC reported.

Mortgage rates, which were averaging around 3 percent in March 2021, have risen to more than 4 percent, according to FreddieMac.com

White said fears this real estate market is a bubble that will burst like the market did in 2008 are unfounded.

“This market is nothing like the 2005-2007 market,” White said, primarily because the predatory lending that fueled that bubble no longer exists.

“We still have tight credit restrictions to get a mortgage,” he said. “This (market) is just a typical supply-and-demand situation.”

The demand continues to come from people who live in close quarters in the cities moving to areas of New Jersey with more wide-open spaces, White said, both from the New York area and the Philadelphia area.

At first it was a demand for outdoor space, with access to the beach and small towns with walkability, White said. “Now there are demands for dedicated office space and dedicated learning spaces.”

People who used to spend their summers at the Jersey Shore are moving to the area permanently. Others who had been thinking about retiring decided now was the time, he said.

White said realtors are seeing hot markets across the state because the supply of homes for sale is so limited.

“In some areas, like Salem and Gloucester, their growth is through the roof,” he said, a reflection of those areas being less expensive. The median home price for March 2022 for a home in Salem County was $201,000, compared with $641,000 for Bergen County, the highest median in the state for March.

“Years ago, who wanted to go to Millstone?” White said. “Now, people want to go to Millstone because there’s so much space.”

The lack of inventory has contributed to bidding wars and has forced buyers to get creative to compete for homes. It also has had a ripple effect for the rental market, where available housing is dwindling as private landlords decide to sell homes they’ve owned for income and the lack of available rentals has led to long waiting lists for apartment complexes and bidding wars for other rentals.

Houses that sat on the market for 120 days or more before the pandemic are selling in fewer than five days, White said, and real estate agents for sellers are having to track 15 to 20 offers or more using spreadsheets that lay out all aspects, from how much cash the offers entail to mortgage prequalifications to appraisal contingencies. The market has been so hot that offers well above asking prices have created quandaries for buyers and sellers when the appraisals have come in well below the buyers’ offers.

It has created stress for buyers, who have to bid on multiple homes before finally getting an offer accepted.

“Buyers get disgruntled,” White said.

All of this has left those on the lowest end of the economic scale on the outside, facing struggles as rents rise because of the going market rates and home purchases rise out of their reach.

“If you’re putting 3 percent down and someone else is offering cash, the cash offers are being accepted first,” White said.

What needs to happen, White said, is additional housing construction to alleviate the demand and create affordable housing. He said there are bills in the U.S. House of Representatives and the Senate that would encourage the enactment of pro-housing policies at the local level, to meet the need for affordable housing, and the realtors group is advocating for passage.

“Some of these municipalities are doing whatever they want” to block more housing, White said.

In the meantime, he said, the market should continue to roll along.

Here is a look at the county-by-county statistics for March 2022:

Atlantic:
New listings: Down 8.2 percent
Closed sales: Down 23.5 percent
Days on the market: 49 (down 3.9 percent)
Median price: $347.500 Up 22.8 percent
Inventory (total homes on the market): 2,149, down 13.2 percent

Bergen
New listings: Down 10.7 percent
Closed sales: Down 23 percent
Days on the market: 44, down 13.7 percent
Median price: $641,000, up 8.6 percent
Inventory (total homes on the market): 1,050, down 34.7 percent

Burlington
New listings: Up 1.8 percent
Closed sales: Down 14.6 percent
Days on the market: 33, down 13.2 percent
Median price: $320,000, up 14.3 percent
Inventory (total homes on the market): 470, down 28.8 percent

Camden
New listings: Down 8.2 percent
Closed sales: Down 13.7 percent
Days on the market: 28, up 3.7 percent
Median price: $273,000, up 13.8 percent
Inventory (total homes on the market): 474, down 27.2 percent

Cape May
New listings: Up 1.3 percent
Closed sales: Down 21.6 percent
Days on the market: 51, down 5.6 percent
Median price: $481,500, up 18.9 percent
Inventory (total homes on the market): 599, down 12.9 percent

Cumberland
New listings: Up 5.2 percent (173 to 182, fewest in the state)
Closed sales: Down 20.8 percent
Days on the market: 45, down 10 percent
Median price: $210,000, up 17.8 percent
Inventory (total homes on the market): 572, down 10.3 percent

Essex
New listings: Down 4.2 percent
Closed sales: Down 12.6 percent
Days on the market: 36, down 20 percent
Median price: $501,000, up 0.8 percent
Inventory (total homes on the market): 667, down 30.8 percent

Gloucester
New listings: Down 20 percent
Closed sales: Down 11.5 percent
Days on the market: 27, down 18.2 percent
Median price: $280,000, up 9.8 percent
Inventory (total homes on the market): 320, down 38.1 percent

Hudson
New listings: Up 8.5 percent
Closed sales: Down 25.7 percent
Days on the market: 52, down 11.9 percent
Median price: $502,000, up 21 percent
Inventory (total homes on the market): 216, down 29.4 percent

Hunterdon
New listings: Down 20.4 percent
Closed sales: Down 15.2 percent
Days on the market: 51, down 28.2 percent (from 71)
Median price: $519,000, up 15.6 percent
Inventory (total homes on the market): 234, down 29.9 percent

Mercer
New listings: Down 18 percent
Closed sales: Down 10.9 percent
Days on the market: 36, down 5.3 percent
Median price: $324,000, down 7.2 percent (but 102.2 percent over list)
Inventory (total homes on the market): 412, down 11.4 percent

Middlesex
New listings: Down 7.3 percent
Closed sales: Down 18.4 percent
Days on the market: 40, down 24.5 percent
Median price: $465,000, up 11.2 percent
Inventory (total homes on the market): 1,063, down 44.5 percent

Monmouth
New listings: Down 9.7 percent
Closed sales: Down 21.1 percent
Days on the market: 39, down 26.4 percent
Median price: $590,000, up 8.1 percent
Inventory (total homes on the market): 1,147, down 16 percent

Morris
New listings: Down 20.9 percent
Closed sales: Down 16.8 percent
Days on the market: 38, down 19.1 percent
Median price: $575,000
Inventory (total homes on the market): 543, down 42.2 percent

Ocean
New listings: Down 10.5 percent
Closed sales: Down 19.1 percent
Days on the market: 39, down 27.8 percent
Median price: $476,000, up 14.7 percent
Inventory (total homes on the market): 1,285, down 15 percent

Passaic
New listings: Down 8 percent
Closed sales: Down 11.2 percent
Days on the market: 43, down 12.2 percent
Median price: $450,000, up 7.4 percent
Inventory (total homes on the market): 388, down 37.4 percent

Salem
New listings: Zero percentage change
Closed sales: Down 10.3 percent
Days on the market: 40, down 28.6 percent (from 56)
Median price: $201,000, up 1.8 percent
Inventory (total homes on the market): 207, down 21.6 percent

Somerset
New listings: Down 17.8 percent
Closed sales: Down 27.2 percent
Days on the market: 34, down 37 percent (from 54)
Median price: $505,500, down 5.6 percent (however, selling at 103.9 percent of ask)
Inventory (total homes on the market): 370, down 33.2 percent

Sussex
New listings: Down 9.4 percent
Closed sales: Down 16 percent
Days on the market: 51, down 7.3 percent
Median price: $350,000, up 10.8 percent
Inventory (total homes on the market): 357, down 31.1 percent

Union
New listings: Down 17.5 percent
Closed sales: Down 19.6 percent
Days on the market: 34, down 24.4 percent
Median price: $492,500, up 8 percent (and 104.4 percent of ask)
Inventory (total homes on the market): 537, down 33.4 percent

Warren
New listings: Down 22.8 percent
Closed sales: Down 28.1 percent
Days on the market: 43, down 14 percent
Median price: $364,500, up 23.8 percent
Inventory (total homes on the market): 201, down 30.4 percent