New Jersey Market Review and Forecast What Happened, and What’s Coming

After nearly a decade of slow but steady progress back from the depths of the Great Recession, New Jersey is showing signs of real growth and prosperity.  According to the U.S. Bureau of Labor Statistics, New Jersey added 61,000 jobs last year, which is the best year for private-sector growth since 2000.  The gains continued into 2017, with 12,600 jobs added in January, bringing the unemployment rate to 4.6 percent, which is slightly below the national average, 4.7 percent.  Governor Chris Christie, who inherited a 9.8 percent  unemployment rate when he took office in 2010 recently commented, as quoted by NorthJersey.com:  “I think we should stop the continuing drumbeat that somehow New Jersey has underperformed from a job perspective.  New Jersey is outperforming the nation in 2016 in job growth and outperforming the nation in terms of unemployment rate as well.” 

While the good news on the employment front in itself would be enough, it stands to reason that the effect of this economic improvement would extend to the real estate market – and it does.  According to an article in the New York Times on March 17 of this year, New Jersey’s markets “are so brisk that many have less than three months’ inventory,” as reported by Jeffrey Otteau, president of the Otteau Group, an appraisal and advisory firm located in Matawan.  “By way of comparison, in 2012, most markets had a four-to-eight month supply, a more typical range.”

The Structure of the Market

Approximately 66 percent  of New Jersey residents own their own home, which can include a single-family home, a condo or co-op.  The remaining approximately 34 percent  are renters.  Statewide, the overall vacancy rate for all dwellings is approximately 10 percent .  Approximately 38 percent of dwellings were built between 1940 and 1969.  Another 34 percent  were built between 1970 and 1999, meaning nearly three-quarters of the residential housing stock in New Jersey is more than 17 years old.  Of the total housing stock, approximately 45.5 percent are owned units in townhomes, small apartment buildings or apartment complexes of which 52 percent contain two bedrooms or less.  Condo and co-op units are well represented in the state overall.  Approximately 46 percent  of housing units fall in the $208,000 to $416,000 price range.*  (from www.NorthJersey.com)

According to information provided to The New Jersey Cooperator by New Jersey Realtors from their annual Townhouse-Condo Market Overview, pending sales are up 13.8 percent  over same month in 2016, and closed sales are up four percent.  Median sales price is up 1.8 percent, days on the market are down 14.7 percent, and supply has dropped 26.5 percent.  The Times article goes on to say that “the dynamics driving demand vary from suburb to suburb, but industry experts cite several overall reasons for the busy winter.  First, many buyers had been holding off on making a purchase until after the presidential election, largely because of uncertainty about the outcome.  That pent-up demand was unleashed after November 8, and has been helped along by a mild winter.”

Bob Oppenheimer, president of New Jersey Realtors, says that “In total for 2016, there was an 8.8 percent  increase in townhouse and condo closed sales over the entire 2015 year, increasing to 22,455 units over the previous 20,638 units.  The median sales price was stable, with a negligible shift down 0.6 percent for 2016, prices sitting at $248,500 over 2015’s $250,000.  For the beginning of 2017, continued low inventory could be the source of a slight decrease in new listings over February year to date numbers from last year.  But numbers are comparable.  Through January and February of this year, there were 5,911 new townhouse and condo listings throughout the state, whereas last January and February there were 6,042, a modest 2.2 percent  decrease.  This is likely an indication that the market is picking up steam in the first few months of the year with a significant 16.4 percent increase in year-to-date pending sales, up to 3,677 in February.”

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