To say the current real estate situation is a “sellers’ market” is quite an understatement! Prices are soaring in most areas across the country, and North New Jersey is no exception.
Most school children are introduced to the most basic concept of a capitalist economy in the latter years of elementary school – supply and demand. Right now, the very simple reason why home prices are appreciating at staggering rates is… demand is outstripping supply. More people are looking to buy homes than there are houses available, which leads to bidding wars, and prices rise.
The New Jersey Realtors Association provides a wealth of information to consumers on a monthly basis. A review of the seven-county area that North Jersey FCU serves (Bergen, Essex, Hudson, Middlesex, Morris, Passaic and Union) shows median sales prices for single family homes have appreciated by double-digits from May 2020 to May 2021, while inventory has declined sharply. One bit of good news: condos and townhouses are relatively affordable.
Here are the median sales prices for single family homes (with % change), county by county, with percent change in available inventory:
| County | May 2020 | May 2021 | Inventory |
|---|---|---|---|
| Bergen | $535,000 | $630,500 (+17.9%) | -39.7% |
| Essex | $475,000 | $575,000 (+21.1%) | -40% |
| Hudson | $427,000 | $510,000 (+19.4%) | -16.1% |
| Middlesex | $380,000 | $435,000 (+14.5%) | -31% |
| Morris | $470,000 | $570,000 (+21.3%) | -42.9% |
| Passaic | $370,000 | $440,450 (+19.0%) | -31.6% |
| Union | $400,000 | $470,000 (+17.5%) | -37.1% |
Condos and townhouses, in contrast, are showing smaller increases in prices. For example, in Bergen County this category of housing is up 8.2% year over year, up 7.3% in Passaic County, 8.1% in Essex County, 8.2% in Union County, and only 4% in Middlesex County. Condo/townhouse median sales prices actually are down 1.8% in Morris County and 0.2% in Hudson County. So those looking to jump into the real estate market should take a look at opportunities in less-heated areas.
For those looking to buy a single family home, NJ Realtors does not have a lot of good news in its most recent monthly report. The organization says inventory is low all over the country, and home builders are constrained by high costs of lumber and other materials needed to construct new houses. Due to the pandemic, many construction projects stopped completely – similar to the Great Recession in 2008-09. It took nearly two years for the industry to ramp up back then, but prices were low due to the collapse of the housing market. In 2020-21, home prices never fell despite the recession caused by the COVID-19 pandemic.
Patience is the key. Don’t rush out and buy a house just because you think you need to. Consider buying a condo or townhouse to get your foot in the door. If you are handy, buy a fixer-upper and fix it up! With demand high, builders are moving as fast as they can to create new inventory, so eventually the market will moderate.
