New Jersey’s real estate market has been a hot topic for years, and for good reason. With rising home prices and fierce bidding wars, it’s hard not to wonder: What’s next for the Garden State’s housing market?

Will prices continue to rise, or will it slow down to hit the rock bottom? Let’s check it out.

Current State of New Jersey Home Prices

Currently, the New Jersey real estate market seems very promising. Here’s an overview: 

• As of October 2024, the median price for homes in New Jersey is $533,500. The prices have increased by 8.8% as compared to the previous year.

• There were only 20,527 houses for sale in January 2024, which is a 16.7% decrease from the previous year. That means the New Jersey Real Estate Market is slightly bearish. The scarcity is also leading to cut-throat competition.

• 7,680 homes were sold in October this year. Last October, this was just 7,506. So, despite rising mortgage rates and scarcity of houses,  buyers are not backing down. Instead, they are targeting areas with more affordable options.

• The median days on the market were 37 days.

Historic Trends

New Jersey’s real estate market has a track record of growth, but not without its ups and downs. Have a quick look at that: 

• Post-Recession Recovery (2008-2012): The housing crash hit New Jersey hard, with prices dropping by nearly 30% in some areas. It took several years for the market to recover. Modest prices were rising only around 2013.

• Steady Growth (2015-2019): The mid-2010s saw stable economic conditions and low interest rates. So, the real estate prices saw a healthy annual price increase of 3-5%.

• Pandemic Boom(2020-2024): The Covid-19 pandemic reshaped the market schematics. Families sought larger homes. So, naturally, the real estate demand in suburban areas peaked. On top of that, the historically lowest mortgage rates also pumped in the buying frenzy. As a result, the prices rose by over 49% in the past five years. Some areas even have experienced double-digit annual growth.

Future Predictions

The New Jersey housing market is expected to remain robust but with slower, more sustainable growth. Check out what to watch for:

• Price Growth Will Moderate

Continued recovery from pandemic-related disruptions is expected to support a stable housing market. So, the double-digit gains of recent years are unlikely to continue. 

Rising interest rates and affordability challenges will cap how high prices can go. So, the annual price increase will be stable between 2-4%. Yet, low inventory will prevent any significant declines.

• Regional Variations Will Increase

Not all areas will perform equally. The polarization across the New Jersey real estate market may increase. The prices across high-value markets like Bergen will slow as these markets approach price ceilings. Buyers are more likely to shift to affordable options. So, the demand for homes in less-popular areas like Gloucester and Cumberland will rise.

• Interest Rates Will Play a Key Role

Predictions suggest rates could stabilize between 6% and 7% over the next five years. Some buyers may remain cautious but won’t create a full-blown market downturn.

• New Construction Will Ramp Up

It is crystal clear that there is a scarcity of homes in the area, considering the decline in inventory. Therefore, builders are expected to focus on townhouses and multi-family units to address this concern.

Opportunities for Buyers and Sellers

The changing market conditions open gates for many opportunities for both buyers and sellers. Have a look at them:

Buyers

• The real estate prices across emerging markets in New Jersey are expected to shoot up. So, look for valuable home plots in South Jersey with competitive prices.

• Interest rates are predicted to rise further. That means it is better to act sooner rather than later. 

• The scarcity of plots is leading to more intense competition. To be on the safe side, always try to work with local agents who know the ins and outs of the market very well.

• As the interest rates are expected to rise, many would-be buyers are turning to rentals. Investing in properties near colleges or urban hubs can yield strong returns.

Sellers

• New Jersey is still a seller’s market. But as the price moderates, pricing your home correctly is more important than ever before. 

• The demand for properties in New Jersey is not expected to subside in the near future. Money spent on minor upgrades like landscaping and interior touch-ups will never go to waste. In fact, they can add significant value to your property in the long run.

• Listing in spring or early summer typically attracts the most buyers.

Challenges To Watch Out For

No forecast is complete without considering the potential roadblocks. Here are some threats that you need to be aware of before jumping right away:

1. At 2.23%, New Jersey has the highest property taxes in the nation. This could drive away buyers from the area.

2. As of now, inventory remains low. But if investors capitalize on this opportunity with more constructions, the demand and prices may gradually fall. 

3. External factors like recession risk, inflation, job market fluctuations, etc., might affect housing demand.

4. Flood zones and coastal erosion could impact property values in vulnerable areas like Atlantic and Ocean counties.

Frequently Asked Questions (FAQs)

• Are home prices expected to drop in New Jersey?

  Not likely. Even though the price growth may slow down in the coming years, a steady 2-4% annual increase is expected. 

• Is now a good time to invest in New Jersey real estate?

  Yes. As the rental demands rise, investing in multi-family units or undervalued properties can yield significant returns.

• How do interest rates affect the market?

  Higher rates can impact affordability for buyers. But at the same time, they also increase demand for rental properties.

• What challenges should I consider before buying or selling

  Before jumping right away, always keep an eye on the property taxes and any economic changes that may affect the demand. Similarly, check out for the chances of any natural calamities as they can pull down the prices of an area quickly.

Conclusion

New Jersey’s real estate market is set to remain robust over the next five years. Even though the days of rapid price increases may be behind us, the market remains strong. Still, there are plenty of opportunities for those who are strategic. But to make the most out of it, you need the right guidance.

At One Team Home, we know the exact pulse of the New Jersey market. We have a team of experienced specialists who can guide you with their valuable expertise. Contact us now