The housing market in the Northern New Jersey suburbs of New York City continued to develop as a fully‑realized seller’s market, with low levels of housing supply shackling sales growth but generally driving price appreciation throughout the region.
The regional market continues to suffer from a lack of supply. The number of homes available has settled at levels that generally signal a seller’s market, with about six months of inventory in most of the Northern New Jersey markets. The lack of inventory has been stifling sales growth, since the market lacks “fuel for the fire” to meet the existing buyer demand, even while driving meaningful price appreciation throughout the region.
Because of the lack of inventory, sales were mostly flat. For the region, sales were up just 0.3% in the quarter, and they were mixed in the individual counties: Bergen houses up 3%, Bergen condos down 2%, Hudson down 3%, Passaic up 3%, Morris down 4%, Essex up 1%, and only Sussex bucking the trend by rising about 11%. That said, sales are now at levels we haven’t seen since the seller’s market of the mid‑2000s, and almost double in many places from the bottom of the market following the correction of 2008‑09.
But even as low inventory stifles sales growth, it drives meaningful price appreciation. Prices rose about 2% regionally, with dramatic spikes in Hudson (8%), Passaic (6%), and Sussex (7%). Those types of increases are not sustainable, but the longer‑term trends are still meaningful, with regional average prices up about 2% for the rolling year.
Inventory, however, might be stabilizing. Textbook economics tells us that limited supply, coupled with high demand, drives prices up, which is what we’ve seen in the past several years. But that same textbook also teaches us that rising prices eventually attract more sellers into the market, which fuels sales and stabilizes pricing. And that seems to be what we’re seeing now ‒ after several years of sharply declining supply, inventory either flattened out or even rose in some markets.
Going forward, we expect the seller’s market to continue. Stabilizing inventory might drive more sales growth, but we still believe that demand is strong enough to soak up that added supply and still drive meaningful price appreciation. Accordingly, with good economic conditions, low interest rates, and attractive pricing, we expect that the Northern New Jersey market will see rising sales and prices through a robust summer and fall market.
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