As in the rest of the US, the 2020 housing market in New Jersey was full of surprises. In March, as economic activity in the country practically came to a halt due to the COVID-19 pandemic, all indications pointed to a disastrous effect on real estate.
While this was indeed the case the first few months into the crisis, the market saw a dramatic turnaround starting in June. According to Zillow, from June to September, home values across the US increased by 2.2%, the largest quarterly increase since 2013. For the same period, home prices in the New York-Newark metropolitan area went up by 3.4% from the previous year.
Here are other significant real estate statistics for New Jersey from the November, 2020 report by New Jersey Realtors.
- The average sales price went up to $470,275, a 15.3% increase from the average sales price of $407,820 in 2019
- Days on market went down to 57, a 10.9% decrease from the previous year’s 64 days
- New listings for the year totaled 110,428, a decrease of 10.3% for the same period in the previous year
- Closed sales was up 4.6% and pending sales was up 11.3% from the previous year
Condos and townhomes:
- The average sales price was $357,560, an increase of 5.9% from the previous year’s average of $337,485
- Days on market went down to 57, a decrease of 8.1% from the previous year’s 62
- New listings for the year was 34,077, a decrease of 5.5% from the previous year’s 36,050
- Closed sales was down 2.4% while pending sales was up 3% from the previous year
Key takeaways from 2020
The New Jersey real estate market reflected the trends that prevailed in most of the country.
- Increased home sales
Buyers were very active in the second half of 2020, buoyed mainly by historically low interest rates. The average mortgage rate for the year was 3.2%, with a record low of 2.86% registered in September.
One of the most significant trends observed in 2020 is the exodus from the big cities to the suburbs. This phenomenon is believed to be the result of people moving away from the congestion of major urban areas and into more spacious suburbs where they can afford to buy bigger homes and be surrounded by more open space.
The growing trend for remote working has also boosted the movement to the suburbs. As the need to live close to offices has been reduced, people took the opportunity to buy homes in areas far from urban centers that are deemed safer from the pandemic.
- Low housing supply
The year 2020 was a sellers market in most parts of the country, largely due to the lack of inventory. In New Jersey, supply was at 2.5 months for single family homes by the end of November, down from 4.8 months in 2019, and homes for sale were down 42.4% from the previous year.
This has led to fiercer competition over available homes, significantly pushing home prices up.
- The rise of technology
In 2020, technology played an important role in real estate. The use of tools like virtual tours and video conferencing has been instrumental in connecting buyers and sellers and allowing transactions to take place even with social distancing restrictions in place.
Technology has also allowed remote working and ecommerce, two trends that have defined homeowners’ choices and decisions.
Predictions for 2021
It is expected that the homebuying frenzy will somewhat ebb in 2021, but sellers will still hold the edge. Home prices will continue to rise but most probably at a slower rate than what was seen in 2020.
Here are other predictions for the housing market, according to the National Association of Realtors:
- Seasonality will return
In 2020, COVID-19 has upended the traditional homebuying cycle, where most activity is seen in the summer. In 2021, normal seasonality will return with strong buying seasons expected in the spring and summer.
- Home prices will be at an all time high
In 2021, home prices will continue gaining ground and will rise around 5.7% on top of the strong gains made in 2020
- Millennials will make a strong impact
From first time home buyers, millennials will transition into “move up” buyers with growing families fueling the need for bigger space
- Mortgage rates will rise
Mortgage rates are seen to increase to 3.4% by the end of 2021, which remains close to historical lows
- Home sales will increase
Homeowners are more likely to sell in 2021 as anxiety about COVID-19 eases with the rollout of vaccines and the expected stabilization of the economy. Along with continued high demand, this is seen to push home sales up, with a forecasted increase of 7%.
Get expert help in navigating the New Jersey real estate market in 2021
As seen in 2020, it can be very difficult to predict what will happen next in real estate. To successfully navigate this complex landscape, you need the help of local experts who will leverage their knowledge and experience in the New Jersey market to help you achieve the best results. That’s what we at David DePaola & Company bring to the table.