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  • Camille Haynes

New Jersey Home Prices: It's All About Supply and Demand

As we enter the summer months and work through the challenges associated with the current health crisis & civil unrest, many are wondering what impact the economic slowdown will have on home prices in Union & Essex County. Looking at the big picture, supply and demand in New Jersey will give us the clearest idea of what’s to come.

Making our way through the month of June and entering the second half of the year, we face an undersupply of homes on the market in New Jersey. Keep in mind, this undersupply is going to vary by location and by price point. According to the National Association of Realtors (NAR), across the country, we currently have a 4.1 months supply of homes on the market. Historically, 6 months of supply is considered a balanced market. Anything over 6 months is a buyer’s market, meaning prices will depreciate. Anything below 6 months is a seller’s market, where prices appreciate. The graph below shows inventory across the country since 2010 in months supply of homes for sale.

In New Jersey, the number of new homes on the market took a significant downturn due to Covid. In Essex County, 313 homes were listed for sale in April 2020. This is compared to 919 homes in April 2019, which is a 65.9% decline. Union County had 228 homes listed for sale in April 2020 compared to 850 in April 2019. This is 66.1% down in the county.

Given the undersupply of homes on the market in Northern New Jersey today, there is still upward pressure on prices. Looking at simple economics, when there is less of an item for sale and the demand is high, consumers are willing to pay more for that item. The undersupply is also prompting bidding wars, which can drive price points higher in the home sale process.

While unemployment might have slowed down a prospective buyer from moving immediately, once the state starts to open up combined with new historic low-interest rates expect buyers to be as aggressive as ever when the right opportunity comes on the market.

Many may think home prices will depreciate due to the economic slowdown from the coronavirus, but experts disagree. As we approach the second half of this year, we may actually see home prices rise in Union & Essex County even higher given the lack of homes for sale.

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