Home prices climbed rapidly, especially during the pandemic boom.
This continued a trend of price growth that accelerated after 2020.
Such price hikes made buying a home more expensive relative to incomes, squeezing many middle-income families.
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Sales activity fluctuated significantly during this period.
During 20202021, rock-bottom mortgage rates and pandemic-driven housing demand fueled a surge in home sales.
2021 saw near-record sales as buyers rushed to take advantage of 3% interest rates and remote-work opportunities.
However, by 2022 and 2023, rising interest rates cooled the market.
In 2023, New Jersey had 84,305 closed home sales, a steep 22.1% drop from 2022.
Despite fewer sales, prices stayed high because demand still exceeded the limited supply of homes.
Statewide data show that about 74% of buyers bought single-family detached homes.
These include typical houses with a yard, which remain the dream for many families.
Attached homes like townhouses and rowhouses made up roughly 8% of purchases.
Condominiums and other housing types accounted for the remaining share.
For budget-conscious buyers, the home punch in often depended on price and location.
For example, young professionals purchasing in Jersey City or Hoboken often opted for condos or co-ops.
Buyer Motivations: Upsizing, Downsizing, and Relocation
Homebuyers between 2018 and 2023 had varied motivations.
On the other hand, a considerable share of homeowners were downsizing during this period.
Roughly one-third of sellers moved to a smaller home.
Downsizing was popular with empty-nesters and retirees.
High property taxes in New Jersey pushed many retirees to downsize as well.
Pandemic-Driven Migration Patterns
Relocation was another significant factor.
During 20202021, there was a notable migration from dense urban areas to more rural or suburban areas.
Conversely, a number of people moved into New Jersey from out of state.
Some households even purchased secondary or vacation homes during this period.
Low interest rates and remote work enabled a subset of higher-earning families to buy weekend or summer houses.
The Jersey Shore saw increased interest from local buyers who wanted a beach house.
Down payment sizes varied by buyer.
During the pandemic housing boom, down payments actually grew larger on average, as competition was fierce.
Nationally, the typical first-time buyers down payment reached 8% in 2022 the highest in decades.
However, the situation reversed sharply in 2022.
Suddenly, borrowing became much more expensive.
The New Jersey Housing and Mortgage Finance Agency (NJHMFA) provides special mortgages and down payment assistance.
In fact, NJHMFA assisted 2,313 families in 2023 with down payment support totaling $26.8 million.
Programs like Road Home New Jersey offer down payment grants or low-interest loans to qualified first-time buyers.
These programs became a lifeline for some buyers struggling to cover the steep upfront costs.
New Jersey saw its share of cash buyers too, particularly for lower-priced homes and investment properties.
Changing Household Behavior
As market pressures grew, New Jersey households adapted their behavior.
One noticeable shift was an increase in multigenerational living and purchases of homes to accommodate extended family.
In New Jersey, this trend was even stronger 19% of recent buyers purchased a multi-generational home.
The Lock-In Effect
Another behavioral change was how long homeowners stayed put.
This suggests that during the booming market, Jersey homeowners took advantage of rising prices and sold relatively sooner.
However, by 20222023, a new factor encouraged people to stay put: the mortgage rate lock-in effect.
Many owners had refinanced or bought homes at 3% interest rates in 20202021.
They feared having to buy a new home at a much higher rate.
Chief among these were inflation and the rising cost of living.
Everyday expenses for New Jersey families gas, groceries, utilities all jumped up.
This meant households had less disposable income to save for down payments or cover a higher mortgage.
In this era, those costs continued to climb.
This led many middle-income families to relocate within New Jersey in search of affordability.
Urban vs.
Suburban Trends
Urban versus suburban trends also differed.
New Jerseys urban centers (Newark, Jersey City, Paterson, etc.)
have more condos, multi-family houses, and rentals.
By 20212022, suburban and even rural towns saw a boom in demand.
Small towns in New Jersey (e.g.
Camden County home values were up around 7.9% in that year.
Buyers in those years could find bargains on foreclosed homes or short sales.
From 20122017, prices slowly rose but it was a gradual recovery.
In 20182023, prices surged to new highs, greatly exceeding the 2000s bubble levels.
Sellers often had to make concessions.
By 20132017 the market normalized, but without extreme competition.
In 20182023, it flipped to a strong sellers market, especially 20202022 when inventory hit record lows.
Homes often sold above asking price with multiple bids.
(New Jersey did manage about 41% first-time in 2023, higher than the national average).
This implies that young buyers had a tougher time in 20182023 compared to 20082017.
