Experts predict that in 2023, national home prices will drop by 6.8% compared to 2022. However, if you’re looking for a new property in the New Jersey or New York housing market, understanding these shifts on a local level may seem like quite a challenge. What will the housing market look like in 2023 in this region specifically?
Industry reports predict both optimistic and pessimistic outcomes. For example, sales are down in some areas, but that doesn’t mean prices are dropping alongside the decreased inventory and demand. Therefore, it’s important to consider how each one could impact your ability to find the perfect place at an affordable price.
From booming apartment markets to an increase in home prices in the Hudson Valley, there’s a lot to know about navigating this year’s market. And that’s exactly what we’re about to do.
Sit tight as we explore four key industry reports on NJ and NY real estate in 2023, ranging from first-time buyer trends to potential shifts in supply. Then, we’ll analyze what happens when these changes arrive. Whether you’re just beginning your search for the ideal apartment or house rentals, it pays to be prepared.
Discover your home’s worth online for free in minutes!
Recap of the 2022 NJ housing market
The US real estate market in 2022 saw impressive growth despite rising interest rates. However, growth also meant that housing prices increased, too. According to data from Redfin, the national median home sale price increased by 16.8%, rising from $318,000 to $386,000. This marked the highest annual increase since 2014 when prices rose by 11%.
The high demand for housing was driven largely by low mortgage rates and an influx of city dwellers who left coastal hotspots for more affordable housing options.
Where did people move to and from?
Cities with populations over 500,000 saw a 21% jump in home sales between 2021 and 2022. This trend was especially strong in the country’s South, Midwest, and West regions, where sales jumped 25%, 17%, and 18%, respectively, while Northeast sales only grew by 6%.
That’s great news for buyers in New York and New Jersey. Speaking of the NJ and NY-specific markets and prices, what happened in these markets in 2022? Things slowed down a bit. Bidding wars cooled off, and houses sat on the market much longer than in 2020 and 2021.
But overall, the New Jersey housing market saw strong activity for sellers in 2022, as reported by Allison Pries from NJ.com. Her comprehensive summary of the 2022 market detailed how the median sales price reached $470,000 and homes sold for 100.5% of the list price.
Despite high demand, a lack of inventory was an issue as unsold homes plummeted from 30,000 in January 2020 to about 17,000 in October 2022.
Nonetheless, real estate agents are hopeful of a renewed surge in available listings. Experts predict that home prices will decline slightly over the next two years by 5%. However, it’s worth noting that this comes after three years of decently strong growth, with values increasing by 32%.
With the reset year of 2023 coming up, New Jersey’s real estate market will surely be interesting. Should you buy a home or sell your home?
If maximum profit is the goal, it may be better to wait until prices rise again in a few years. However, if you need to move more urgently or are looking for a good deal from buyers, now may be a reasonable time as buyers will likely be willing to negotiate more than usual with high rates.
New York housing marketing: Hudson Valley sales down, prices up
What about the New York housing market? There was a lot of focus on the Hudson Valley, as Lanning Taliaferro from Patch reported. Several intersecting factors shaped it in 2022.
According to Taliaferro’s summary of the Hudson Valley housing market, home sales dropped 35.2% from the previous year, signaling a decrease in the number of homes put up for sale. At the same time, the average sales price increased by 1.5%, driven by a shortage of entry-level housing and low inventory for homes priced at over $1 million.
Despite this slight overall increase, there were sizable variations depending on location, with Dutchess, Westchester, and Putnam counties seeing prices either remain steady or rise significantly. In contrast, Orange and Rockland counties experienced price decreases.
It’s worth noting that while sales in the Hudson Valley dipped in 2022, it was largely partly due to the boom the market experienced in 2020 and 2021. The Patch report notes that the number of units sold in 2022 was still higher than in 2019 during a pre-pandemic market. So things are cooling off, but it’s not necessarily cause for concern.
All these changes will likely continue into 2023 and beyond, with experts predicting that sales will continue to be low short-term and then pick back up in the second and third quarters of the year.
Taliaferro ended their report with a quote from Aaron Velez, HGAR Regional Director for Putnam County. Velez said he wouldn’t hesitate to list his home in the Hudson Valley, indicating it’s a decent time to benefit from increased equity.
Manhattan landlords won’t budge on rent
We’ve talked a lot about New Jersey real estate and even the New York housing market, but what about the apartment market? Landlords in Manhattan still won’t budge when it comes to lowering rent prices from their peak in July 2022.
The US rental market experienced a significant shake-up in 2022, with rents slipping around the nation beginning around the fourth quarter. For example, ApartmentList reported in February 2023 that year-over-year rent growth continued to decline in 2022 and even in the first months of 2023. It’s now at 3%, the lowest since April 2021.
These decreases sprang from an abundance of new construction and increased public subsidies for renters, allowing them to leave their previous apartments for more affordable options elsewhere.
Despite this trend, Manhattan landlords were unwilling to budge on prices, with rents falling just 1% in December 2022. This comes after hitting a high in July 2022 when the median rent was a staggering $4,150. Since then, the median rent has bounced between $4,000 and $4,100.
As Suzannah Cavanaugh from The Real Deal reported, this represents a measly 1.2% decrease from July 2022 compared to larger drops over the same period elsewhere in New York City. The discrepancy appears to be driven by steady job growth in Manhattan, which has kept demand high compared to other locales.
Furthermore, many apartment owners have opted to keep their units empty until they can find tenants willing to pay their asking price rather than accept lower offers, resulting in less inventory for potential renters and higher overall costs for those who manage to secure a property.
This isn’t good news for prospective tenants looking for an affordable Manhattan apartment. Still, it could lead to better opportunities elsewhere if they’re willing to expand their search beyond the island.
Cavanaugh ended her report by quoting a few local experts who seem to think that while the NY apartment market is currently in favor of landlords, it does appear to be shifting in favor of renters.
Central Jersey’s hot apartment market
If you can’t afford to live in New York City, you might want to look at some prime NJ real estate. The apartment market heated up quite a bit in 2022, as detailed in Mike Deak’s report from MyCentralJersey.com.
Before we dive into Deak’s report, it’s worth noting that RentCafe reported that Central Jersey was ranked as the seventh most competitive rental market in the United States. If you’re interested in renting here, you’ll want to act fast. As of the end of 2022, 96.8% of all apartments were occupied.
Why is Central Jersey so attractive to renters? Towns like Dunellen and Raritan Borough have a special charm about them. There’s also been a lot of new construction in those areas that have attracted people, even during the pandemic.
Despite new construction in the area slowing down amidst calls for social distancing, demand for apartments remained strong, keeping the vacancy rate relatively low.
Deak reported that the interest isn’t just about all these brand-new, modern apartments. It also has to do with rising interest rates. Simply put, people can’t afford to buy homes in the New Jersey housing market.
Nearly 70% of renters in the area said they are delaying plans to buy a home. Instead, they’re looking for affordable places to live, and apartment developers in Central Jersey are catering to those needs. Deak notes that it could be worse. However, we know from the reports above that it does seem like the NJ housing market will get slightly better soon (at least, we hope).
With agile developers continuing to push out new apartments and landlords keeping existing ones up-to-date, it appears likely that Central Jersey renters will continue to enjoy a wide selection of apartments throughout 2023.
Bargain hunters looking for great deals should be diligent since competition will remain fierce between new and established complexes vying for customers’ attention. We use “bargain” lightly here, too. The lowest price for a one-bedroom apartment in the community in Deak’s was still over $2,100.
Key takeaways: NJ & NY housing
What does all of this mean? How can you take the reports above and use them to inform your own real estate strategy in 2023? Expect a fairly steady housing market in 2023.
According to Redfin, the median list price of a home in the Big Apple is currently down 4.8%, while Curbed’s estimated forecast has it remaining fairly flat overall. Overall, it does seem like a decent time to buy a home if you’re willing to deal with higher interest rates.
In general, home prices are still higher in some areas than they were this time last year. However, they’re not nearly as bad as they were in 2022.
Remember, the median sales price reached $470,000, and homes sold for 100.5% of the list price in New York in 2022. It doesn’t look like we can expect those kinds of prices in 2023. However, it does seem like the decrease in prices will be slow. Real estate experts recommend keeping an eye on mortgage interest rates as those will dictate home prices moving forward.
Meanwhile, in New Jersey, the state’s typical fluctuating housing trends seem poised to continue as values remain relatively stagnant statewide. Prices are expected to trend upwards in certain coastal areas, such as Atlantic City and Ocean County, but could decline slightly elsewhere.
That said, New Jersey is still experiencing strong growth across many of its non-urban markets as buyers seek out smaller towns with a lower cost of living. If you’re priced out of the housing market, there are great options for apartment listings in Central Jersey. The NJ apartment market is hot as it continues to cater to renters who can’t afford to buy.
Get a cash offer
2023 looks like it will be a decent year for homeowners looking to sell their homes in NY and NJ. However, both the New York housing market and the New Jersey housing markets have been slow to rebound from the impacts of the pandemic, with many homeowners hesitant to put their properties on the market.
You have other options if you don’t want to risk having your house sit on the market for months. Consider a cash offer if you want to sell your home quickly and without hassle.
iBuyer.com is a one-stop shop for getting cash offers on your property fast. You can get a free home valuation simply by providing some information about your property, and we’ll present you with a competitive cash offer that’s fair and honest. It’s faster, simpler, and hassle-free.
If you’re looking to sell your home this year but don’t have time to wait for an offer on the open market, consider taking advantage of iBuyer’s quick and easy process to get cash offers online. Get started today by getting a free valuation of your property.
