Earlier this year, Mashvisor reported on the effect of the coronavirus on the New Jersey real estate market. According to our initial real estate market analysis, it was clear that COVID-19 was slowing down the NJ housing market. This was despite the fact that the New Jersey governor deemed real estate an essential business. Local buyers were hesitant to make a move, as they waited to see how the pandemic would affect the local and national economy as well as New Jersey house prices. Although sellers feared that they would soon see home prices dropping, many pulled listings or postponed sales for fear of having anyone enter their homes for sale. These NJ real estate market trends were ones seen across the US in early spring.
But as the state has now managed to flatten the curve to some extent, how is the NJ housing market 2020 doing? What does the housing market forecast look like for the rest of the year?
Home Sales Have Climbed Back Up in the NJ Housing Market
New Jersey housing market data for June 2020 shows that home sales in the city are on the rise. New Jersey Realtors reports that pending sales for the month of June recovered and actually exceeded those during the same time last year (+33.8%). Closed sales were up from May 2020, but have still not reached June 2019 levels (-21.8%).
Although home sales have not completely recovered in the NJ housing market, it’s clear that buyers are back in the market. The general rise is a positive sign for the health of the real estate market.
Housing Supply Remains Low
New listings also continued to climb in June 2020 from the severe drop suffered in April. Still, the supply of homes for sale remains 41.0% lower than it was in June 2019. The months of supply sits at 3.6.
New Jersey Realtors says this is a trend seen across the country. Even though buyers are ready to get back into the NJ housing market due to low mortgage rates and an ease in COVID-19 restrictions, some sellers don’t share the sentiment. Listings remain low as many sellers still fear COVID-19, especially as local and national cases are back on the rise.
It’s a Seller’s Market and the Sales Price Has Increased
With low supply and demand climbing back up, the NJ housing market 2020 is naturally a very hot seller’s market. As such, the median sales price actually increased in June 2020, by 5.3% YoY. Although house prices in NJ are rising despite the pandemic, homes are selling for about 2% less than list price.
Is It a Good Time to Invest in NJ Real Estate?
If you are in a good financial position, it is generally a good time to invest in NJ real estate. Here are a few reasons why:
An NJ Housing Market Crash Is Unlikely
Low supply and high demand mean that a housing market crash is very unlikely. While some housing market predictions see New Jersey home values dropping from now through the beginning of 2021, it’s not by very much – 2.1% drop according to Zillow.
At the same time, it’s important to keep an eye on the local economy in New Jersey. Like much of the country, the economy suffered from high unemployment rates and a shrinking GDP. Although the state is now in the stages of reopening with economic recovery in mind, it’s still unclear what the long-term effects of COVID-19 will be on the economy and how that will affect the NJ housing market.
Related: Should We Expect a US Housing Market Crash 2020 Due to the Pandemic?
Buying an NJ Rental Property Is Profitable
While you might think that buying an NJ real estate investment and flipping it is a good idea because the market is a hot seller’s market, that’s not the best idea. These are still uncertain times. However, it is a good time to invest in an NJ rental property.
Related: The Best Real Estate Investments During the Spread of the Coronavirus
For one, NJ real estate investors who have bought and held onto properties have historically enjoyed real estate appreciation. NeighborhoodScout reports NJ properties have increased in value by 98% since Q1 2000. COVID-19 is a wild card and although it may cause values to drop in the immediate future, history shows us the NJ real estate values are resilient and can rebound.
Homeownership in New Jersey is dropping, contributing to increasing rental demand. If you know where to invest in real estate in New Jersey, you could enjoy positive cash flow and a high occupancy rate. Here is Mashvisor’s NJ housing market data for June 2020:
- Median Property Price: $444,609
- Price per Square Foot: $356
- Price to Rent Ratio: 18
- Traditional Rental Income: $2,097
- Traditional Cash on Cash Return: 1.2%
Related: Is Now a Good Time to Invest in Real Estate?
It’s a Good Time to Invest in These NJ Cities
Of course, some parts of the NJ housing market are faring better than others. In terms of rental property performance, these are the 6 best cities in New Jersey where you can get the highest rate of return.
#1. Trenton Real Estate Market
- Median Property Price: $233,605
- Price per Square Foot: $126
- Price to Rent Ratio: 12
- Traditional Rental Income: $1,625
- Traditional Cash on Cash Return: 2.6%
#2. Middletown Real Estate Market
- Median Property Price: $579,915
- Price per Square Foot: $248
- Price to Rent Ratio: 15
- Traditional Rental Income: $3,224
- Traditional Cash on Cash Return: 2.2%
Middletown is one of the best cities for rental income in the NJ housing market for 2020.
#3. Union Real Estate Market
- Median Property Price: $385,836
- Price per Square Foot: $209
- Price to Rent Ratio: 14
- Traditional Rental Income: $2,312
- Traditional Cash on Cash Return: 1.5%
#4. Cherry Hill Real Estate Market
- Median Property Price: $313,583
- Price per Square Foot: $149
- Price to Rent Ratio: 13
- Traditional Rental Income: $2,058
- Traditional Cash on Cash Return: 1.5%
#5. North Bergen Real Estate Market
- Median Property Price: $492,989
- Price per Square Foot: $340
- Price to Rent Ratio: 19
- Traditional Rental Income: $2,149
- Traditional Cash on Cash Return: 1.2%
#6. Manchester Real Estate Market
- Median Property Price: $205,370
- Price per Square Foot: $636
- Price to Rent Ratio: 12
- Traditional Rental Income: $1,408
- Traditional Cash on Cash Return: 1.1%
The Manchester real estate market is one of the most affordable markets on this list. Search for affordable NJ investment properties for sale in this market (or the market of your choice) now.
Start Your New Jersey Property Search Today
Buying property in New Jersey could be a good idea for those who are in a good financial situation, despite COVID-19. As long as you find cash flowing NJ income properties, then this will be a smart move. How can you find these cash flow properties in the NJ housing market? With Mashvisor’s real estate investment tools.
Click here to find top-performing properties in New Jersey.