The housing market in N.J. has slowed — except for these types of homes (2024)

Home sales in New Jersey, overall, declined 22% last year but there was one segment of the market where sales were actually up.

Sales of homes priced $2.5 million and above increased by 3% in 2023. And they’re up 30% so far in 2024, according to data from the Otteau Group.

Known as the luxury market, this segment of the real estate market has also suffered from low inventory. But the high interest rates that impact homebuyers at other price points aren’t as much of a factor for buyers of higher-priced homes.

“The stronger performance of the super-luxury segment is attributable to inflation and elevated mortgage interest rates being less consequential for affluent households with higher disposable income and savings,” said Jeffrey Otteau, a real estate economist who heads the Otteau Group.

Sales were down the most, 27%, in the under $400,000 price range, where buyers are the most monthly payment conscious. They were down 13% for homes priced at $400,000 to $599,999, 9% for homes between $600,000 to $1 million and 1% for $1 million to $2.5 million homes.

If the interest rates drive up a mortgage payment from $3,000 to $3,500 for a homebuyer at a lower price point, it could price them out of the market. “For someone buying a home for $2 million and their monthly payment goes from $5,000 to $5,500, they can still afford it,” Otteau said,. “It’s not going to break their budget, because their income is so much higher.”

The low inventory of homes available for sale, on the other hand, is affecting buyers equally at all price points.

Inventory in New Jersey has been on the decline for the past decade. In July 2011, there were 71,194 homes on the market in New Jersey, according to data from the Otteau Group. By July 2021, there were 20,729 homes on the market.

Just two and a half years later, that number has declined by nearly 50%. There were 10,500 homes on the market as of January 2024, according to data from the Otteau Group.

“When there’s less of something, it’s worth more,” said Dennis M. McCormack of Prominent Properties Sotheby’s International Realty in Alpine.

Buyers are scrambling for the few homes that are available to buy.

Suzanne Veninata, of Douglas Elliman of NJ realty, listed a Rumson home days before it could be toured and had a sight unseen offer that was accepted by the sellers. And she even had a back-up sight unseen offer.

“I had three showings scheduled and we had to cancel them,” she said. “It was a crazy situation.”

DJ Ten Hoeve, of of Keller Williams Realty Central Monmouth, represented the buyer who bought it sight unseen. “I knew if we waited for it to be shown it would’ve ended up in a bidding war,” Ten Hoeve said.

His client paid $6.6 million for the five bedroom, seven full and two half bathroom custom built New England farmhouse with a contemporary flair. It was listed for $6.5 million.

“There’s just not enough inventory,” he said. “Especially if it’s priced right or turn-key.”

Veninata said the low inventory is driving up prices. “The $3 million homes are now $4 million homes,” she said. “Things have gone up a lot.”

She just priced a home that previously sold 3 years ago and it’s worth 30% more now, she said.

“Some of these bigger [price tag homes] are moving quicker than smaller ones,” Veninata said.

James Ward of Keller Williams Ocean Living in Point Pleasant Beach said buyers are behaving differently given the low inventory.

He listed a riverfront home for $2,950,000 and got “bombarded” at an open house on Sunday.

“In that price point, usually you’re dealing with higher networth individuals who are more appointment-based,” he said.

He typically wouldn’t have done an open house on a property like this one. “The expectation is you get more nosy neighbors, not bonafide buyers,” he said. “But I didn’t have one nosy neighbor. They were all high-networth individuals who will be completing a purchase as soon as they can.”

Are you an agent, buyer or seller who is active in this changing market? Do you have tips about New Jersey’s real estate market? Unusual listings? Let us know.

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Allison Pries may be reached at apries@njadvancemedia.com.