As the state's second-largest city, with a varied population and prime location overlooking the Hudson River and Lower Manhattan, Jersey City has long been a favorite destination for those seeking dynamic residential real estate.
The market's primary strength is its ability to offer something to everyone. From professional singles to young families to more established homeowners and institutional investors, anyone looking for a property can find a slice of Jersey City to love.
However, by the end of the summer, the growing predictions of a slowing market proved prophetic. Although the median sale price doesn't yet reflect a dampening mood, the number of closed sales does. Home sales have declined every month since late spring. The past quarter reflected a considerable drop-off year over year for single-family homes and the townhouse-condo market.
Overall, it was reflective of conditions throughout the state and for most of the country. Thus far, 2022 has been an interesting year for real estate — let’s look ahead to 2023 and see what to expect in the coming year.
Heading into 2023, mortgages are considerably more expensive now than at the start of the year. It's given plenty of buyers pause as they navigate an uncertain market and decide whether to buy now or wait out the market.
The other side of the transaction table is feeling the pinch as well. Having grown accustomed to anecdotes that include 20-plus offers on a single property or home sales closing $25,000 or more over asking, current sellers are facing an unfamiliar marketplace.
Indications such as days on the market and percentage of list price received appear in the early stages of a downward trend. It's realistic to think that until inflation numbers recede, or, at the very least, level off, the cast has been set for at least the first half of 2023.
The good news is that the market remains accessible. Its return to a more balanced market is favorable for buyers. The trade-off for sellers is that home values, while dropping, are doing so incrementally and still remain historically high.
Success, however, will require a bit more patience and savvy than the previous 24 months.
Navigating and succeeding in an uncertain market
At the moment, that can be hard to accept. Buyers are hitting a market where mortgage costs have increased more than 50% in the past year. Sellers watch nervously as buyers take longer to shop for a home, expecting some relief from historical home prices.
It's different from the balanced market that either side was expecting.
But there are ways to succeed for both sides of the transaction.
In an inflation-driven market, demand decreases. You'll face considerably less competition if you need to buy anytime in the next six months. Watch how long homes linger on the market in the neighborhoods where you want to buy. Opportunities exist to buy at considerable discounts, especially if a seller is motivated and ready to move.
Next, account for how inflation will impact ownership costs, not just your mortgage payment. Inflation can linger over even the tiniest of expenses like a thick fog. Or the ones you didn't plan for. In addition to your taxes, insurance, and closing or other transaction-related costs, consider what it will cost to live in the home. Any energy-related expense will have an impact on your bottom line. So too, will unforeseen repairs or updates to the house itself.
If a project home is on your radar, research material and labor expenses before diving into any home renovation. If the upgrades require a loan, shop around for a generous lender.
In fact, make sure you identify that lender before you buy your home. More importantly, shop around for that lender before committing to a loan. Inflation or not, mortgage rates are constantly in flux. Consider that this year, rates on a 30-year fixed-rate mortgage went from 5.23% in May to 5.52% in June to 5.22% in August and are now sitting at just over 6%.
Interview several lenders and explore the different programs they offer and the fees they charge. The right lender could save you thousands of dollars over the life of your loan. And, should rates drop, consider refinancing to save even more.
With current trends pointing towards a deflated market in 2023, the sooner you list your home, the greater your return. Just make sure you're ready to sell. If your plans call for simultaneously selling and buying, partner with a savvy real estate agent who can help navigate both transactions. Even in the best markets, it's always challenging. Still, given the transitory market we're now in, you can find considerable value in both transactions.
Although it's always been advisable to prep a home before listing, the pandemic-era market made it less of a necessity. If it wasn't falling apart and was in a decent neighborhood, buyers would purchase it sight unseen (even some without meeting the first two conditions). The "buy as-is" days may be coming to an end.
To keep your home competitive and guarantee a healthy return, repairs, updates, and staging will stand out amongst discerning shoppers. You don't need to break the bank — as noted, inflation is raising the costs of materials and labor — but targeted improvements that appeal to buyers increase the likelihood of a lucrative sale.
Finally, just as buyers should watch for opportunities, so should sellers. Not all homes and neighborhoods are created equal. If yours is a standout property in a sought-after section of Jersey City, you can still command a premium with the proper prep, marketing, and pricing.
Partner with a seasoned, savvy listing agent to boost your home's profile. You can access their knowledge and experience to position your home in a volatile market and a network of past and current clients hungry for exclusive sales before a listing goes public.