Rumson New Jersey Real Estate Veteran Dennis Lynch Examines Vulnerable Housing Markets Across the State

The onset of the COVID-19 pandemic caused a massive disruption in real estate markets nationwide. As professionals opted to leave expensive and crowded cities for suburban sprawl, New Jersey’s housing market was certainly a beneficiary of this phenomenon with such close proximity to New York City and Philadelphia.

The crisis caused a massive disruption in real estate markets nationwide. Millennial professionals thinking about starting families or desiring more space and lower risks of contracting COVID chose to swap out expensive and crowded cities for suburban sprawl. Given the extreme proximity to New York City and Philadelphia in addition to its own urban centers like Trenton and Newark, New Jersey’s housing market was certainly a beneficiary of this phenomenon, and bidding wars ensued on single-family homes throughout the Garden State.

With rock-bottom interest rates and large pools of qualified buyers, New Jersey homeowners enjoyed home sale prices far exceeding what they paid. Even in 2022, the median home sale price in New Jersey was $460,000, representing a 30% increase over 2021.

However, heated housing markets across the nation are starting to cool as the Federal Reserve starts to raise interest rates to combat rising inflation. Despite having so many hot markets of its own and being near several of them, the New Jersey housing market is at risk of a bubble pop.

If you’re thinking about selling your New Jersey home and are concerned about how these market shifts could impact your sale price, working with a real estate expert who knows New Jersey markets in and out is imperative. Dennis Lynch and Marshall Lynch are a father-son team with more than ten years in the real estate business who have served more than 1,000 home buyers and sellers in the Rumson, New Jersey area in Monmouth County. Dennis and Marshall Lynch can help you find your ideal New Jersey home and if it is the right time to buy or sell.

Which areas in New Jersey are the most likely to be vulnerable to market shifts?

According to real estate data aggregator ATTOM, three of the most vulnerable housing markets in America happen to be in New Jersey, with a whopping six counties in New Jersey representing the top 10 most vulnerable counties in the entire nation.

Regardless of ranking, the following New Jersey counties were named in ATTOM’s report:

• Bergen
• Camden
• Gloucester
• Essex
• Ocean
• Passaic
• Sussex
• Union

However, Passaic, Essex, and Atlantic Counties represented the largest indicators of decline based on median single-family home prices, average local wages, unemployment rates, and foreclosure activity within county limits.

What would designate a New Jersey county as having a “vulnerable” real estate market?

It may come as a surprise to see Bergen County on this list given its diverse housing stock that is notoriously low, due to hot demand from close proximity to New York City along with a higher-income population and venerated school districts. All of these factors have made Bergen County housing prices comparable to those within New York City limits. Bergen County ranks so high because the criteria used in ATTOM’s rankings examines home affordability as a whole, with single-family home prices given the most weight. However, ATTOM also factors in unemployment, local average wages, and foreclosure rates proximal to housing prices.

Soaring home prices are now meeting interest rates on 30-year mortgages soaring in tandem, which is pushing homeownership even farther out of reach for prospective buyers. After an initially heated market in the first two years of COVID, home prices in these areas of New Jersey began to decline month after month in 2022 per ATTOM’s report. Bergen and Passaic Counties rank high on ATTOM’s list as vulnerable counties given how much of an average local resident’s wages would go to housing costs for a median-priced single-family home, with Bergen County housing costs representing 48.3% of wages and Passaic County 46.5%.

This is more than 20% over the national average of 26.3%.

Does a vulnerable market mean that it’s more likely to bottom out?

Of the 50 most at-risk counties named in ATTOM’s report, several California and New York counties are unsurprisingly named. However, some were shocked to find that an overwhelming share of the report belongs to New Jersey, and wouldn’t seemingly have much in common with Chicagoland or rural California (all named on the list) as far as their local economies go.

In addition to housing costs that are high right now, these areas are also likely to be hit harder by runaway inflation given the uncertainty of various economic sectors, particularly if people will spend less on them due to job loss. With mortgage payments, real estate taxes, and insurance that would potentially take up such a large share of the average resident’s income, this is what would classify an area as “vulnerable.”

Just because a housing market is considered vulnerable doesn’t necessarily mean that it isn’t robust, such as Bergen County remaining a popular choice for wealthy New York City ex-pats who want to remain close to the city. Since housing costs carry the most weight in ATTOM’s calculations, other factors could indicate more economic stability, such as relatively low unemployment.

A repeat of 2008 is not likely, given the relatively low mortgage delinquency rate nationwide. However, if the market is considered vulnerable and real estate prices continue to fall after cooling off from the pandemic buying spree, it could start to turn more favorable to buyers and give them more leeway to negotiate compared to the recent past.

According to Dennis Lynch, local foreclosure rates need to have more attention paid than national because of highly-specific factors to the region. New Jersey has a fairly diverse economy and also receives “ripple effects” from New York City and Philadelphia’s housing and labor markets — but some counties in New Jersey have experienced higher than normal foreclosure rates due to layoffs and COVID deaths and disability among other factors.

How can Dennis Lynch and Marshall Lynch help me determine the right time to sell my home, or buy one, in the complex New Jersey real estate market?

As a recession looks inevitable in the current economic climate, this certainly factors into your decision whether you should buy or sell your property in the near future. There are also major personal elements of this decision that may carry more weight, in addition to factors specific to state and hyper-local real estate markets.

It can be challenging to make the right call on timing your home sale or purchase to get the most favorable outcome. By working with real estate experts who can help you make a data-driven decision and analyze your real estate and financial goals, they can help you make an informed choice.

Rumson, New Jersey-based Dennis and Marshall Lynch prioritize the use of data to help their clients determine the best timing for purchase and sale transactions. With over 10 years of experience in the New Jersey real estate market, their methodical approach to real estate transactions has garnered over 1,000 satisfied clients who have relied on their expertise on whether to buy, sell, or hold their property and compute a realistic ROI (return on investment).

Contact Dennis and Marshall Lynch today to learn more about how their experience and expertise in the Rumson area can give you more assurance and confidence in what may seem like an unpredictable environment.