Metrostudy’s first-quarter survey of the Northern New Jersey and New York Suburbs housing market showed that the housing recovery that blew through the first half of 2013 has slowed down quite a bit in 2014, especially in new construction. The region recorded 1,194 observed closings for 1Q14, up 16% from 4Q13. Monmouth and Middlesex Counties had the largest numbers of closings for the Northern New Jersey region: Monmouth closed 149 units and Middlesex County closed 142 units. The Northern New Jersey/NY Suburbs region recorded 1,241 starts in 1Q14, down 16% from 4Q13.
“Quarterly starts have decreased for the past three quarters in this region,” says Quita Syhapanya, regional director of Metrostudy’s Northern New Jersey and New York Market. “Starts may have decreased for 1Q14, but closings have increased by a healthy rate. The “Winter Vortex” that stalled housing in this region has begun to thaw out with the 16% jump in closings. However, some of the effects of the extreme weather are still a factor in the starts numbers.”
Total housing inventory increased slightly from 8,812 in 4Q13 to 8,860 units in 1Q14. In 2Q13 Housing Inventory was at 7,203 units and has increased by 23% to end 1Q14. Under construction inventory has increased by 338 units which is an 8% increase from the prior quarter. Finished vacant inventory decreased by 298 units in the same time period. The average closing price for a new home closed in the Northern New Jersey/NY Suburbs for February 2014 was $490,019, up 4% year over year.
For 1Q14 there are 9,780 Vacant Developed Lots (VDL) in the Northern New Jersey/NY Suburbs market, a slight decrease from 4Q13 levels. When Metrostudy started monitoring VDLs in this region in 2Q13 there were 11,118 lots available. Since that time there has been a 12% decrease in developed lots. This region has only a 17 month of supply of vacant developed lots remaining. A healthy market supply level for equilibrium would be between 24 to 30 months. “The Northern New Jersey/NY Suburban market is extremely under supplied when it comes to finished lots,” says Syhapanya. “Ocean, Monmouth and Middlesex counties have the most lot inventory in the region, and respectively they only have 23, 17, and 18 months of supply.”
The past three quarters the number of finished lots being delivered to the marketplace has increased each quarter, but not at the volume needed to meet the demands of the market. During the wintery months of January, February and even March developing lots was difficult with the unpredictable weather builders and developers were facing. Any sort of construction or site improvement - from digging up foundations or laying concrete down - was a tall order with either the ground being hard as a rock or a muddy mess that slowed site work progress. With spring finally here and the winter behind us you can expect more lots to be delivered in the coming quarters.
The Northern New Jersey/New York suburb region’s new construction housing market has been in a holding pattern to begin 2014 with small gains in closing, but a lag in activity for starts. Some of the spillover from the weather in 4Q13 still held some of the activity down in January and February with activity starting to pick back up towards the end of March. A good proportion of the new home building activity is occurring in counties right outside of New York City. Bergen County specifically saw 316 starts for 1Q14 with increased demand occurring in the condo market in Hudson County. Buyers are looking outside of New York City for a home as market prices have pushed potential homeowners to neighboring counties right outside of the city.
Overall, the entire real estate market including resales in Northern New Jersey/New York suburbs region is seeing strong price gains in attractive locations. Areas not in prime locations are still climbing back up and may take some time to get to positive equity. The inventory of homes up for sale is still very low in the region, but with spring in the air many potential sellers who were on the sideline may put their homes on the market. This increase in inventory coupled with the increase in demand should help the real estate market expand further in the coming quarters. With inventory being low, prices are continuing to increase suggesting a “sellers’ market”, but as potential sellers feel more confidence in the housing market more homes will get listed and prices should stabilize.
For information contact: Quita Syhapanya at 215.893.9890 Ext. 231
Metrostudy, a Hanley Wood company, is the leading provider of primary and secondary market information to the housing and related industries nationwide. Established in 1975 in Houston, Metrostudy provides research, data, analytics and consulting services that help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. www.metrostudy.com
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