From 2018 through 2023, New Jersey’s housing market experienced rising prices and tight supply, creating challenges for budget-conscious homebuyers (households earning under $250,000 per year). Home prices climbed rapidly, especially during the pandemic boom. In 2023 the median home sale price statewide reached about $455,000, up 6.3% from the year before. This continued a trend of price growth that accelerated after 2020.

Over the five-year span, typical New Jersey home values increased roughly $200,000 (over 50%), far outpacing income growth. By mid-2024, the median list price in New Jersey was around $587,000, about 9.1% higher annually over five years. Such price hikes made buying a home more expensive relative to incomes, squeezing many middle-income families.

Sales activity fluctuated significantly during this period. During 2020–2021, rock-bottom mortgage rates and pandemic-driven housing demand fueled a surge in home sales. 2021 saw near-record sales as buyers rushed to take advantage of 3% interest rates and remote-work opportunities.

However, by 2022 and 2023, rising interest rates cooled the market. In 2023, New Jersey had 84,305 closed home sales, a steep 22.1% drop from 2022. Owners were listing fewer homes for sale (new listings fell 20% in 2023) and buyers faced less inventory. Despite fewer sales, prices stayed high because demand still exceeded the limited supply of homes.

Statewide, the homeownership rate hovered around 63%–64% during this period, a bit lower than the U.S. average, reflecting New Jersey’s high housing costs and many renters.

Popular Home Types

Most New Jersey homebuyers in 2018–2023 purchased detached single-family houses, although condos, townhomes, and multi-family homes were also options. Statewide data show that about 74% of buyers bought single-family detached homes. These include typical houses with a yard, which remain the dream for many families.

Attached homes like townhouses and rowhouses made up roughly 8% of purchases. Condominiums and other housing types accounted for the remaining share. Only a small fraction of buyers (around 5%) bought brand-new construction homes, as 95% bought previously owned houses in New Jersey.

For budget-conscious buyers, the home type often depended on price and location. In more urbanized and expensive parts of North Jersey, condos and townhomes became a more affordable entry point than single-family houses. For example, young professionals purchasing in Jersey City or Hoboken often opted for condos or co-ops.

In some cases, buyers got creative – purchasing a 2- or 3-family house and living in one unit while renting the others to help cover the mortgage. This period saw interest in multi-family homes as an affordability strategy, since rental income from one unit can offset the home cost.

Buyer Motivations: Upsizing, Downsizing, and Relocation

Homebuyers between 2018 and 2023 had varied motivations. A significant number were “upsizing” – buying a larger home than their previous one – often due to growing families or a desire for more space (like a home office). Among home sellers nationwide in 2022, 39% moved to a larger home and about 28% moved to a similarly sized home, indicating that upsizing was a common reason for moving.

The COVID-19 pandemic amplified this trend: with remote work and remote schooling, buyers wanted extra rooms and bigger yards. For instance, a family in a two-bedroom Hudson County apartment might sell and purchase a four-bedroom house in suburban Bergen or Morris County to gain space.

On the other hand, a considerable share of homeowners were downsizing during this period. Roughly one-third of sellers moved to a smaller home. Downsizing was popular with empty-nesters and retirees. Older New Jerseyans whose children had grown up often chose to sell the large family home and buy a smaller, easier-to-maintain property. High property taxes in New Jersey pushed many retirees to downsize as well.

Pandemic-Driven Migration Patterns

Relocation was another significant factor. Some buyers relocated within New Jersey for job changes or lifestyle reasons – moving from cities to suburbs, or vice versa. During 2020–2021, there was a notable migration from dense urban areas to more rural or suburban areas.

Families living in Jersey City or Newark, for instance, looked to towns in Morris, Sussex, or Monmouth counties for a quieter environment or lower cost, especially once they could work remotely. Conversely, a number of people moved into New Jersey from out of state. The state actually gained new residents from New York during the pandemic – over 75,000 people moved from New York to New Jersey between 2021 and 2022, likely seeking relatively more space or affordable housing while still remaining within commuting distance of NYC.

Some households even purchased secondary or vacation homes during this period. Low interest rates and remote work enabled a subset of higher-earning families to buy weekend or summer houses. The Jersey Shore saw increased interest from local buyers who wanted a beach house. Areas like Ocean City, Cape May, and Long Beach Island experienced a surge of second-home purchases in 2020–2021.

Financing and Mortgage Trends

Paying for a home in New Jersey often required creative financing and significant resources during 2018–2023. Mortgages remained the primary way buyers financed their purchases, but the mix of loan types and down payments shifted over time.

Throughout this period, roughly two-thirds of New Jersey home buyers used conventional mortgages, while about one-third used government-backed loans like FHA or VA. FHA loans, insured by the Federal Housing Administration, were especially popular among first-time buyers who had smaller down payments or moderate credit. In 2017, for example, FHA loans accounted for nearly 30% of home purchase loans in New Jersey.

Down payment sizes varied by buyer. During the pandemic housing boom, down payments actually grew larger on average, as competition was fierce. Nationally, the typical first-time buyer’s down payment reached 8% in 2022 – the highest in decades. In New Jersey, first-time buyers were able to put down a median of about 14% of the purchase price (financing 86%).

Repeat or move-up buyers, who could use proceeds from a prior home sale, had a median down payment around 24% (financing 76%). This means a lot of buyers were coming up with hefty lump sums – tens of thousands or even over $100,000 in cash – for down payments. Many tapped into savings and investments, and 35% of New Jersey buyers in 2023 used proceeds from selling their previous home as part of the down payment on the new one.

The Impact of Interest Rate Volatility

Mortgage interest rates had a huge impact on buyer behavior in this period. In 2018, rates were around 4.5%, but by 2020 the average 30-year mortgage rate fell below 3% – an almost record low. These ultra-low rates in 2020–2021 made monthly payments much more affordable, allowing buyers to stretch their budgets and bid higher prices.

However, the situation reversed sharply in 2022. As inflation surged, the Federal Reserve raised interest rates, and mortgage rates climbed above 6%, reaching about 6–7% by late 2022. Suddenly, borrowing became much more expensive. A mortgage that cost $1,500 a month at 3% interest could cost over $2,000 at 6% for the same loan amount.

This rate shock in 2022 cooled off many would-be buyers – some were priced out, and others simply decided to wait. Those who did buy in 2022–2023 often had to lower their price range or increase their down payment to keep monthly payments manageable.

First-Time Buyer Assistance

Throughout 2018–2023, New Jersey offered several first-time homebuyer assistance programs to help bridge the affordability gap. The New Jersey Housing and Mortgage Finance Agency (NJHMFA) provides special mortgages and down payment assistance.

In fact, NJHMFA assisted 2,313 families in 2023 with down payment support totaling $26.8 million. Programs like “Road Home New Jersey” offer down payment grants or low-interest loans to qualified first-time buyers. These programs became a lifeline for some buyers struggling to cover the steep upfront costs.

During 2022, when nationally the share of first-time buyers hit a historic low of 26%, New Jersey actually stepped up its assistance efforts. By helping thousands of buyers each year, these programs kept the door open for homeownership for many moderate-income households.

The Rise of Cash Buyers

Another notable financing trend was the rise of all-cash buyers in certain years. With intense competition for homes, some buyers (often investors or wealthier individuals) paid cash to win bidding wars. Nationally, about 20% of home purchases in 2022–2023 were all-cash, up from only 13% cash offers in 2021.

New Jersey saw its share of cash buyers too, particularly for lower-priced homes and investment properties. While most budget-conscious families can’t afford to pay cash in full, the presence of cash investors made the market tougher – first-time buyers with FHA loans sometimes lost out to cash bids.

The competitive financing landscape meant that many regular buyers had to get pre-approved, offer larger down payments, and even waive contingencies to have their offers accepted.

Changing Household Behavior

As market pressures grew, New Jersey households adapted their behavior. One noticeable shift was an increase in multigenerational living and purchases of homes to accommodate extended family. Nationwide, 14% of home buyers in 2022 bought a multi-generational home, often for caregiving or cost-saving reasons.

In New Jersey, this trend was even stronger – 19% of recent buyers purchased a multi-generational home. These could be larger single-family houses with enough room for grandma or a grown child, or homes with in-law suites. Common reasons included taking care of aging parents, adult children moving back in, or combining family resources to afford a better home.

The “Lock-In” Effect

Another behavioral change was how long homeowners stayed put. Interestingly, New Jersey sellers in the recent period had a somewhat shorter tenure: the typical New Jersey homeowner who sold in 2022 had lived in their home only 6 years before selling, whereas nationally the average was about 10 years.

This suggests that during the booming market, Jersey homeowners took advantage of rising prices and sold relatively sooner. However, by 2022–2023, a new factor encouraged people to stay put: the mortgage rate “lock-in” effect.

Many owners had refinanced or bought homes at 3% interest rates in 2020–2021. Once rates shot up to 6–7%, those owners were reluctant to move and give up their cheap mortgages. They feared having to buy a new home at a much higher rate. As a result, a lot of existing homeowners chose not to list their houses, contributing to the low inventory in 2022–2023.

Economic Pressures on Buyers

The period from 2018 to 2023 was marked by significant economic pressures that influenced homebuyer decisions. Chief among these were inflation and the rising cost of living. By 2022, inflation hit levels not seen in 40 years – consumer prices were 9.1% higher in June 2022 than a year earlier, the fastest increase since 1981.

Everyday expenses for New Jersey families – gas, groceries, utilities – all jumped up. This meant households had less disposable income to save for down payments or cover a higher mortgage. High inflation also pushed the Federal Reserve to raise interest rates aggressively, which, as discussed, drove up mortgage rates and cooled buying power.

Cost of living in New Jersey has long been high, with the state infamous for its property taxes (highest average property taxes in the nation). In this era, those costs continued to climb. Property taxes on a median-priced home (around $450k) can be $10,000 or more per year in New Jersey, a serious consideration for budget-minded buyers.

Regional Differences Across the State

New Jersey’s homebuying trends from 2018 to 2023 varied across different regions of the state, reflecting local differences in housing stock and affordability. Broadly, North Jersey (the counties closer to New York City) is the most expensive and competitive region, Central Jersey and the Jersey Shore counties have a mix of moderate and high-cost markets, and South Jersey (closer to Philadelphia or rural areas) tends to be more affordable.

In North Jersey’s suburbs, like Bergen, Essex, Union, and Morris counties, home prices were well above the state median. For instance, the median value of owner-occupied homes in Bergen County was about $459,000 (2014–2018), whereas in a rural South Jersey county like Salem it was around $185,000 in the same period.

By the early 2020s, those values climbed much higher, but the gap remained: wealthy Northern counties routinely saw median prices $600k+, while some Southern or western counties remained in the $200k–$300k range. This led many middle-income families to relocate within New Jersey in search of affordability.

Urban vs. Suburban Trends

Urban versus suburban trends also differed. New Jersey’s urban centers (Newark, Jersey City, Paterson, etc.) have more condos, multi-family houses, and rentals. Buyers in these cities often are younger or first-timers, and many condos were bought in Jersey City and Hoboken, especially by those who still worked in New York.

However, the pandemic saw a temporary cooldown in some urban markets as remote workers left cities for more space. By 2021–2022, suburban and even rural towns saw a boom in demand. According to survey data, 58% of New Jersey homebuyers in 2022 bought in suburbs or subdivisions, while only about 9% bought in rural areas and the rest in small towns or urban areas.

Small towns in New Jersey (e.g. in Hunterdon or Warren counties) also attracted buyers seeking a quieter, affordable locale – 26% of buyers chose homes in small towns rather than big metros. Even within suburbs, there was a trend of moving further out: families in inner-ring suburbs sometimes moved to outer suburbs or exurban communities where prices per square foot were lower.

South Jersey’s Affordability Advantage

South Jersey (Camden, Gloucester, Burlington, Atlantic, Cumberland, Salem counties) offered more affordability and thus saw relatively strong price growth in percentage terms. In fact, Zillow data through mid-2023 showed some of the largest year-over-year home value jumps in South Jersey counties – for example, Cumberland County’s typical home value rose about 8.3% from July 2022 to July 2023, the highest in NJ.

Camden County home values were up around 7.9% in that year. Part of this is because when North Jersey and Shore markets got too hot, buyers turned to places like South Jersey for better deals. Towns outside Philadelphia (like Cherry Hill, Deptford, Washington Township) became popular for those willing to commute or work remotely part-time.

Comparing 2018–2023 to 2008–2017

The 2008–2017 period began with the housing crash and Great Recession, and ended with a recovering, more balanced market by the mid-2010s. In contrast, 2018–2023 saw a tight seller’s market, a pandemic housing boom, and then an affordability crunch.

In 2008–2011, New Jersey home prices fell or stagnated due to the crash; many homeowners had negative equity and foreclosures were common. Buyers in those years could find bargains on foreclosed homes or short sales. From 2012–2017, prices slowly rose but it was a gradual recovery.

In 2018–2023, prices surged to new highs, greatly exceeding the 2000s bubble levels. Unlike the earlier period’s buyers who often got homes below peak prices, the later buyers were frequently paying record-high prices. Also, foreclosures were relatively rare post-2018 (especially after a 2020 moratorium on foreclosures), whereas the earlier period had distressed sales as a significant part of the market.

Market Conditions: From Buyer’s to Seller’s Market

The late 2000s to mid 2010s generally favored buyers for a while – there was more inventory and homes took longer to sell, especially during the recession. Sellers often had to make concessions. By 2013–2017 the market normalized, but without extreme competition.

In 2018–2023, it flipped to a strong seller’s market, especially 2020–2022 when inventory hit record lows. Homes often sold above asking price with multiple bids. For example, in 2021 it was common for a starter home in New Jersey to receive a10+ offers and sell for 5-10% over listing.

The percent of list price received by sellers went over 100% in the early 2020s (meaning homes on average sold for over asking), whereas in 2008–2012 homes typically sold below asking after price cuts.

Demographic Shifts

The earlier period saw a higher share of first-time buyers for much of it, especially because of stimulus like the 2009 first-time homebuyer tax credit. In 2010, first-timers made up nearly half of buyers as the government offered incentives and home prices were low.

In 2018–2023, the first-time buyer share actually hit historic lows due to high prices – dropping to only 26% nationally in 2022. (New Jersey did manage about 41% first-time in 2023, higher than the national average). This implies that young buyers had a tougher time in 2018–2023 compared to 2008–2017.

Many Millennials delayed buying in the early 2010s due to the recession’s aftermath, but those who were ready by mid-2010s benefited from moderate prices and low rates. Fast forward to the 2020s, and Millennials (and Gen Z starting out) faced fierce competition and rapidly rising costs, pushing some out of the market entirely.

References

1. NJ Realtors® Weekly—Jan. 24 – New Jersey Realtors®
2. What is the homeownership rate in New Jersey? – USAFacts
3. By Race – 2023 New Jersey Profile of Home Buyers and Sellers
4. In New Jersey, FHA Loans Accounted for Nearly 30% of Home Purchases – NJ Lenders Corp.
5. Home – NJ.gov – NJHMFA Annual Report
6. Consumer prices up 9.1 percent over the year ended June 2022, largest increase in 40 years – U.S. Bureau of Labor Statistics
7. Home Prices Went Up In Every NJ County Since Last Summer: See How Much – Patch
8. 75000-plus New Yorkers moved to NJ between 2021 and 2022 – NJ Spotlight News
9. New Jersey Median value of owner-occupied housing units, 2014-2018 by County – IndexMundi
10. New Jersey Housing Market Trends & Forecast 2024 – Innago
11. New Jersey Monthly Indicators – NJ Realtors®
12. Homeownership: Empowering New Buyers – NCSHA
13. United Van Lines: NJ tops list of most moved from states in 2023 – WRNJ Radio