How High-Income Homebuyers in New Jersey Are Shaping the Market

New Jersey’s housing market has seen major shifts in recent years, especially among its wealthiest homebuyers. A wave of high-earning households is reshaping the landscape from suburban mansions to beachfront getaways.

The Elite Segment and Their Impact

Luxury house in New Jersey — Shutterstock

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Households making $500,000 or more per year represent a small elite slice of New Jersey residents, roughly the top 1-2% by income. Though few in number, these high earners have an outsized impact on the real estate market. They tend to buy in the luxury segment, pushing up prices and demand in certain areas.

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In 2022, only about 12% of U.S. homebuyers earned above $200,000, so a $500K income is truly exceptional. In New Jersey, which has one of the highest concentrations of wealthy households, over 10% of tax filers earn above $200K. These affluent buyers influence local markets through the properties they choose and the trends they set.

During 2018–2023, homes purchased by this income group ranged from expansive suburban estates to upscale city condos. Many high-income buyers upgraded to larger houses or more desirable locations as their careers advanced. Others downsized from older mansions into luxury condos or second homes as children moved out.

Because these households can afford high prices, they often drive competition in New Jersey’s priciest tiers. In fact, the share of homes valued over $1 million in North Jersey nearly doubled from about 4% in 2019 to almost 10% by mid-2023. In other words, nearly 1 in 10 homes in the Newark metro (North Jersey) is now a “million-dollar home,” a dramatic rise fueled by wealthy buyers and surging prices.

What They’re Buying

Upsizing Trends

Many wealthy buyers are upsizing – moving from starter homes or city apartments to spacious single-family houses in the suburbs. The typical New Jersey buyer (across all incomes) already favors detached single-family homes (about 74% of purchases), and high earners especially seek out properties with more space and privacy.

During the COVID-19 pandemic, this trend accelerated as remote work became common. Affluent families left crowded cities for larger houses with yards and home offices. In 2020 and 2021, buyers with means went on a “buying spree,” doubling the number of luxury home sales (especially in the $2–3 million range) compared to 2019. Upscale suburban towns saw bidding wars for homes that offered extra bedrooms, dedicated work-from-home spaces, and big backyards.

Downsizing Patterns

Some wealthy New Jerseyans have been downsizing. Empty-nesters and older professionals who no longer need a 5-bedroom house are selling their large suburban homes (often to younger high earners) and moving into high-end condos or smaller homes.

These downsizers often stay in New Jersey but opt for low-maintenance living – for example, a luxury condominium in a walkable downtown like Jersey City or a 55+ active adult community. There is also a trend of retirees in this income bracket relocating out of state (often to Florida or other low-tax states). Within New Jersey, upscale downsizers still have relatively few options (new luxury condo developments are limited), so many remain in single-family homes longer than they might prefer.

New Construction vs. Existing Homes

New construction is a part of the picture, but not a huge piece of it. New Jersey is a mature, built-up state with limited large-scale construction. Statewide, only around 5% of recent home purchases were brand-new homes – the other 95% were previously owned houses.

High-income buyers do crave new amenities and custom features, but they often achieve this by renovating older homes or doing tear-down rebuilds. For example, in north-central Jersey’s wealthy enclaves, it’s common to replace an old house with a new custom-built one on the same lot. Entirely new developments are rarer, but there have been a few aimed at the luxury market.

Housing Types

The majority of these buyers choose houses. They are often family households, and New Jersey’s high-end condo supply is limited to a few areas. Still, luxury condos and townhouses have their niche.

In Hudson County’s “Gold Coast” (Jersey City, Hoboken, Weehawken), wealthy professionals are purchasing condos in tall towers that offer amenities and shorter commutes. And some affluent empty-nesters are opting for posh condos in towns like Morristown or Princeton to enjoy a walkable lifestyle. But by and large, “detached, single-family, suburban” is the name of the game for high-income buyers.

Demographic Profiles

middle age couple buying house — Shutterstock

The profile of a $500K+ household buying a home in New Jersey tends to be a middle-aged married couple, often with children. Statewide data shows about 63% of New Jersey home buyers are married couples, and that share may be even higher in the top income brackets (many have dual high earners).

Their ages can vary, but many are in their 40s or 50s – prime earning years. The median age of NJ home buyers recently was 46, but high-income buyers skew a bit older, as it takes time to reach a $500K salary. These families often include children at home – around 36% of NJ buyers have kids under 18.

Professional Backgrounds

Professions for this group frequently include finance (Wall Street executives, hedge fund managers, bankers), technology entrepreneurs, top doctors and lawyers, senior corporate executives, and owners of successful businesses.

New Jersey’s economy, especially in North Jersey, is tied closely to New York City’s financial sector – so a big portion of $500K earners are finance professionals who choose to live in NJ and commute or work remotely. The pharmaceutical and healthcare industries in NJ also create high earners (e.g. medical specialists or pharma executives).

Many of these buyers have flexible work arrangements – by 2021–2023, remote and hybrid work was common in high-paying jobs, which allowed them to live further from the office. That flexibility encouraged moves to locations once considered “too far” from Manhattan.

Financial Characteristics

With very high incomes (and often substantial assets), many can make large down payments or all-cash purchases. Nationwide, the luxury home sector sees a higher rate of cash purchases and less dependence on mortgages.

Even when they do finance, high-income buyers easily qualify and often secure the best rates. This means that even when mortgage rates rose in 2022–2023, many wealthy buyers were insulated from the full impact – they either had cash or enough income that a higher payment was manageable. Their spending is more influenced by stock market trends and tax policy than by interest rates alone.

Lifestyle Priorities

The pandemic shifted many preferences: suddenly home offices and dedicated Zoom rooms became critical. Affluent buyers started prioritizing properties that could comfortably accommodate remote work for two adults plus maybe some home-schooling space for kids.

Large yards or even swimming pools became more desirable when public facilities were closed – in fact, “staycation” amenities like pools climbed high on wishlists, tying with home offices as the second-most popular feature for luxury buyers in one 2021–2022 survey. High-end buyers have always liked nice kitchens and master suites, but now they also seek outdoor living spaces, gyms, and entertainment rooms to enjoy at home.

Tax Policy Impact

The SALT Cap Effect

One big influence on high earners’ homebuying behavior has been tax policy – especially the 2018 federal tax overhaul. In 2018, the Tax Cuts and Jobs Act capped the SALT (State and Local Tax) deduction at $10,000. This was a major hit for affluent residents of high-tax states like New Jersey.

Previously, a homeowner paying $30,000 in NJ property taxes (not uncommon on a multi-million dollar home) could deduct that from their federal taxes; after 2018, only $10K could be deducted. Essentially, owning an expensive home in New Jersey became less tax-friendly for the wealthy.

This SALT cap had a few effects. Some high-income buyers became more hesitant to purchase very expensive homes in New Jersey, since the ongoing tax costs (property tax + state income tax) were less shelterable. Realtors noted that the cap “effectively increases the cost of owning” in high-tax areas and could reduce demand.

We started to see a trend of wealthy households reconsidering their location: a number of them accelerated plans to change residency to low-tax states or at least buy second homes there. In the years immediately after 2018, New Jersey saw an uptick in out-migration of high earners.

New Jersey’s State Tax Policies

New Jersey’s state tax policies also come into play. The state has a “millionaires’ tax” (a higher income tax rate for income over $1 million) – which doesn’t directly hit those making $500K (since the top NJ bracket kicks in at $1M). However, even below that, NJ’s income tax and famously high property taxes are a consideration.

In 2020, the state actually expanded the top tax bracket to include income over $1M (previously it started at $5M), reinforcing NJ’s status as a high-tax environment. High-income homeowners are very aware of these costs.

In short, tax changes created a bit of a double-edged sword: on one hand, New Jersey’s excellent schools, infrastructure, and proximity to NYC remained a draw for wealthy families; on the other hand, the financial hit from taxes made some think twice about buying or staying.

Economic Factors

From 2018 to 2023, the broader economic climate swung from one extreme to another. For homebuyers, mortgage rates and the state of the economy are key factors. High-income buyers are somewhat buffered (since they often have large down payments or pay cash), but they’re not completely immune.

The Interest Rate Rollercoaster

In 2018, mortgage rates were around 4–5%, and the housing market was steady. By 2019 they dipped, and then in 2020–2021 we hit historic rock-bottom interest rates (near 3% for a 30-year loan). These ultra-low rates were a catalyst for many wealthy households to buy property.

Even for a rich buyer, a 3% mortgage is attractive – money was so cheap that some preferred to finance and invest their cash elsewhere. This contributed to the buying frenzy of 2020-21. High earners who had been on the fence jumped in to seize the moment, upgrading to million-dollar homes with minimal borrowing costs.

By 2022, however, the Federal Reserve began raising interest rates sharply to combat inflation. Mortgage rates more than doubled, reaching around 6–7% – the highest in about 20 years. This sudden rise had a chilling effect on the overall housing market, but the high-end segment proved relatively resilient.

Many middle-class buyers were priced out as monthly payments surged, but affluent buyers often continued their plans, albeit sometimes scaling back a bit. In North-Central NJ, for example, overall home sales volume dropped by 21% in 2023 compared to the year before, reflecting the slowdown. Yet interestingly, the luxury sales held strong or even increased in certain months – in December 2023, sales of $2M+ homes in that region were up 46% year-over-year despite the rate environment.

Inventory Challenges

Another effect of higher rates was on housing inventory. Many existing homeowners (even high-income ones) with low-rate mortgages became reluctant to sell and give up their 3% loan for a new 7% loan. This “lock-in effect” further choked the supply of homes for sale across New Jersey.

By 2023, New Jersey’s inventory of homes on the market hit extreme lows. There were only about 12,000 single-family homes for sale in Dec 2024, versus 41,000 in Dec 2014 – a staggering drop. This shortage propped up home prices even as sales volume dipped. For the wealthy buyer, it meant fierce competition for the few desirable listings available.

The COVID-19 Effect

It’s impossible to analyze 2018–2023 without focusing on the COVID-19 pandemic’s huge impact on housing choices. For high-income households in New Jersey, 2020 was a turning point.

The Urban-to-Suburban Shift

Pre-2020, there was a notable trend of younger affluent people favoring city life. Many Millennials and Gen Xers in the mid-2000s and 2010s flocked to urban centers – places like Hoboken, Jersey City, or even across the river in Brooklyn and Manhattan. They enjoyed the walkability, nightlife, and proximity to work. Suburban New Jersey (the classic bedroom communities) sometimes struggled to attract this cohort.

Then COVID hit. Practically overnight, priorities flipped. In 2020, dense cities went into lockdown, and the perceived drawbacks of city living (small apartments, no private outdoor space, shared elevators) became acute. High-earning New Yorkers started eyeing New Jersey’s spacious suburbs as a refuge.

As one NJ brokerage president put it, there was a “renewed appreciation” for the green spaces and quality schools of North-Central New Jersey towns. The media even called it an “exodus” from the cities. Wealthy families decamped from Manhattan or Jersey City high-rises and rushed to buy houses in towns like Short Hills, Summit, Montclair, and Alpine.

Suburban Price Surge

New Jersey’s high-end market benefited greatly from this urban flight. Prices in the suburbs shot up. For instance, overall NJ home values jumped roughly 30% or more in just two years. Even very expensive properties that had sat on the market pre-COVID started selling.

The number of luxury sales (e.g. $2M+ homes) in North-Central NJ doubled from 2019 to 2021, largely due to pandemic-fueled buying. Areas like Morris, Somerset, and Bergen Counties – known for large lots and upscale homes – saw renewed interest from city dwellers seeking a change.

The Rise of Second Homes

Within New Jersey, there was also movement from the more densely populated cities and inner suburbs out to the shore and country areas. Suddenly, owning a vacation home in driving distance felt not like a luxury but almost a necessity for those who could afford it.

High-income families who normally might vacation abroad instead bought second homes at the Jersey Shore or in the Pocono Mountains. Shore towns saw an explosion in demand for beach houses in 2020–21. For example, Cape May County (the “Jersey Cape” area) became the hottest second-home market in the nation: nearly 50% of all mortgages there in 2022–23 were for second homes (vacation properties) – the highest share in the U.S.

Migration Patterns

It wasn’t just New Yorkers coming in; some high earners came from even farther. During the pandemic, a few buyers from California or other states chose New Jersey to be nearer to family or to escape natural disaster risks elsewhere. Remote work made such moves feasible.

The flip side of these shifts is that New Jersey also saw some high earners leave during this period, especially post-pandemic. While many moved into NJ for space, others moved out for tax or lifestyle reasons. States like Florida and Texas (with no income tax and warm weather) attracted a share of NJ’s wealthy, particularly retirees or those who realized they could work remotely permanently.

Regional Hotspots

New Jersey offers a diverse range of regions, and high-income homebuyers have gravitated to a few key hotspots:

Bergen County (Northeast NJ)

Long the bastion of wealth in NJ, with suburbs directly across from NYC. Towns like Alpine, Saddle River, Tenafly, and Englewood Cliffs are home to executives and celebrities seeking large estates with privacy. Bergen County consistently has some of the most home sales over $1 million.

Proximity to Manhattan (some towns are 15–30 minutes away) makes it ideal for finance professionals. Even middle-tier towns here saw price spikes; the median single-family sale price in Bergen hit around $717,500 recently, well above the state median.

“Gold Coast” Urban Waterfront (Hudson County)

This includes Jersey City, Hoboken, and surrounding areas along the Hudson River facing NYC. It became extremely popular, especially for younger wealthy buyers who wanted city living without NYC prices (though Hudson County is no bargain either!).

Jersey City, in particular, has boomed: it built housing at more than twice the rate of New York City during the 2010s, adding thousands of high-end apartments and condos. Its population surged (the city grew nearly 60% from 2010 to 2020). By 2023, Jersey City was often dubbed NYC’s “sixth borough.”

North-Central NJ Suburbs

This area, roughly west of Newark and New York City, saw a huge renaissance in the pandemic. Towns in Union/Essex like Short Hills (Millburn), Summit, and Livingston have always been wealthy enclaves due to short train commutes and top schools.

Further west, Morris and Somerset counties offer even larger properties – places like Mendham, Bernardsville, Far Hills, and Warren have multi-acre estates and horse farms. In 2018–2019, these outer suburbs were a bit quieter market-wise; by 2020–2021 they were on fire.

The Jersey Shore

The shore isn’t just for summer rentals – it’s increasingly part of high-net-worth individuals’ real estate portfolios. Monmouth County towns like Rumson, Spring Lake, and Deal have long been havens for wealth (many finance executives live in Rumson and enjoy its beachside luxury while commuting to NYC by ferry).

Moving further south, Cape May County (encompassing Avalon, Stone Harbor, Cape May, etc.) became the No.1 second-home market in America by 2022. Nearly half of recent buyers there were acquiring vacation homes, often expensive ones near the ocean. The median list price in Cape May County in 2024 was about $973K, showing how high values have climbed.

Second Homes and Investment Properties

Many $500K+ households don’t stop at just one home. The pandemic triggered a surge in second-home purchases: national rate locks on second-home mortgages more than doubled at one point in 2020. New Jersey’s wealthy were part of that wave.

Owning a shore house or a mountain cabin became more than a status symbol; it was seen as a safe retreat and an investment in family enjoyment. High earners who normally might fly to Europe instead invested in a beach property. This led to substantial price increases in NJ vacation markets (e.g. bidding wars for lakefront houses in Sussex County or beach condos in Ocean City).

By 2023, second-home demand cooled from its peak, but remained above pre-pandemic norms. According to one analysis, second-home buyer incomes tend to be about 160% higher than primary-home buyers’ incomes, which aligns with the idea that only the well-off can afford multiple properties.

In terms of investment properties, some high-income individuals also expanded their real estate portfolios for rental income. With low interest rates through 2021, a $500K earner could easily buy a few rental condos or a multifamily building. North Jersey saw an uptick in small investors buying suburban single-family homes to rent out.

Comparing 2008–2017 vs. 2018–2023

Luxury Mansion New Jersey — Shutterstock

How do the homebuying trends among $500K+ households in 2018–2023 differ from the prior decade (2008–2017)? The contrast is striking:

Market Cycle and Pricing

2008–2011 were crash and recession years. High-end homes in NJ often took longer to sell and many lost value. Wealthy buyers were cautious in those years, sometimes snapping up bargains in 2009–2012 but also holding off if their own finances were hit.

From 2012 to 2017, the market recovered slowly. Prices in NJ appreciated, but not explosively. In fact, by 2017, many NJ areas still hadn’t exceeded their 2006 peak prices (especially when adjusted for inflation).

Contrast that with 2018–2023: after a modest start, we saw record price growth post-2020. By 2023, NJ home values were far above mid-2000s peaks. For example, the average single-family home price in NJ went from about $309,000 in 2014 to $699,000 in 2024 – more than doubling in a decade.

Tax Environment

Before 2018, the SALT deduction had no cap. High-income NJ homeowners could deduct all their hefty property taxes and state income taxes on federal returns. This effectively subsidized the cost of owning in NJ.

Starting in 2018, the wealthy felt a new pinch that they hadn’t in the prior decade. This likely contributed to the accelerated outmigration post-2018. Pre-2018, a Wall Street banker might have bought a $2.5M NJ home and written off big taxes; post-2018, that same person might cap their NJ budget at $1.8M and perhaps invest the rest elsewhere.

Demographics and Preferences

In 2008–2017, a lot of high-income home buying was driven by Baby Boomers and Gen X. By 2018–2023, the landscape changed: Boomers are now late 60s/70s and many have already made their housing moves (or are renting, or moved to Florida).

Gen X and older Millennials are the drivers now. Millennials in their late 30s and early 40s have entered high-paying careers; some founded startups or climbed corporate ranks to reach $500K incomes. They generally showed slightly different tastes – for example, millennials initially preferred urban amenities, but as they had kids, many shifted to suburbs albeit with a desire for more modern, updated homes.

Psychological Factors

An intangible but important difference is confidence. The late 2000s into early 2010s rattled people – even rich households felt uncertainty about jobs, economy, and housing as an investment (after seeing values crash).

By the late 2010s and especially post-2020, there was a sense of real estate being a safe haven and FOMO (fear of missing out) kicked in. The wealthy saw prices rising and jumped in to not miss the boat. The mindset shifted from caution in 2009 to aggressive acquisition in 2021.

In summary, compared to 2008–2017, the years 2018–2023 were far more dynamic for high-end homebuying in New Jersey. We went from a slump to a surge. Despite challenges like the SALT cap and low inventory, New Jersey continues to be a place where a segment of America’s affluent choose to put down roots, drawn by the state’s unique mix of location, lifestyle, and opportunity.