Unprecedented Supply in Jersey City & Hoboken

Pavel Saikin
Jan 18, 2024
2 min read

Updated: May 8, 2024

The lack of housing inventory throughout 2023 has been reported and documented to exhaustion. With the release of my Annual Market Reports for Jersey City and Hoboken, we can assess the real damage and identify the evolving 2024 market dynamics.

The number of 'Homes Listed' and 'Homes Sold' in 2023 decreased by an average range of 25%-30% in Jersey City and Hoboken. Such is a significant decline cannot be sustained, but it is unlikely for a 25%-30% increase in 2024. Transaction volumes in 2020-2022 were unprecedentedly high compared to years prior, and just as the mortgage rates of 2.5% are gone forever, so too are such elevated inventory levels. For now at least. A calculated expectation for 2024 requires a reversion to the mean, specially the 5yr inventory average. Although 2019 may seem to be a suitable anchor year for pre-pandemic conditions, it does not factor the development of new homes, growing populations, and the prevailing market conditions.

The most notable market condition is the average 'Days On Market'. As mortgage rates ascended to multi-decade highs, home buyers were forced out of the market, but many of those buyers were also home sellers. This ultimately led to the low inventory conditions. The extent to which supply and demand fell is reflected in the 'Days On Market'. Across most home criteria in Jersey City and Hoboken, the 'Days On Market' decreased, indicating that supply fell faster than demand.

How will the market react to lower rates?

Declining mortgage rates will spur on more demand, but there will be increased supply from owners that can finally afford to upsize or relocate. An unexpected piece of supply will also come from landlords that rented their primary homes in 2020-2022 and will look to avoid capital gains tax before reaching the 3-year exemption.

How much is supply expected to increase?

Based on the 5-year average for 'Homes Listed' and 'Homes Sold' throughout Jersey City and Hoboken, inventory is expected to increase approximately 14%-18% in 2024. Certain home criteria may experience greater or lesser changes in supply, but a plethora of factors can shift the markets and cause new trends to emerge. There may be higher demand than expected from consistent population growth spurred on by thousands of new rental units, or we might see trend-chasing sellers that oversupply the market. Will demand rise in tandem to supply, or will it outperform? Only time will tell...