All-Time High Home Sales Prices and Resumption of Economic Activity in Northern New Jersey
The Bergen-Hudson-Passaic, New Jersey Housing Market Area (HMA) is located in northern New Jersey and includes the counties of Bergen, Hudson, and Passaic. The HMA is part of the larger New York-Newark-Jersey City NY, NJ, PA Metropolitan Statistical Area. The current population in the HMA is estimated at 2.1 million. The HMA was hit particularly hard by the pandemic, as the area experienced more job losses and a rate of death nearly double the national average. A recent Comprehensive Housing Market Analysis highlighted the economic and housing market activity in the area.
Strong Forecast as Economic Activity Begins to Resume to Pre-Pandemic Levels
Nonfarm payrolls declined sharply in the HMA over the past year due to the pandemic and shutdown measures taken to reduce the spread of COVID-19. Over the past year, job losses occurred in every employment sector and the unemployment rate tripled to an average of 11.9 percent, which was higher than the state and national unemployment rates during the same period. As of March 2021, nonfarm payrolls totaled 92,200 in the HMA, a 9.9 percent decline from February 2020.
The education and health services sector and the wholesale and retail trade sector are the largest sectors, each accounting for 18 percent of nonfarm payrolls in the HMA. Over the past year, employment in these sectors declined by 11.9 percent and 11.7 percent respectively, for losses of more than 19,000 jobs in each sector. Although employment in the education and health services sector declined over the past year, from 2001 to 2019, it had been the only sector in the HMA to increase employment annually during this period. Five of the 10 largest employers in the HMA are in the education and health services sector. Other large sectors include the professional and business services sector and the government sector, accounting for 15 percent and 13 percent of nonfarm payrolls in the area, respectively.
Over the next 3 years, nonfarm payrolls are expected to increase by 2.4 percent annually.
Home Sales Prices Reach All-Time High
The HMA home sales market is slightly tight with an estimated vacancy rate of 1.3 percent. During the 12 months ending March 2021, home sales increased by 8 percent for a total of 26,150 new and existing home sales in the HMA. During this period, the average sales price increased by 14 percent to $574,900, which was an all-time high for the area. The homeownership rate in the HMA is 50.1 percent. Affordable housing is scant in the area, where median house prices have increased at a faster rate than area median incomes, leading many people to rent. The rental market is slightly soft with an estimated vacancy rate of 6.6 percent.
Over the next 3 years, demand is estimated for 3,775 new homes and 6,500 new rental units. At the time of this report, there were 990 new homes under construction and 9,900 new rental units under construction, which will help satisfy the demand for new housing. For more detailed information on the HMA, please see the recent Comprehensive Housing Market Analysis.