Is Buying a House in Northern New Jersey About to Get More Expensive?

The Future of Home Buying in New Jersey: What You Need to Know

As we look ahead, the real estate landscape in New Jersey is poised for significant changes. Governor Murphy's proposed budget for 2026 includes an increase to the real estate tax, commonly referred to as the "mansion tax." This blog will delve into the implications of this proposal, the current real estate market trends, and what buyers and sellers can expect in the coming months.

Understanding the Mansion Tax

Currently, buyers purchasing homes valued at $1 million or more are subject to a 1% realty transfer tax. The proposed changes would double this fee to 2% for homes priced between $1 million and $2 million and increase it to 3% for properties exceeding $2 million. Additionally, there are suggestions for applying this tax to commercial properties as well. This increased burden could make purchasing a home in New Jersey even more expensive, prompting potential buyers to act quickly.

The Local Real Estate Market: A Deep Dive

Active Listings and Inventory Challenges

To understand where the market is heading, it’s crucial to analyze local real estate data. In Bergen County, the number of active listings has significantly decreased compared to previous years. As of March 2nd, active listings were far below those of 2024, indicating a tight market for buyers. With interest rates recently declining, many buyers are likely to re-enter the market. However, if inventory does not increase, this could lead to a highly competitive spring market.

New Listings: A Declining Trend

New listings are also a concern. As of March 2nd, the number of new homes entering the market was approximately 4.4% lower than the previous year. This decline in new listings is concerning, as it creates a supply-demand imbalance. Buyers are eager to purchase homes, yet there simply aren’t enough properties available. This scenario typically leads to rising prices, further complicating the buying process.

Sales and Median Prices: The Bigger Picture

Interestingly, the number of homes sold has outpaced last year’s figures, despite the shrinking inventory. This trend indicates a strong demand for homes, leading to a more competitive environment for buyers. The median listing price for new homes has risen by 7.35% year-over-year, while the median sales price shows a staggering increase of 10%.

Why Prices Are Rising

New Jersey is experiencing unique challenges that are contributing to this upward price trend. A lack of available land for new construction means that the market is heavily reliant on resale homes. Additionally, many existing homeowners are hesitant to sell, fearing they won’t find suitable replacements, especially as they transition into retirement or downsize.

The Months of Supply: An Indicator of Market Strength

The months of supply metric is a crucial indicator of market health. With a combination of high demand and low inventory, the months of supply in New Jersey has decreased compared to previous years. This trend suggests that if interest rates continue to decline, even more buyers will enter the market, driving prices higher.

Strategic Moves for Buyers and Sellers

For homeowners looking to sell, the current market presents a favorable opportunity. It is essential to strategically market and price your home to attract potential buyers. On the other hand, buyers should not hesitate to make offers even in a competitive environment. Working with knowledgeable agents and understanding the local market dynamics can provide a significant advantage.

Final Thoughts

The New Jersey real estate market is undergoing a transformation, influenced by proposed changes to tax codes and ongoing supply-demand issues. As a buyer or seller, staying informed and proactive is crucial to navigating this evolving landscape. Whether you’re looking to purchase your first home or sell an existing property, understanding these trends will help you make informed decisions.

For personalized assistance and guidance through the New Jersey real estate market, don't hesitate to reach out. We're here to help you strategize and succeed in your real estate endeavors.