With close proximity to major urban areas, excellent schools, and a high standard of living, New Jersey is a great place for families and working professionals. To help you understand the associated costs, here’s a look at the cost of housing in New Jersey.
How Much Do Homes Cost in New Jersey?
The average price of a home in New Jersey is $471,472. However, it varies greatly depending on where in the state you look. For instance, the median home price in Edgewater is over $600,000. But in Hightstown, it’s only around $370,000.
Typically, the closer you are to New York, Philadelphia, or the shore, the higher the prices will be. But New Jersey also has rougher areas, and the median value of a home in Trenton is just under $275,00, whereas in Atlantic City, it’s around $185,000. So, prices vary depending on where you live, but most residents can expect values between $400,000 and $500,000 for the average home.
Are House Prices Dropping in New Jersey?
No, housing prices in New Jersey don’t seem to be dropping much in 2022. However, they do seem to be cooling off. Home prices across the state rose by 12% in 2020 and another 15% in 2021. They are expected to increase by 5% in 2022, which is still significant, yet not quite as dramatic in comparison.
However, the number of homes for sale has been dropping off statewide, which may keep prices consistent as there is also a slowing in demand due to rising interest rates. So, while a total market crash seems unlikely, homeowners should expect a slight reprieve from the dramatic increases witnessed over the past two years.
When Is the Best Time to Buy in New Jersey?
The best time to buy a house in NJ is between April and June. Springtime is when most homes hit the market, so it's when you'll have the most selection. However, if you're looking for a discounted price, those aren’t necessarily the best months to shop due to the stiff competition.
According to the data, listing prices tend to be the lowest in January because fewer people shop for a home in the winter. But inventory tends to be the highest in March, which gives you more options. However, mortgage rates also tend to be at their lowest in December, which is helpful if you’re looking to save money in the long term.
Average New Jersey Down Payment
The average down payment on a home in New Jersey is $29,500. Although banks often suggest homeowners put down at least 20% to avoid private mortgage insurance, the median down payment for borrowers across the country is 12%.
Some government loan programs, such as FHA loans, allow borrowers to get a loan with as little as 3.5% down, while VA and USDA loans offer zero percent down mortgages for qualified borrowers. But those planning on taking out a conventional loan should try to save around $30,000 for a down payment, depending on the size of the home loan you’re trying to get.
What Salary Do You Need to Buy a House in New Jersey?
The exact salary needed to qualify for a mortgage will depend on the loan size and the lender’s requirements. But most experts agree that you should not spend more than 28% of your salary on housing expenses. So, say you took out a $470,000 loan and made a $30,000 down payment (leaving an outstanding principal of $440,000).
The average interest rate for a 30-year fixed-rate loan in New Jersey is currently around 7%, which would put your monthly payment at just under 3,000 per month. That would mean your household income should be about $125,000 to afford the loan safely. However, that’s just one example and could change dramatically depending on the terms of the loan and your financial profile.
What Kind of Homes Can I Buy In New Jersey?
Fully Detached Home
A fully detached home is the most common type of housing in New Jersey. They’re traditionally found in the suburbs and rural areas. However, you can often find detached homes in metropolitan areas as well. Detached homes offer privacy, space, and land that are great for growing families. But they also come with a higher price tag and more maintenance responsibilities than a condo, co-op, or townhouse.
Condos are a common type of housing found all over New Jersey. With a condo, you get the benefits of homeownership without as much upkeep as a traditional detached home. Plus, condos often have access to shared amenities such as a pool, fitness center, lounge, etc. But you typically won’t have a private yard or the square footage of a traditional detached home, which may not be ideal for families.
A co-op is a specific type of building where the buyer purchases shares in a corporation that owns and manages a building and gets to live in a particular unit as a benefit. It differs from a condo in that the homeowner does not own their individual unit, but they often have more say over what goes on in the building itself. Co-ops are often associated with New York City but can also be found in New Jersey. They’re often cheaper than a condo of the same size, yet they require a strict application process which includes the approval of a board of directors.
A townhouse is a type of property that features multiple floors and shares one or two walls with an adjacent building but has a separate entrance. Townhouses are perfect for those who want more square footage than a typical apartment or condo but don’t want to deal with all the maintenance of a detached home. They’re most common in metropolitan areas; however, they can also be found in communities all over New Jersey.
A loft is a specific type of apartment building with certain identifying characteristics such as high ceilings, open concept floor plans, exposed rafters and brick, and large windows. They’re typically found in former industrial buildings that have been converted into residential housing. Lofts are highly in demand and often more expensive than a standard apartment. Plus, they’re typically found in urban areas where industrial buildings are more common.
Renting vs. Buying in New Jersey
Most residents in New Jersey own their own homes, and only about one-third are renters. New Jersey is a state known for its small towns and suburbs more conducive to homeownership than large cities.
Many people flock to New Jersey to settle down and avoid the renter lifestyle that is common in New York or Philadelphia. However, if you want to rent while you build your credit and save money to purchase a home, you can find plenty of apartment complexes and homes for rent, especially in cities like Newark or Jersey City.
New Jersey Housing Market FAQs
Should I Get Pre-Approved?
Yes, getting pre-approved for a loan is always wise before you start shopping for a home. If you’re just looking around to see what’s out there and aren’t ready to make an offer, then pre-approval isn’t as big a concern.
But pre-approval is a must if you are prepared to make a move and aren’t planning on paying cash. A seller likely won’t take your offer seriously unless you have a commitment from a lender, and you may miss out on your dream home if you have to wait to secure financing after viewing it.
Will I Get into a Bidding War?
It depends on the local market and what type of property you want to purchase. With rising interest rates, demand for homes is beginning to soften, so the crazy bidding wars common throughout the pandemic are unlikely to occur. However, if the local market is particularly hot or you’re after a property with exclusive features or amenities, you may face stiff competition.
How Long Before I Can Move In?
The standard closing process in New Jersey will typically take anywhere from 30 to 45 days after the seller accepts your offer. This period will give you time to do your due diligence and ensure the home’s condition is up to your standards.
However, when you can move in following the contract signing depends on what you negotiate with the seller. In some cases, you may be able to move in as soon as you sign the paperwork, while in other scenarios, the seller may request additional time to gather their belongings.
What Can Expect at a Closing?
The typical closing in New Jersey will be the same as almost anywhere else in the country. A day or so prior, you’ll do a final walkthrough to verify the condition of the property is up to par with what you expect.
Then on the day of the closing, you’ll meet with the seller and their representation to sign the paperwork and hand over the necessary funds (known as cash to close). Then, if everything goes smoothly, the attorneys will transfer the title into your name, and you’ll be the home’s new owner.