Much has been written about Jersey City’s first property revaluation since 1988 in terms of what its impact would be on the city’s housing market, especially in Downtown neighborhoods where the estimated tax bill ended up jumping around 67% for 1-4 family homes and 24% for condominiums. A Pure Properties Market Report for the first quarter of 2018 partially confirmed what some had feared, as Downtown had a notable surge in 1-4 family homes coming to market for sale following the calculation of new tax bills.
Total listings of Downtown properties increased 238% from 13 in quarter one of 2017 to 44 in 2018’s first quarter, but sale prices remained steady for both homes and condominiums in this year’s first quarter despite the influx of inventory. The latest Pure Properties’ Q2 Market Report suggests that while Downtown homeowners might not be out of the woods yet, sale prices have still remained steady in Jersey City’s leading neighborhood.
In 2018’s second quarter, 1-4 family homes had an average sale price of $1.51 million, up 6% from Q1 and rising 21% over the year. Condominiums didn’t fare quite as well, dipping 6% in Q2 to average $678,000, a 7% drop since 2017’s second quarter. Average rent in the neighborhood dropped a modest 2% in the quarter to $2,550/month.
While it’s probably still too early to conclude that the Downtown market has emerged completely unscathed, there are some promising numbers in terms of demand. 1-4 family homes spent an average of just 39 days on the market in 2018’s second quarter compared to this time last year, when similar homes were listed for 118 days on average.
David Orr, Executive Director and COO of Dixon Advisory, remarked that 2017’s second quarter also had several properties that were sold at clearance levels, as there was a lot of uncertainty at the time. “Even though the tax reval has had a large cost to Downtown homeowners, all kinds of markets value certainty,” he says. “Now we have certainty on taxes.”
Orr also believes that the increase in 1-4 family homes listed for sale, which in theory could drive down prices, has actually given buyers more options. “The high-quality homes are selling through quickly and at good prices, but the rest are sitting on market,” he explains. “The quarterly data shows that 1-4 family homes sold do indeed average 39 days on the market, but properties still currently on the market have been there on average for 66 days, with over a quarter of them listed for over 120 days.”
The slight drop in condominium prices might be explained by new supply coming from completed developments or the condominium conversion of existing structures, something that isn’t happening with 1-4 family homes. “Despite all the new condominium construction, there is very little new supply of 1-4 family homes, so the overall supply of these types of properties is basically fixed, or even diminishing,” Orr says.
Essentially, Orr sees quality homes on the market selling because the buy side of the market is still behaving rationally despite some of the tax changes that have taken place. While the reval’s impact has not been fully factored into sales throughout the region, proven demand for homes in the face of increased inventory, along with stable median sales prices, perhaps has started to provide a sense of reassurance in Downtown’s ability to appreciate even in the face of tax increases.
Stayed tuned, as we explore more of Pure Properties’ Q2 Market Report and analyze the current state of other Jersey City neighborhoods and Hudson County cities.