Pandemic-weary New Yorkers, eager to escape the confines of city living, may push up suburban New Jersey home prices by the most in 16 years.
That’s the forecast by real estate consultancy Otteau Valuation Group for four counties close to New York City: Bergen, Essex, Union and Middlesex. The firm sees a dip in single-family home prices this year, followed by a 6% jump in 2021, the biggest annual increase since 2005.
“This looks like the 1970s, which was a time when people were leaving the cities,” Jeffrey Otteau, president of the firm, said in an interview. “You had tremendous growth in places like Long Island and Westchester County, at the expense of the Manhattan economy.”
New York’s two-decade urban revival drew in families who put up with dense living conditions and costly housing as trade-offs for a short commute. That reduced demand for suburban properties, keeping a lid on values and making remote, multiacre estates especially hard to sell.
Now, three months into the city’s lockdown, those norms are fading fast. New Yorkers no longer tethered to their Manhattan workplaces are free to move -- and those with the means to splurge are seeking big houses, with space for home offices and backyards for socially distant entertaining. Prices at the highest end of the market can be comparable to a three-bedroom apartment in Manhattan.
High-End Deals
In May, contracts to buy New Jersey homes priced at more than $2.5 million soared 69% from a year earlier, according to Otteau’s data. The increase came entirely from counties just beyond the city.
“When you go from a $3 million apartment to a $3 million home, you triple or quadruple your space,” Otteau said. “You really don’t care if the mayor shuts down the beaches, or the mayor shuts down the parks, because you’ve got all that in your backyard.”
In the past year, it took 101 days on average to sell a $3 million-plus home in the prestigious Short Hills section of Millburn, according to data compiled by Tony Verducci, a luxury broker with Sotheby’s International Realty. But last month, Verducci sold two such homes in the Essex County community, each within 15 days of their listing.
A seven-bedroom Short Hills property with a movie theater and a small basketball court found no takers before the pandemic. Verducci brought it back to the market on May 6 for $3.675 million and got two competing bids.
“You’re taking everything you used to do outside and doing it in the home,” Verducci said. “Everyone wants a home gym because their gyms are closed. They want a nicer kitchen because they’re cooking now. When you’re working from home, you kind of need a Zoom room.”