JC/Hoboken Housing Inventory Crunch

One of the defining characteristics of the 2022 housing market in Jersey City and Hoboken has been a lack of inventory. For the last decade, active housing supply in Jersey City and Hoboken has been decreasing relative to the population density. This trend aligns with the overarching lack of housing supply across the country, but the story in JC/Hoboken is much more interesting. It was not long ago when people thought the NYC and surrounding markets would not recover, that the crown jewel of this country would finally begin to wither away, yet in 2022 we see higher prices, more demand, and a resurgence of activity.

Markets are always a factor of supply and demand, but supply has played a much larger role in the Jersey City and Hoboken markets. 2020-2021 was the only time in the last decade where demand was the key factor. Let’s take a look at the data and see how the housing inventory has performed over the last 10 years and why supply is a much more important factor to our cities.

Below is the data on the number of Total Homes Sold in Jersey City Downtown and Hoboken during Q1-Q3 (January-September) since 2013. Although the data itself is useful, interpreting the data is even more important because the cities have evolved and gone through many market changes over the years.

One of the main considerations when interpreting the data is factoring in the population growth and new residential development. Jersey City’s population grew by approximately 18% over the past 10 years, according to the most recent census, more than three times as fast as the entire state. Hoboken also experienced massive population growth, increasing more than 20% over the past 10 years. As the population grew, residential development was rampant throughout the cities. Thousands of new condos and rental apartments were built, adding to the total potential housing supply, and yet, the number of homes selling each year did not increase at a similar pace. Quite the contrary, the number of homes sold was steadily declining.

The start of the pandemic in 2020 was the first time that demand played a larger role than supply because many renters were leaving Jersey City and Hoboken for the suburbs. This caused demand to quickly decline and prices to fall, but it did not last for long. 2021 saw a resurgence to the markets. People began to migrate back to the cities, sales increased, and most home prices rebounded to their pre-pandemic levels. The amount of sales in 2021 outpaced previous years because the market was correcting for the low sales volume in 2020. Now in 2022, the number of homes sold is on par with 2016-2019 levels, which is quite interesting given the increase of development and population.

Since 2013, the number of homes sold every year in Jersey City and Hoboken has remained fairly consistent, apart from the pandemic market conditions which are now considered a data outlier. With thousands of new condos being added over the last decade, it would be expected that the number of sales would gradually increase since there are more possible sellers every year, but this has not been the long-term trend. A fair prediction for 2023 would be that the number of sales will remain consistent with 2022 levels because this would be a reversion to the mean. There will be a whole new set of market and economic factors in 2023, but the desire to leave the cities has diminished which will cause more people to bid for the same quantity of homes. The supply will, once again, determine the markets.