By one measure, New Jersey’s residential market is robust, as rising sales are putting a dent in inventory. Yet the price tags on some luxury homes are giving buyers pause — and spurring competition among brokerages for those home-seekers who can afford the hefty sums.
“We feel the $2 million properties aren’t moving as fast,” said Soha Fontaine, the broker/owner of a new RE/MAX luxury residential property office in Hoboken. The city has 40 homes listed for $2 million or above, which she believes to be a record.
With more than $400 million in single-family home listings, RE/MAX is the fourth-largest brokerage in The Real Deal’s ranking of the top residential brokerages in the priciest counties in Northern New Jersey — Bergen, Essex and Hudson. The top five brokerages on the list each had more than $400 million in listings. The next five brokerages each had listings ranging from roughly $100 to $200 million.
These brokerages have a high number of luxury home listings, putting them squarely in one another’s crosshairs in the rough-and-tumble fight for affluent homebuyers.
Fontaine has observed buyers’ tightening purse strings. She recently sold a $2 million Hoboken townhouse to a couple relocating from North Carolina for a corporate job who were absolutely adamant about not going over that price point despite being able to afford much more.
Overall, the Garden State’s residential market is healthy. In the first quarter of 2016, the inventory of residential properties for sale had declined 7.8 percent from the end of 2015 while closed sales were up nearly 20 percent from the previous quarter, according to New Jersey Realtors, a trade association. Still, some of the region’s luxury brokers are finding they have to look farther afield to attract wealthy buyers for the big-ticket properties.
“It’s a constant battle for positioning to get in front of those high-end buyers,” said Bill Boswell, a top-selling agent at Coldwell Banker Residential Brokerage in Wycoff, New Jersey. Coldwell Banker is the third-largest brokerage in TRD’s ranking, with listings valued at $537 million.
Boswell said out-of-state buyers were vital to his team, which sold $86 million in 2015. He said brokers often competed for these buyers online using creative multimedia marketing campaigns and social sites like Instagram.
Boswell said a big advantage with out-of-state buyers was their willingness to look at a wider range of properties. “When someone doesn’t have ties to a community, to family in the area or to a school system,” he said, “it creates a much more mobile situation.”
On the flip side, he has found, some out-of-state buyers gasp when they learn about Jersey prices. Boswell has worked with pharmaceutical employees relocating from a state like Indiana, where the average home sales price was $159,702 in 2015. The average pricing is more than double that figure in New Jersey. And asking prices are much higher in popular bedroom communities across the river from New York, where, for example, the average listing price in Bergen County recently topped $600,000.
“I don’t recall anybody backing out from a move,” he said. “But I have seen people decide to rent because they are not comfortable enough with the area to commit those kind of dollars.”
Long a staple of the Manhattan residential market, foreign buyers are beginning to cast their gaze across the river to New Jersey. Some 3 percent of all U.S. home sales to international buyers were in New Jersey in the 12 months ending in March 2015, up from 2 percent five years earlier, according to the most recent report by the National Association of Realtors. Though not among the top four states — California, Florida, Texas and Arizona — New Jersey is considered a “major” destination for international home buyers.
Compared with buyers from the Midwest, many foreign buyers are coming from markets where housing prices are higher, and many can afford to pay in cash. Although prices in the New York and New Jersey metropolitan area are high by U.S. standards, they are lower than in many major foreign cities. In a 2015 National Association of Realtors study, median prices for a 1,300-square-foot apartment were $1.6 million in New York City, $2.2 million in Moscow and $4.1 million in Paris.
Arlene Gonnella sells homes in Short Hills for Weichert Realtors, the fifth-largest brokerage on our list. She said that even buyers from Europe and Asia have a sophisticated knowledge of the New Jersey housing market, and they are familiar with the highly ranked Millburn Township school district, which gives a lift to local property values.
Gonnella, whose team had $107 million in sales in 2015, recently sold a Short Hills home near the $1.89 million asking price to a couple moving from Singapore. The property is situated just a block and a half from Deerfield Elementary School. “They wanted it within walking distance to the school,” she said.
ast summer, Gonnella sold a similar Short Hills residence on Lawrence Drive to a couple moving from Paris, who also indicated their interest in a property near Deerfield Elementary School. Yet this couple said they were planning to send their children to private school. “They thought having a good public school system would be good for the resale value,” Gonnella said.
Bridge and tunnel
Brokers say the most common out-of-state buyers are what you might expect — New Yorkers with growing families who can’t find the space they want at a price they can afford in Manhattan or Brooklyn.
“They are most interested in the schools and a young community,” said Jeri Green, a realtor in Tenafly who was the top producer in 2015 for individual sales volume in New Jersey at Prominent Properties Sotheby’s International Realty.
Prominent Properties was the top brokerage on TRD’s list, with nearly $1 billion in single-family home listings in Northern New Jersey, in large part because of the high values of many of their homes on offer. That put it well ahead of the second-largest brokerage, Keller Williams Realty, which had just over $600 million in listings. Green, who estimated that up to 20 percent of her buyers were relocating from New York, focuses on commuter towns near the George Washington Bridge, such as Tenafly, Demarest, Cresskill, Norwood, Closter and Haworth.
Rents have climbed so high in New York City, Green said, that many of her clients found they were able to buy large homes for less than they were paying their landlord.
Green’s clients are often on a budget, with $1.5 million being the limit for many of her buyers. “It’s the upper end of the market that seems to be struggling,” she said. “The $3-million-and-up resales have really slowed down.”