For brokers in northern New Jersey, starter home deals move with remarkable velocity.
“The minute we have a starter home for sale now, it hasn’t been a week, and we have offers,” said Deborah Bruen, who heads up a team at Coldwell Banker in Morristown.
Single-family homes are still the preferred choice for new buyers, and inventory is particularly low. The number of single-family homes available for sale dropped about 23.5 percent from December 2017 to the same month in 2019: from 9,046 listings to just 6,919, according to data from the North Central Jersey Association of Realtors — which covers Morris, Essex, Union, Somerset and Sussex counties . Overall new listings, including single-family homes, townhouses, condos and properties in adult communities, dropped a little more than 14 percent, from 2,016 in December 2018 to 1,728 by December 2019.
Paula Clark, who leads a group at Coldwell Banker in Hillsdale, said it’s important to keep in touch with their buyers because, when something comes on the market, “we need to be at their door within minutes and then tell them exactly what they need to do.”
Adding yet more pressure to the situation: The number of buyers has also increased, as more millennials enter the market seeking homes under $500,000, according to Linda Stamker, sales associate at V&N Realty Group in Teaneck. “In 2019, 3,602 homes sold under $499,000 in Bergen County. It was 3,500 the year before. In 2015 it was 3,440.”
So homes priced under $500,000 naturally get a lot of interest.
“I listed a house in Teaneck a couple of months ago for $450,000. I got 27 people at an open house. I got three offers, and they went over asking,” Stamker said. She recently listed another house in Teaneck for $425,000 and got so much interest she canceled the open house.
Bergen County saw a median closing price of $462,000, according to December 2019 data from Zillow. Clark, who primarily covers the northern Pascack Valley area, said she keeps close tabs on the market — including houses that aren’t listed.
“Inventory’s not always on the MLS or on Zillow, and I go on many listing appointments, and they’re not ready to sell.”
Clark said she’ll often tell clients about a property before it’s listed. “Sometimes I can actually put it together before it goes live on the MLS or on Zillow,” Clark said. “It’s a win-win situation for everybody because I also say, ‘This is the price, there’s no negotiating,’ so the seller knows they’re getting their price.”
Sometimes sellers get tired of waiting for the right offer and pull the listing. After they’ve been off the market for a year, Clark said she’ll call them to say, “‘You know, we just got this buyer, and they love this home which reminds them of yours. What do you say we have an appointment and we meet with you?’”
Bruen, who covers most of Morris County but mainly Morristown, Morris Township, Morris Plains and Randolph, said about 40 percent of her business is first-time buyers. If clients are willing to pay more, they choose Morristown and Morris Township; if they want more for their money, they go out to Randolph, she said.
One first-time buyer not only ended up farther west but also had to accept septic rather than public utilities. “They started with the forever-home mindset and realized that this is not going to be their forever home,” Bruen said.
Towns closer to the George Washington Bridge won’t have lower-priced homes, said Stamker, who primarily does work in Teaneck, Bergenfield and New Milford and handles apartments and condos in Fort Lee. In Tenafly, for instance, you’d never find a starter home under $600,000.
“The farther you go away from the bridge, that’s where you see the prices drop,” in towns like Teaneck, Dumont, Bergenfield or Lodi, Stamker said.
Those NYC-adjacent starter homes
It’s also a difficult market in areas closer to New York City, where a starter home is more likely to be a condo unit. Jill Biggs, who leads a team at Coldwell Banker in Hoboken, said a lot of her business comes from people who work on Wall Street.
“As crazy as it is, you have the first-time homebuyer that’s buying a $400,000 one-bedroom,” she said. “I sometimes have first-time homebuyers with their parents who are jumping in and helping them, and they’re buying a million-dollar condo.”
The median sale price of downtown Jersey City homes was $713,300, according to December 2019 data from Zillow.
Public transportation drives the decision-making there. At first, people say they want to live within six blocks of a PATH train. And those homes are older, “or it’s a fifth-floor walkup, or it’s a basement, and they don’t like it,” so they go six blocks farther out, Biggs said. “But it depends where you’re coming from.”
Someone living in a New York City apartment, “you show them what they’re going to get here, it’s palatial,” she added.
Outside Jersey City or Hoboken, first-timers are generally paying $400,000 to $500,000 for a single-family home, Bruen said. One of her properties was listed at $465,000 by the current owners, who bought it as their first home then sold it to another first-time buyer.
As hard as that first sale might be, it’s important to look beyond it to the next sale. Biggs said her clients outgrow their condo units after three-and-a-half to five years, so it’s important they buy something that’s easy to resell.
If someone wanted to buy a fifth-floor walkup, she’d point out to them that 75 percent of brokers aren’t even going to show that property “because they don’t want to walk up the stairs. … You have to be careful, because you’re not trying to get that person to just buy one property.
“Ultimately for first-time homebuyers, you want to be their realtor for life,” Biggs said. “So you’ve got to do the right thing.”