2020 was a year like no other for the residential real estate market, and the market is still feeling the effects.
The onset of the COVID-19 pandemic in the late winter and early spring of last year set off a series of whiplashing shifts. Initially, public health concerns and stay-at-home orders brought the market to a halt as buyers and sellers alike held back on transactions. But over the course of the year, demand rebounded in dramatic fashion. Increased household savings gave many people more resources to enter the market, especially among first-time buyers in the millennial generation. Meanwhile, space and amenities in the home took on additional value because more people were working and schooling from home. All of these factors have driven up the demand for homes.
Despite strong interest from buyers, the market has not seen supply keep up. The ripple effects of the pandemic have made many would-be sellers more conservative, keeping their homes off the market. With the broader economic outlook still uncertain in many ways, these homeowners are wary of making such a major transaction, especially when it means competing with a mass of buyers for their next property.
Together, the combination of strong demand and weak supply has produced higher prices and lower inventory. In a typical year, the number of active listings and the median list price for homes stays roughly in sync, following the seasonality of the real estate market. In 2020, however, there was divergence as prices continued to increase while active listings fell sharply over the course of the year.
Another side effect of this dynamic is that the homes that do come on the market sell faster because of the scarcity. In turn, this means that the share of listings on the market that is new in any given month is rising. At the peak of the summer market in 2020, the share of listings that were newly listed within the past 30 days was almost half of the total inventory. Even for the slower periods in November and December 2020, the share of new listings was up 50 percent or more year-over-year for the same months—and comparable to the level for peak months in a normal year.
As is usually the case with real estate, these trends look different according to location. Many of the areas that still have a strong housing inventory are places that have seen increased home construction to accommodate a growing population. At the state level, Florida is the clear leader in the number of homes for sale, with 248 active listings per 10,000 homes, and Hawaii (229) and Georgia (210) are not far behind. In these locations, supply and demand are keeping pace with one another more than they are elsewhere. This makes them more favorable for buyers because while there are more competitors in the market, there are also more options available.
The metro locations with fewer listings for sale in 2020 for the most part follow the same dominant national trends. In some communities, inventory is low because demand is high and properties are selling quickly. This is most apparent in high-growth locales like Seattle and Salt Lake City, where increased demand for homes from higher-income professionals means that the few properties that are on the market move fast and at high prices. But even in Rust Belt cities that have largely experienced an economic decline in recent decades, like Buffalo, NY or Grand Rapids, MI, sellers are showing reticence to put their homes on the market out of fear they will have nowhere to go—a trend that has also dramatically reduced supply.
To find the states with the most and fewest homes for sale, researchers from Inspection Support Network pulled data from Realtor.com and the U.S. Census Bureau. The research team calculated the average number of monthly active residential listings in 2020 per 10,000 owner-occupied homes. Researchers also pulled the average number of new listings per month, the year-over-year trends, and the median home price for reference.
The analysis found that in New Jersey, there was an average of 31,478 active listings per month in 2020. Altogether, there were 153 active listings per 10,000 owner-occupied homes, compared to the national average of 124. Out of all states, New Jersey has the 11th most homes for sale. Here is a summary of the data for New Jersey:
- Number of active listings per 10k homes: 153
- Average number of active listings per month: 31,478
- Change in number of active listings (YoY): -32.0%
- Average number of new listings added per month: 13,410
- Median home price: $423,057
For reference, here are the statistics for the entire United States:
- Number of active listings per 10k homes: 124
- Average number of active listings per month: 914,438
- Change in number of active listings (YoY): -27.5%
- Average number of new listings added per month: 371,149
- Median home price: $334,081
For more information, a detailed methodology, and complete results, you can find the original report on Inspection Support Network’s website: https://www.inspectionsupport.