The Impact of the Coronavirus on New Jersey Real Estate

As of this writing, there have been about 1,610,119 confirmed cases of the coronavirus and 96,373 deaths globally. In the US, there have been about 468,895 confirmed cases and 16,697 deaths. As the number of confirmed cases keeps escalating across the country, many industries are affected including the real estate industry in numerous states and major US cities. Stats show that the hardest-hit states have been California, New York, Washington State, and New Jersey. In this blog post, we’re discussing how the COVID-19 pandemic is affecting the New Jersey real estate business and the New Jersey housing market in 2020.

New Jersey Home Sales

Every year, US housing market predictions point to the fact that the spring season is usually a hot time for real estate activity across the country. This spring, however, we’re living with the coronavirus which is changing the real estate business as we know it. Seeing that many people have lost their jobs and/or are furloughed, in addition to the fact that people across the nation are in quarantine and are staying home to limit the spread of the coronavirus, the idea of selling or buying a property could be far from your mind. Home sales are dropping in many parts of the US, including in the New Jersey real estate market.

The New Jersey housing market has started to feel the impact of COVID-19 with a slowdown in real estate activity among sellers and buyers as both are feeling unsettled. Homebuyers are fearful of the economic climate and it’s become commonplace for them to suspend their property search until the health crisis is over. Furthermore, social distancing has raised concerns from home sellers worried about welcoming outsiders into their homes. Sellers have to face the suddenly shifting New Jersey real estate market trends in 2020 and many are saying “I don’t think I want buyers in my home”.

However, the US Department of Homeland Security Cybersecurity and Infrastructure Security Agency has added real estate activity to the list of essential businesses. This comes from their belief that real estate is an essential business that needs to continue operations during the coronavirus pandemic. Consequently, a few state governors quickly permitted home buying and selling during this time, including the governor of New Jersey. Does that mean we can expect New Jersey home sales to get back up? Only time will tell, but brokers and agents advise sellers to not panic and lower asking prices (but understand that the market is ever-changing). Meanwhile, buyers should expect fewer bidding wars.

New Jersey Real Estate Agents Are Coping

As Gov. Phil Murphy declared real estate an essential business, he also clarified that realtors and agents can still operate and show houses to prospective buyers on a one-on-one basis. Nonetheless, there is still a prohibition on open houses. So while many buyers and sellers are putting their plans on hold, New Jersey real estate agents are still working, keeping in mind to take every precaution on home showing requests while following guidelines from the National Association of Realtors (NAR). This includes using disposable gloves, shoe covers, and hand sanitizer. But the reality is that there haven’t been many showing requests since the governor’s stay-at-home order.

Closings are also being delayed seeing that some municipalities are closed to the general public. And it’s not just closings that are undergoing a change. Take home inspections, for example. If a home inspection is needed, agents will let the inspector perform the inspection alone while the house is vacant. Inspectors will document any issues or concerns with photographs or video and forward the findings to the buyers with a report to explain any defects. Another example is home showings which are now done virtually via video calls while the home is vacant.

Overall, New Jersey real estate agents say it’s impossible to predict what will happen over the next few weeks and months. Still, they predict an uptick in home sales when the pandemic is over and we finally get an all-clear. According to Michele Messina, a sales associate with RE/MAX Villa Realtors with offices in New Jersey:

As much as this market is challenging, we still have very serious investors out there and we could potentially see a rise in real estate, just in a different way. I also see many first time home buyers who are actually considering investment properties because they feel that the market is telling them to buy now. This could make real estate one of the busiest places and help the economy.

New Jersey Announces Mortgage Payment Reliefs

After President Trump signed the CARES Act, Gov. Murphy announced that a group of major banks has joined other financial institutions to provide homeowners with mortgage forbearance as well as financial protections. The New Jersey Bankers Association, Cross-State Credit Union Association, and the Mortgage Bankers Association of New Jersey have endorsed the initiative and encouraged their members to adopt these policies. Under Gov. Murphy’s proposal, New Jersey real estate owners who are facing financial hardship due to COVID-19 may be eligible for the following relief:

• For at least 90 days, financial institutions will waive or refund mortgage-related late fees and other fees, including early CD withdrawals.
• For at least 60 days, financial institutions will not initiate foreclosure sales or evictions.
• Financial institutions will not report derogatory late payments to credit reporting agencies for borrowers taking advantage of COVID-19-related relief.
• Borrowers will be provided with a streamlined process to request a forbearance for COVID-19-related reasons, supported with available documentation.
• Borrowers will be provided the opportunity to request additional relief upon a continued showing of hardship due to COVID-19.

In addition, Gov. Murphy signed Executive Order No. 106 last week. This order enforces a moratorium on removing people from their homes due to an eviction or foreclosure proceeding. Meaning, tenants can’t be asked to leave their homes for nonpayment of rent while the order is in effect. The governor also said that the Department of Community Affairs received an additional $13 million in federal funds as part of its annual renewal for the Section 8 Housing Choice Voucher Program. These funds should help tenants and homeowners maintain their housing stability and prevent a New Jersey housing market crash in 2020.

New Restrictions on Short-Term Rentals

Another announcement by Gov. Murphy is that he is imposing additional restrictions on short-term rentals in New Jersey in response to COVID-19 and the coronavirus pandemic. The order gives New Jersey towns and counties the ability to impose additional restrictions on hotels, motels, and vacation homes to accept new guests or seasonal tenants after 8:00 p.m. starting Sunday, April 5. A copy of the Administrative Order can be found here.

Not many people are traveling now anyway, but Gov. Murphy said the order was imposed after he heard “too many stories” of people trying to relocate to Jersey Shore vacation homes from impacted areas to ride out the quarantine for the time being. He believes the only way to flatten the curve is by continuing to practice social distancing and by traveling only when necessary. This order will prevent people from relocating to vulnerable communities that don’t have the hospital resources should people get sick. In a statement, Gov. Murphy warns:

Many of our shore communities lack the health care infrastructure to accommodate an influx of part-time residents. New Jerseyans should stay at their primary place of residence for the duration of this emergency.

Renting vacation homes during the coronavirus pandemic to guests who need to self-quarantine away from their families has, in fact, become a trend recently. Airbnb hosts were hit the most when a travel ban was issued after COVID-19 was officially deemed a global pandemic. So accepting guests for quarantine purposes seems like a good way to keep their Airbnb businesses afloat in these difficult times. However, this new order will surely impact Airbnb New Jersey real estate investors and vacation rental owners.

Airbnb data can also prove this. The two tables below present Airbnb data to compare the performance of Airbnb rentals in March 2019 vs March 2020 for cities in New Jersey. You can see how hosts were affected by a change either in their daily rate, Airbnb occupancy rate, or monthly rental income. This data is generated using Mashvisor’s Airbnb Profit Calculator and based on historical and predictive real estate analytics.

To learn more about Mashvisor and how we help real estate investors and Airbnb hosts make faster and smarter investment decisions, click here.

Table #1: March 2019 Airbnb Data for New Jersey Real Estate

Table #2: March 2020 Airbnb Data for New Jersey Real Estate

The Bottom Line

As of this writing, New Jersey housing market predictions 2020 are difficult to make due to the uncertainty surrounding the coronavirus pandemic. However, New Jersey real estate market trends suggest that there is some activity in the market as agents are still operating keeping in mind the necessary precautions. And as long as the CARES Act is helping people keep their homes from being foreclosed, it’s unlikely that we’ll see a NJ real estate market crash. Anyone interested in investing in NJ homes for sale any time soon should keep a close eye on COVID-19 developments and its impact on the housing market nonetheless. To stay updated on coronavirus trends in real estate markets across the US, sign up with Mashvisor.

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