• Quarterly New Home Starts are down 20% from 1Q17 Levels, while Annual Starts are down 24.2% YOVERY
• Annual New Home Starts in the New York Suburbs are up 23% YoverY while closings are down 23.9%
• Annual New Home Starts in Central New Jersey are down 3.4% YoverY while in Northern New Jersey starts are down a jaw-dropping 51.3%
• This region’s land available for development is very limited and many builders and local developers have been moving away from greenfield development and exploring options for redevelopment in transit oriented towns in this region

“Looking at the macro view of the entire Northern/Central New Jersey market it may seem obvious that this market is struggling to gain strong momentum in new home construction activity,” said Quita Syhapanya, Regional Director of Metrostudy’s New Jersey and New York markets.

“The main issue at hand outside of the potential impact of the tax reform bill has on current homeowners and potential buyers in the market is the fact that the market is close to being a fully built out housing market.

A study by the state of NJ states that NJ has actually already developed 60% of its buildable land as of 2007. That was eleven years ago which makes finding traditional undeveloped land that is not preserved or environmentally constrained a real challenge.

This impact has capped the activity this market can have. The other option is redevelopment which you see in abundance along the Gold Coast specifically in areas in Hudson County, NJ.

Metrostudy’s 1Q18 survey of the Central/Northern New Jersey & New York Suburbs new home construction market showed 1,202 starts for 1Q18, a decrease of 7.1% from the starts in 4Q17.

Year over year, first quarter starts were down year-over-year by 20%. There were 852 closings in the quarter, down 19.3% from 4Q17 and down 9.1% from 1Q17.

In annual starts ended 1Q18 with 5,038 new homes started, a decrease of 5.6% off the annual pace last quarter. Year over year the pace is down 24.2% over 1Q17. Annual closings decreased by 2.1% off last quarters annual pace ending the quarter at 4,039. Year over year saw annual closings decrease 9.6%.

Below is a breakout of starts and closings in the three regions covered in this market:

• Central New Jersey started 569 homes in 1Q18, a decrease of 14.2% from 4Q17 and a decrease of 13.3% over the starts from last year. Annually starts are down 3.4% from last quarter’s pace ending 1Q18 at 2,490. Looking at closings for 1Q18 saw 442 homes occupied for the quarter. Closings are down 12.1% quarter to quarter and down 24.2% year over year. Annually closings decreased by 14.5% year over year.

• Northern New Jersey’s annual new home starts are at 1,537 which is a 20.3% decrease from last quarter. Year over year the numbers are down by 51.3%. Annual closings increased by 8.1% quarter to quarter and year over year decreased by 13.2%. This market is the most active market in this region with construction occurring along the Hudson River and the demand in this area has only gotten stronger especially among Millennials. We are seeing mass construction of condo projects and redevelopment of townhomes among the product of choice here. Sales activity and price appreciation has been strong here for over four years.

For 1Q18 there are 7,586 Vacant Developed Lots (VDL) in the market. That represents a .6% decrease in developed lots in the region from the 7,634 lots available in 4Q17. Year over year saw an increase in available lots by 10.9%. This region has 18.1 months of supply of vacant developed lots remaining. With an annual starts rate of 5,038 it would take 18.1 months to go through the remaining lots at this pace.

Northern New Jersey, NY Suburban Market Undersupplied.

The Northern New Jersey/NY Suburban market continues to be under supplied. Lot availability and available land opportunities continue to be tight with over regulation on land holding back development.

There were 1106 lots delivered into the market this quarter. Year over year lot deliveries are down 10.1% from the 1,230 delivered in 1Q17.

There is very limited land available for new development in the NJ/NY market. Annual lot deliveries ended 1Q18 with 5,667 lots delivered into the market. The pace is down 2.1% quarter to quarter and year over year its down 8.2%.

Getting projects approved and putting the first shovel into the ground has been a challenge.

This region’s land available for development is very limited and many builders and local developers have been moving away from greenfield development and exploring options for redevelopment in transit oriented towns in this region.