We have been noticing a market slowdown in towns further out on the Midtown Direct train line in NJ. It seems homes are staying on the market longer and require price reductions in order to get sold. As a professional – I felt this happening instinctively, but thought it time we look at the facts. The numbers are quite compelling. While South Orange and Maplewood (the closest stations to NYC on the Midtown Direct train line) are still experiencing multiple bids on homes, the market seems to be slower as you head farther out.
Source: Garden State Multiple Listing Service
As you can see Summit and Madison are still pretty strong, but Millburn and Chatham are flat year over year (a slowdown) and towns further out like Basking Ridge and Harding have decreasing values.
There are two hypothetical reasons why this is happening:
- A fundamental market shift is coming. Gary Keller-CEO of Keller Williams and author of a book titled “Shift,” predicts a shift, from a seller’s market to a buyer’s market is coming, like it does every 10 years. He bases this opinion on the fact that China’s economy is a bit wobbly and the stock market a bit shaky. I don’t share his opinion for a myriad of reasons.
- I believe the shift is in the demographics. The next generation of home buyers are Millenials (30-35 year olds) and they have a very different sensibility about the lifestyle they prefer. When the National Association of Realtors surveyed Millenials they said the number one parameter for choosing where to live is “walkability.”
Understanding this next generation of home buyers is critical to the success of selling a home. They are not interested in spending more hours on the train to get home to a house on 2 acres. They prefer less yard space and a shorter commute. It is most likely that in these households both spouses will be working full time and quality of life, time with their family remains a very high priority.
As a result, towns like South Orange and Maplewood, NJ offer the kind of lifestyle that is more befitting. They are the shortest commutes on the Midtown Direct train line (compared to the above towns). They are incredibly diverse racially and socio-economically and they have thriving downtowns that provide a wealth of cultural activities.
These Millenial home buyers are a very diverse group and are coming from areas like Brooklyn, Jersey City, Astoria and Hoboken so they are used to living in areas that are changing over or being gentrified. They are less status conscious so home and lot sizes are not the draw. But if they visit a listing within walking distance to a coffee shop – they will likely put in an offer. To them that’s a place to call home.