Realtors’ Study Finds Cape May Least Expensive Rental Market

EDISON — The New Jersey Association of REALTORS® (NJAR®) Governmental Research Foundation (GRF) recently unveiled an online, interactive database prepared by the nationally recognized Center for Housing Policy that compares wages for selected occupations with the costs of owning and renting a home. The purpose of the New Jersey specific Paycheck to Paycheck database is to examine housing affordability around the state, according to a release.
“Paycheck to Paycheck is a tremendous way for consumers to analyze the affordability of various housing options throughout the Garden State,” said 2009 NJAR® GRF President Bill Hanley. “Beyond providing a tool for the public to examine their individual housing opportunities, this database is an excellent platform to draw attention to the importance of providing more people with safe and affordable housing. Every day, REALTORS® see firsthand the frustration and discouragement of working families unable to realize their dream of homeownership. This database is another way REALTORS® are working to shed light on some of the housing issues facing New Jersey.”
Paycheck to Paycheck provides custom charts examining the affordability of homes in all 21 counties in New Jersey for workers in 29 different occupations. Paycheck to Paycheck uses a common set of data applied in a consistent way to examine housing affordability. Users can compare one occupation across three counties or up to ten occupations in a single county. If no occupations are selected, Paycheck to Paycheck analyzes the following default set of occupations: teacher, police officer, registered nurse, retail sales worker, and janitor. To view the database, visit www.njar.com/paycheck2paycheck .
“As home prices continue to level off, the buying power for many potential homeowners has certainly increased,” added Hanley. “However, certain segments of our state’s workforce still find it difficult to afford to enter the housing market. For areas like New Jersey where home prices are higher than other parts of the country, we need to be vigilant in our efforts to create affordable housing opportunities for all of our residents.”
Findings
Bergen County is the most expensive homeownership market in the state, with a median home price of $481,250. Salem County is the least expensive area to purchase a home, with a median home price of $147,500. Hunterdon, Middlesex and Somerset Counties ranked as the most expensive rental markets in the state, with a fair market rent for a two-bedroom apartment coming in at $1,340. Fair market rent for a two-bedroom apartment in Cape May County is $895, making it the least expensive rental market in New Jersey.
Additionally, the data indicates a household would need to have a yearly income of $155,989 to afford to purchase a home in Bergen County, while in Salem County a household would need to earn $54,026 to buy a house. In Hunterdon, Middlesex and Somerset Counties a yearly income of $53,600 is needed to rent a two-bedroom apartment. A household would need to earn $35,800 annually to afford to rent a two-bedroom apartment in Cape May County.
Examining specific occupations used in the database shows that janitors and retail sales workers are priced out of every housing market in New Jersey. In addition, a two-income household is needed for a retail sales worker or a janitor to afford to enter the rental market. For teachers, police officers and nurses, counties in southern New Jersey provide more affordable housing options. There are several counties where households with two teachers, police officers or nurses could afford to purchase a home, including Burlington, Camden and Gloucester Counties. According to the database, teachers, police officers and nurses generally can afford New Jersey’s rental markets.
To calculate homeownership affordability, Paycheck to Paycheck follows conventional mortgage underwriting guidelines and assumes that not more than 28 percent of household income should be used to pay the mortgage, property taxes and insurance. The database further assumes a down payment of 10 percent.
Data Sources
Information represented in the database was obtained from a variety of sources. On the homeownership side, data provided by First American Core Logic, which includes sales of both new and existing homes, was utilized. The average property tax rate for each county comes from the New Jersey Department of Community Affairs, and the costs of homeowner’s insurance for each county were estimated using average premiums reported by the National Association of Insurance Commissioners. The Federal Housing Finance Board’s Monthly Interest Rate Survey was used to determine the interest rate for a 30-year, fixed-rate, non-jumbo mortgage. On the rental side, the database uses the Fair Market Rents (FMR) established by the U.S. Department of Housing and Urban Development. Information on prevailing wages for the selected occupations comes from a proprietary database maintained by www.Salary.com .
The New Jersey Association of REALTORS®, with approximately 50,000 REALTOR® and REALTOR-ASSOCIATE® members, is one of the largest trade organizations in the state. NJAR®’s membership is comprised of real estate professionals who subscribe to a strict Code of Ethics and are members of the national and local REALTOR® organizations. As the leading advocate for the real estate industry and private property rights in New Jersey, NJAR® is committed to protecting the dream of homeownership. For more information, please visit www.njar.com .
The NJAR® Governmental Research Foundation (GRF) was formed in 1999 to research issues; to promote knowledge of, conducted research, and assist in issue research in the field of real estate and related fields; and to inform and educate the public on subjects of the public interest and general concern pertaining to real estate, land use and related topics.
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For legislative related media inquiries contact:
Danielle Alpert
NJAR® Government Relations Coordinator
Phone: (732) 494-4730
E-mail: dalpert@njar.com
PAYCHECK TO PAYCHECK NEW JERSEY
Most to Least Expensive
HOMEOWNERSHIP MARKETS
Rank County Median Home Price
1 MOST EXPENSIVE Bergen $481,250
2 Morris $455,500
3 Somerset $447,750
4 Hunterdon $422,000
5 Essex $420,000
6 Monmouth $405,000
7 Union $375,000
8 Middlesex $360,000
9 Passaic $352,900
10 Hudson $340,000
11 Mercer $326,750
12 Cape May $321,000
13 Ocean $298,000
14 Sussex $288,310
15 Warren $274,000
16 Burlington $270,000
17 Atlantic $260,000
18 Gloucester $244,000
19 Camden $208,000
20 Cumberland $170,000
21 LEAST EXPENSIVE Salem $147,500
*Data from 3rd Quarter 2008
PAYCHECK TO PAYCHECK NEW JERSEY
Most to Least Expensive
RENTAL MARKETS
(Fair Market Rents for 2 BR Units)
Rank County 2 BR Fair Market Rent
1 MOST EXPENSIVE Hunterdon $1,340
Middlesex $1,340
Somerset $1,340
4 Bergen $1,256
Passaic $1,256
6 Monmouth $1,251
Ocean $1,251
8 Hudson $1,192
9 Mercer $1,120
10 Essex $1,103
Morris $1,103
Sussex $1,103
Union $1,103
14 Atlantic $1,033
15 Warren $1,007
16 Cumberland $956
17 Burlington $932
Camden $932
Gloucester $932
Salem $932
21 LEAST EXPENSIVE Cape May $895
*Data from 3rd Quarter 2008