A Look Back at 2025 with Charlie Oppler
The real estate market has been affected by so many variables over the past two years that 2026 should be a lot more “normal.”
First, in New Jersey in 2024, the Real Estate Consumer Enhancement Act changed the way business was transacted by law! The two major changes were that Buyer Representation Agreements became law and Mandatory Seller Disclosures were enacted. These initiatives were a result of the Class Action suit known as Sitzer/Burnett vs. NAR and others.
Fast forward to 2025 during which the government shut-down affected several aspects of home sales. Houses that required flood insurance could not close and some buyers working in government jobs had difficulty providing pay stubs necessary for proof of income to their banks or lending institutions.
Additionally, 2025 saw changes to the mansion tax in New Jersey. This tax, in effect since 2004 as a flat 1% tax to the buyer for all purchases over $1,000,000, was changed on July 1, 2025 when Governor Murphy and the New Jersey Assembly and Senate approved a budget with a new graduated fee (tax) on home sales of $1,000,000 and up – from 1% to a high of 3.5% for all sales over $3,500,000. The new graduated fee (tax) is on the seller and a change from 2004! Of course, all fees like commissions are negotiable!
Now let’s look at what happened in the real estate market. 2025 saw a strong beginning with double digit appreciation in prices throughout many communities in Northern New Jersey. As the year proceeded, prices started to retreat but many homes still saw multiple bids and other communities still had limited inventory across all price points.
Furthermore, once the graduated tax was instituted in July, homes over $1M slowed by about 30% and homes over $2M trailed over significantly. The combination of lack of consumer confidence, including the government shutdown, and many companies reducing their workforce, plus a very modest and late rate cut by the Fed and not a major reduction in interest rates have all contributed to the slowing market. Again, the market still has national sales around 4 million which is over 33% down off a high of over 6 million homes in 2021!
New construction throughout Bergen County and New Jersey has been mostly rentals. Rentals remain strong due to the affordability and inventory crisis. Many potential sellers have a mortgage rate below 3.5%, or no mortgage at all. The cost of owning a home for any move up buyer is almost twice the mortgage payment if they can find a home. There are many tenants looking to buy, but they need the combination of lower interest rates and a healthy increase in inventory.
So here comes 2026! Projections are the Fed will make more cuts and the lending institutions will lower interest rates. Economists are predicting home sales could increase as much 10% which is over 400,000 more sales nationally. New Jersey will usher in a new governor and hopefully address corporate taxes and more proactive solutions to keep businesses in NJ and help the job market stabilize and grow.
Contact your Prominent Properties Sotheby’s International Realty office near you or stop by our office at 834 Franklin Lake Road for all your real estate needs.
