From Suburb to Urban Hub: Rise of Fort Lee's Real Estate

Overview

Fort Lee, New Jersey, renowned for its strategic location and vibrant community, is experiencing a significant surge in real estate prices. Currently, the median home price sits at a staggering $737,500 (Fort Lee MLS Stat Report), a 52.5% increase from a median price of $350,000 in 2019. Similarly, the median rent has jumped about 38% in 1-bedroom apartments from $1800 to $2,483 within the same time frame. This upward trend reflects a broader pattern in many Bergen County areas, transforming the local housing market and reshaping the community. 

Guest Introduction 

Joining us today is Vlada Kobleva. She is a property investor with 7 years of experience and the owner of VGK Enterprises, a company that handles housing contracts and private consulting. With her professional insights, we will dive into our town's current real estate issue. 

Identification of Problem 

Proximity to New York City

From the Modern High Rise balcony, Fort Lee offers a stunning panoramic view of Manhattan. This prime location near New York City makes Fort Lee highly desirable for commuters. Currently, 30% of the town’s residents commute to the city with 42% of them renting their homes. 

Vlada: “Fort Lee’s demand for quality housing is soaring. With more New York residents migrating to the town, Fort Lee is evolving from a suburban to a bustling urban area with high-rise buildings. Many current Fort Lee renters are former New Yorkers who left their 2 bedroom apartments for affordable homes. Despite rising rents, many prefer Fort Lee’s quality of life, even if the prices were to match those in New York.” 

Over the past decade, Fort Lee’s population increased by 10%, driven by an influx of former residents in Long Island. The phenomenon also explains why a 1 bedroom apartment rent increased by 50.5% in the past 5 years while home prices were only 27.8% within that same time frame. 

COVID-19

From stimulus checks to remote working, COVID-19 has impacted the global economy for the past 3 years. However, the pandemic’s impact on Fort Lee’s real estate market has been particularly dramatic. From 2020 to 2021, the median home price in Fort Lee skyrocketed by 40% from $370,000 to $515,631. What drove this remarkable spike?

Vlada: “The height of the pandemic prompted people to move out of urban centers and settle into suburban areas like Fort Lee, which offered more space and better living conditions. This caused a significant demand for housing across Bergen County. Additionally, when the Federal Reserve lowered interest rates to historic lows in 2020, many people refinanced their properties to keep their monthly payments stable. As interest rates normalized, homeowners were reluctant to sell because why would they degrade their homes for the same monthly payments? For example, a $300,000 property at 2.5% interest will have the equivalent monthly payment of $180,000 property at 7.5%. This caused a shortage in supply within the Fort Lee market post-pandemic. “

Local Initiatives

Based on the current real estate market position in Fort Lee, what initiatives are being taken locally? The Housing Authority of Fort Lee was established in 1968 to provide safe affordable housing to low-income residents. The program currently administers a 40-unit Public Housing site on Teresa Drive and a Section 8 Housing Choice Voucher program to provide rental assistance to 490 families. On the broader scope, the New Jersey Housing and Mortgage Finance Agency assists Fort Lee with its Low Income Housing Tax Credit Program. This program provides tax incentives for developers to build and rehabilitate affordable rental housing for low-income households. Furthermore, HMFA offers competitive mortgage rates and down payment assistance to first-time homebuyers, making it easier for low and moderate-income individuals to purchase homes. 

Forecast on Issues

Vlada: “In the short term, property's values will likely continue to increase as homeowners hold onto their properties. We need a long-term incentive or a decrease in interest rates to encourage people to sell their properties because our market is pretty unhealthy right now.”

Conclusion

The escalating real estate prices in Fort Lee reflect a broader trend in many urban areas. The continuous surge in property values and rental rates is reshaping the community, attracting new investments in properties but also posing challenges for newcomers to the area. Nevertheless, our town’s developers and officials are continuing to develop innovative solutions to ensure that Fort Lee remains a vibrant and accessible place to live for all its residents.