Hughes works primarily in Essex, Passaic, and Union counties, and occasionally in Hudson and Bergen counties, which are just outside of New York City. Each of those five counties experienced an increase in their average home value over the past year. Essex county’s average home value is up 5.1% over the last year, Passaic county’s is up 5%, Union county’s is up 3.8%, Hudson county’s  is up 2.6%, and Bergen county’s is up 3.3% per Zillow. And, New Jersey’s average home value is up 5.9% over the past year. Meanwhile, San Francisco’s average home value is down 11.8% over the same period.

It’s clear that the housing market correction, mostly fueled by last year’s mortgage rate shock and currently losing steam, is milder in the East and sharper out West. But New Jersey housing markets, in particular, are getting surprisingly hot again.

“Overall where we’ve been a bit of an anomaly compared to the rest of the country is that our inventory remained very, very tight,” Stacy Esser, founder of SEG Realty, told Fortune. “Even when interest rates climbed…our inventory still remained very, very tight.” 

As of last month, the share of homes for sale in New Jersey was down 19.2% year over year, and the number of newly listed homes was down 31.4% over the same period, according to Redfin, with only two months of supply. “At the end of the day, supply and demand is really going to move everything that happens in New Jersey,” Hughes said. “We have very real demand but very low supply.” And the bidding wars that became all too real at the height of the Pandemic Housing Boom seem to be in full effect in New Jersey, amid an uptick in demand. 

Esser represented a seller with a house on the market during the summer of last year, listed for around $2.2 million. The seller accepted an offer for the asking price, but the deal didn’t end up closing and the seller chose to wait until spring. Fast-forward to this month, and after putting the house on the market again, it’s going to sell for around $2.5 million, Esser said. “We’re literally talking the difference [between] August and April,” Esser said, because demand has jumped back up but inventory hasn’t changed. Her agents have been saying that “it feels exactly like COVID,” with lines out the door during showings, multiple bids, and the listing price being the starting price. “Rates have taken a backseat,” Esser said, referring to something one of her agents tells her.  

Neighborhoods within an hour's commuting distance (if not shorter) to Manhattan are in particular seeing a lot of upward price action.

“This little northeast spot of New Jersey with access to the city has become like a sixth borough of New York,” Hughes said, adding later that other commuter markets within the state feed into Philadelphia. Esser put it simply: “Jersey offers you options,” and commuters from New York and Philly know that. Even South Jersey is seeing price increases as people move down south because the entry price point is lower, Hughes said. 

But as mentioned above, demand has changed, as buyers have largely accepted 6% mortgage rates. “They’ve wrapped their heads around it,” Hughes said. “They’re not comparing it to the 3.5% that was out there before.” Still, those who have locked in those low rates, as Fortune has previously reported, are holding onto their homes. Esser called it a game of tug-of-war that “literally went nowhere,” leading to a standstill. That lock-in effect constraints supply, which, as we know, is already tight in New Jersey. “Everyone’s fighting over crumbs,” Hughes said.

“The last quarter of 2022 was tough for everybody…it just hurt people’s affordability so much,” Hughes said. However, demand wasn’t nonexistent; it was just on the sidelines. Now that rates have dropped slightly and tend to fluctuate around 6%, some of those sidelined buyers are back in. “That little bit of relief is enough for some people,” Hughes said. 

“I don’t know why the market just unilaterally decided that 7% was too high, but between 5% and 6% was okay,” Esser said. “But that’s what happened.”

But again, supply is an issue, so if rates were to come crashing down, Hughes said, “it would be an absolute disaster; New Jersey would be an absolute disaster.” Still, New Jersey’s surprisingly hot market is not reflective of its sales, but rather its home sale prices, which Hughes said are “absolutely insane.” A single-family house in Montclair, a township in New Jersey, down the street from Hughes’ office, was listed for close to $1.1 million. The home sold for $1.73 million, he told Fortune. “The volume of sales may not be there in this year’s spring market, but you see that demand reflected in where the sale prices are ending up,” Hughes said. And in a market like New Jersey’s, sellers are not offering concessions like rate buydowns, which Hughes said are “almost like suicide out here.”

The sellers’ control of New Jersey’s market "f*cking sucks" for buyers, as Esser put it—noting that’s not the most professional way of putting it—because they’ve had to come to terms with the realization that the market isn’t going to become flushed with inventory, and those who’ve been sidelined are realizing that they’re just going to have to pay more. That’ll likely continue to drive home prices up, keeping the market hot, and “unfortunately that just means less affordable homes,” Esser said.