When looking solely at rental yields, Demarest is not an attractive choice for investors. There's a reason to start with this discussion. According to Zillow, the average home value in Demarest is $1,566,155, which has increased by 17.2% over the past year. Redfin reports that the median sale price over the last three months is $2.3 million, a 32.7% increase compared to the previous year. However, it's important to note that Demarest is a small market with a low number of transactions, so a few high-priced listings can significantly skew the median price and growth rate. RealtyTrac estimates the home value at $2,124,349, which falls roughly in between the two previous figures.

To clarify the picture, it's helpful to compare how other areas in Bergen County stack up against Demarest with the same budget. Neighborhoods like Demarest, Cresskill, and Closter, which are part of the Northern Valley Regional School District, generally have high purchase prices and low pure rental yields. Considering that the average rent in Bergen County is around $2,510, the rental yield compared to a purchase price over $2 million is far from the 1% rule. In contrast, other neighborhoods within the county with relatively lower purchase prices may yield a higher cap rate with the same budget. Therefore, if rental income is the top priority, it makes sense to compare Demarest with other areas. Even with the same $2 million, the cash flow left each month can vary significantly depending on the location.

So, who is Demarest suitable for? The Northern Valley Regional High School Demarest campus has long been a preferred school district among Korean families. Since school district boundaries can change, it's advisable to verify the assigned school for the specific address before signing a contract. For families prioritizing their children's education and planning for long-term residency, it seems more realistic to consider the school district premium and potential appreciation in value rather than focusing solely on immediate rental yields. Families moving from out of state should also factor in New Jersey's high property tax rates. Estimating monthly payments based on the tax rates from their previous residence can lead to significant discrepancies in actual costs.

The average interest rate for a 30-year fixed mortgage is around 6.6%. Due to the lock-in effect, where existing homeowners with low-rate loans delay selling, this small premium market has very few listings, making it difficult for the prices of available properties to represent the overall market. It's worth noting that even a couple of listings can cause significant fluctuations in neighborhood averages, so if you have a specific address in mind, it may be more accurate to look up recent sales data individually rather than relying on statistics. Simply asking your agent how many sales have occurred in the area in the last six months can provide a much clearer picture than market indices.

Another approach is to consider splitting the same budget between personal residence and investment. If you're looking to live in the area, focus on neighborhoods like Demarest with verified school districts, while for investment, consider pairing it with nearby areas that have higher cap rates to build your portfolio. Trying to meet both objectives in one property can lead to unsatisfactory results for either purpose.

Excessive leverage that drives up purchase prices can be particularly risky in such small premium markets. Since there are few listings, if you find yourself needing to sell quickly, it may be challenging to get the desired price. You should also consider the risk of property tax reassessment. During periods of significant price increases, the tax burden may also rise after reassessment. For families moving in for the school district, it seems safer to approach this with the financial capacity to handle such risks. Whether for investment or personal residence, this article does not constitute investment or legal advice, and it's advisable to consult with professionals before finalizing any contracts.