Capital city’s plight made worse by safety concerns, loss of jobs and departure of businesses, overall weakness of New Jersey’s economy
If New Jersey’s political leaders want to study the state’s battered housing market, all they have to do is look out their windows in Trenton.
As most of the nation continues to recover from the Great Recession, real-estate data and analysis firms report housing sales are slowing and foreclosures increasing in the Garden State. But the situation is particularly dire in the state’s capital city.
Around the nation, foreclosures have declined to their lowest level since before the housing bubble burst in 2007, according to RealtyTrac of Irvine, CA, whose data is used by the real-estate industry and government agencies.
But in New Jersey, state court records show 31,500 new foreclosures cases have been filed as of Aug. 1, on track to be at least the third-highest annual total in state history. Sheriff’s sales have hit a four-year peak, and bank repossessions almost doubled in May.
Some towns are doing better, but only with modest recent gains, New Jersey sale prices are still down 22.2 percent from the pre-recession peak, according to CoreLogic, another Irvine, CA, analytics firm. That is worse than all but four other states, the firm found.
Trenton could be the poster child for New Jersey’s mix of economic weakness, a troubled housing market and ineffectual political responses.
The 2,473 foreclosure homes in Trenton represent 21.5 percent of the city’s homeowner properties as reported by the U.S. Census as of 2012.
Even a relatively obscure statistic reflects significant trouble. RealtyTrac’s latest numbers show more than twice as many homes in the state capital area are in foreclosure, or have already been seized by banks, than the total number the firm currently lists for sale.
“Think of New York City and its comeback,” Hughes said. “A lot of it has to do with reduction in crime and perception of safety — Trenton is the exact opposite.
“All the Italian restaurants are gone — people told them they didn’t feel safe coming at night — and much of that community has moved to Ewing or Lawrence,” Hughes said.
Even on RealtyTrac, some raw numbers appear even more calamitous in a few other communities, such as Paterson or Newark. But housing sales are up in both those cities on a year-over-year basis, which is preferred by analysts because it avoids seasonal fluctuations. In both cities, median prices are about $150,000-$160,000 and even bank-owned homes average $107,000-$110,000, a smaller gap than the New Jersey average.
In Trenton, the data show sales are down 26 percent from a year ago. So far this year, 19 percent of homes sold in the city have been at sheriff’s sale, by banks after foreclosing, or short sales, in which borrowers are able to walk away from “underwater” mortgages that saddled them with more debt than the current value of the properties. Last year’s figure was 9.9 percent.
Trenton’s median home price is only a bit less than those of Newark and Paterson, but it is heavily weighed down by those 2,473 foreclosure properties. Even before the new surge in foreclosures, Trenton’s homeownership rate for the five-year period ending then was 40.5 percent, compared to 66.2 percent for New Jersey as a whole, according to the Census.
Those foreclosed homes that are being resold in Trenton are going for an average of just $40,000, according to RealtyTrac, and their prices have remained below $50,000 for at least seven months, less than a third of market price.
“That is a very large disparity,” said RealtyTrac Vice President Daren Blomquist, and unusual for its persistence without normal monthly market fluctuations.
Many Trenton homes fit the pattern of places like Detroit, “older properties, smaller properties, close to the city center that are less desirable,” he said. But the large overhang of foreclosed and threatened properties extends into neighboring Ewing, which has 808 of those but just 364 current RealtyTrac sale listings.