From the NY Times:

Spring in a Cold Climate

THE only way to know when the residential real estate market has “hit bottom” will be with a look in the rear-view mirror, according to Jeffrey G. Otteau, the New Jersey-based real estate analyst.

“It will appear from the shadows, months after it actually occurred,” when sales have picked up for several consecutive months, said Mr. Otteau, whose East Brunswick company, the Otteau Valuation Group, studies sales-contract data that it compiles from almost all of the state and provides monthly to subscribing brokers.
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But the latest statewide numbers — from March — do make one thing absolutely clear: The turning point has not yet been reached.

“The clear signal,” despite a 9 percent increase in the number of sales in March over February, “is that the housing market has further to fall,” Mr. Otteau said in the newest report.

Home sales were down 27 percent from the previous March, which continued a pattern for 2008. They are running well behind 2007, which was itself a year of declining sales volume and dropping prices.

“It’s spring,” Mr. Otteau added in an interview. “The numbers always go up during the spring selling season, but you’re still talking about contract sales that are the weakest in recent history.”

The reports do not show shifts in average sales prices on a monthly basis. But given the sluggish sales pace, Mr. Otteau said prices would certainly continue to decline throughout the spring and summer.
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Three years into this market malaise, there is no specific type of community that remains entirely immune, Mr. Otteau said. The latest statistics point toward deteriorating conditions even in downtown redevelopment areas that have attracted thousands of young professionals and empty nesters in recent years.

In Hoboken — the state’s pre-eminent example of transformation from tenement grit to condo glitz — the newest numbers hint at a downturn after a solid decade of robust growth: the supply and demand ratio has sunk to 43 percent, from 78 percent last year. There were 507 unsold homes on the market, a seven-month supply. And the average number of sales per month was down to 70, from 115 last year.

“Until pretty recently,” Mr. Otteau explained, “Hoboken was running counter to the rest of the market, mostly because of ‘overflow’ demand from New York.” He was referring to buyers who were fleeing higher apartment prices in Manhattan for relative bargains across the river.

Now, though, various factors have kicked in to abet a slowdown: tighter mortgage-lending standards; growing buyer unease over the continuing decline in home values; and the prospect of Wall Street cuts of 36,000 jobs, according to federal Labor Department projections.
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But the graph of contract-sales activity that accompanies Mr. Otteau’s latest report tells a different story. In the three previous years, the line had climbed sharply to a peak in March; this year, the peak is more of a molehill.

He summed up his advice to brokers this way: “Expect the spring selling season to be late and brief, with only a modest increase in sales activity, and prices continuing to drift downward.”