From the Home News Tribune:
Simultaneous falling home prices and mortgage rates have made 2009 an historic year, according to real estate experts.
For people who have a sufficient down payment and a secure job, it’s an excellent time to buy a home. But fears about job security and higher interest rates on jumbo mortgages are holding many buyers back throughout Central Jersey, according to Jeffrey Otteau, president of Otteau Evaluation Group in East Brunswick.
Quantifying the drop in home prices in any market is difficult because they are a result of several factors. The homes that are selling now are often the smaller, less expensive homes, whereas a few years ago, when credit was easier to get and more people were confident about their jobs, they were buying larger homes. The average price of a home in any given community probably reflects not only a price decline, but that more smaller homes are selling while the largest homes languish on the market.
Otteau said comparing average prices from one year to the next does not always give a completely accurate picture of the market. But he shared some statistics for the first quarters of 2008 and 2009 as a tool to begin to understand what is happening.
In Middlesex County, he said, the average price of a home fell from $370,508 in 2008 to $305,297 in 2009, a drop of 18 percent.
In Union County, the average price in 2008 was $445,685 in 2008, but fell to $384,188 this year, down 14 percent.
In Somerset County, the average price of a home fell from $449,683 in 2008 to $408,337 this year, down 9 percent.
Otteau pointed out that in 2006, the affordability index in New Jersey was 81 percent. That meant that a person making the median income in New Jersey could only afford 81 percent of the median-priced home. Today, the affordability index is at 111 percent, meaning someone making the median income can afford to buy a home worth 111 percent of the median-priced home.
“New Jersey will likely be one of the first states to emerge from the housing recession,” Otteau said, “because of our high income and our high-density population. As fears of job loss reduce and credit for mortgage money loosens, we will see more buyers. Also, our state has fewer foreclosures than many other states. I see us beginning to pull out of the housing recession within the next 12 months.”