From the Record:
New Jersey’s housing market is recovering, and this spring’s home-selling season will be the liveliest in four years, appraiser Jeffrey Otteau said Monday.
“We are at a turning point in the housing market and the economy,” said Otteau, who tracks the statewide market from his office in East Brunswick and whose forecasts are widely followed. “The bounce in home sales [in January and February] is nothing short of astounding.” He said sales are up about 30 percent in the first two months of the year, compared with last year.
But that doesn’t mean sellers can hike their asking prices, Otteau said. With incomes flat and banks cautious about lending, buyers will be unwilling or unable to pay inflated prices, he said.
“Homes that are overpriced will not sell,” he said.
Otteau predicts that home prices will be flat this year, after falling almost 5 percent statewide last year, and will not return to their 2006 peaks until 2020.
Otteau said that Garden State home buying will be fueled this year by an energized job market, as well as more affordable home prices and mortgage rates below 4 percent. Average New Jersey home prices have fallen 26 percent from the market peak in 2006, and are back to 2003 levels, he said.
There’s pent-up demand among potential buyers, who have waited four or five years because they were insecure about their jobs or worried that home prices would fall further, Otteau said. And rising rents mean that many households will soon decide it’s better to buy than rent.
But he warned: “This improvement is not a return to the market frenzy we saw back in 2005.”
And more than 16 percent of New Jersey homeowners are either in foreclosure or late on their mortgage payments, according to the Mortgage Bankers Association. That represents “a deep, dark hole” for the housing market, especially in rural and inner-city areas, Otteau said.
Foreclosures tend to sell at a steep discount – 20 percent to 30 percent less than similar properties, according to research. That tends to pull down values of neighboring properties.
“Areas with large concentrations of foreclosures will see prices decline,” Otteau warned.