From the Record:
After a long, steep slide, New Jersey home prices are poised to begin rising again — slowly — in 2013, appraiser Jeffrey Otteau said Thursday. But it will take until 2020 for values to return to their 2005 levels, and real estate still faces many challenges, he said.
“The recovery in the housing market is only just starting,” said Otteau, of East Brunswick, whose housing forecasts are followed by the real estate industry. He said demand is stronger in Bergen County than in Passaic, which has been hit hard by foreclosures and other economic distress in the cities.
According to Otteau’s calculations, New Jersey home prices have been basically flat this year. By contrast, the S&P/Case-Shiller index, which uses different ways to track prices, found New York metropolitan-area values dropped 2.6 percent from July 2011 to July 2012, its most recent figures.
The number of sales in New Jersey has rebounded to the fastest pace since 2007, though it remains below the boom levels of 2005, Otteau said. Lower home prices, rock-bottom mortgage rates and a growing confidence in the economic recovery have lured buyers back, Otteau told real estate agents at his semiannual seminar in East Hanover.
“Fewer and fewer people are losing their jobs,” Otteau said. “That’s part of the housing recovery.”
After dropping about 27 percent since the peak of the housing boom, median prices — the point at which half of homes sold for a higher price and half lower — will rise about 3 percent in 2013 as a result of the increased demand, Otteau predicted. As prices begin to tick up, he predicted, buyers will become less cautious and jump into the market.
“Home buyers don’t want to buy if there’s a chance that they could get it for a better price” by waiting, Otteau said.
He predicted that the real estate market next spring will be the most active in at least five years. Spring is traditionally the busiest time in the housing market, as families look to move before the next school year starts.
Not all regions and price categories have experienced higher sales this year. Rural areas continue to trail, in part because fewer people are willing to commute long distances when gasoline costs around $3.50 a gallon. And job cuts on Wall Street have meant lower sales of homes costing over $2.5 million, Otteau said.