From the Trenton Times:
No doubt, the New Jersey housing market has seen better days.
But while home prices across the country continued to plunge during the last three months of 2007, New Jersey has shown surprising resiliency, according to quarterly housing data released yesterday by the National Association of Realtors.
Atlantic County was one of only 11 metro areas in the country (out of the 150 areas surveyed by the NAR) that showed a double-digit annual price gain, rising more than 10 percent in the fourth quarter, to $278,800, compared with last year. And Mercer County was one of only 12 that showed an increase of 6 percent or more.
“We have the second-highest income in the country, which creates a higher level of earnings,” said Jeff Otteau, president of the Otteau Valuation Group, a leading real estate research firm based in East Brunswick. “The demand for housing in New Jersey, even in a down market, is much higher than other parts of the country because we have the highest population density in the world.
“And we are at Manhattan’s doorstep.”
Nationally, existing-home sales — which generally account for 85 percent of all home sales — dropped nearly 20.9 percent in the quarter from October through December, while the median price of a home dipped 5.8 percent, to $206,200, from $219,300, according to the National Association of Realtors.
It was the steepest price drop ever recorded by the national real estate trade group, which has been compiling the report since 1979. In the Northeast, home sales fell 18.2 percent during the fourth quarter, and the median price of a home fell 4.8 percent.
But while New Jersey looked strong in the report issued yesterday, there are some skeptics. Otteau said the housing picture in New Jersey is not quite as rosy as the NAR numbers seem to reflect.
A few weeks ago, Otteau released his own market data, which showed home prices in New Jersey were flat in the fourth quarter of 2007 compared with last year.
To confuse matters even further, the S&P Case Shiller Home Price Index, another popular and widely used home price metric, painted an even gloomier picture of New Jersey’s housing market.
According to that index, for example, home prices in Atlantic County and Mercer County actually fell 6.5 percent and 7.66 percent respectively during the third quarter, while the NAR showed a rise of 5.6 percent and 6.16 percent during that same time. (The S&P Case Shiller index lags the NAR numbers by one quarter)
“How does that old saying go? A man with two clocks never knows what time it is,” said James Bednar, a real estate expert and author of the popular housing blog the New Jersey Real Estate Report. “It seems the current issue is which index should we use to measure the market. They all seem to be telling a different story.”
Sean Maher, a housing analyst with Moody’s Economy.com, said the S&P Case-Shiller index is constructed by matching the prices of homes sold in the latest month with their sales prices when they previously sold in the past. The NAR index simply aggregates the median home sales price and is influenced by underlying mix of properties being sold.
As a result, the two indexes measure two very different things, Maher said.
“Basically, the NAR data looks stronger because you are not comparing the same basket of houses from year to year,” Maher said. “Lower-income households are in less of a position to buy right now, so only the more expensive homes are really selling.”
Still, while New Jersey’s housing market has seen better days, it has generally faired much better than the national average.
Home prices in the Newark-Union area, which includes Essex, Hunterdon, Morris, Sussex and Union counties, for example, rose 5.3 percent, to $435,800, according to the latest home-price data released by NAR. And in the Edison area, which includes Middlesex, Monmouth, Ocean and Somerset counties, home prices rose 0.5 percent, to $370,300.