From the Record:
North Jersey home prices dropped 8 percent last year, falling to their lowest level since 2004 and draining billions of dollars from the housing market.
Despite federal efforts to prop up the market with low mortgage rates and an $8,000 tax credit, the median price for single-family homes dropped 8 percent in Bergen County and 9 percent in Passaic County, according to an analysis of sales data by The Record. For the year, homes sold at a median price of $415,000 in Bergen and $320,000 in Passaic. Prices dropped the most at the low and high ends of the market.
“We entered 2009 staring into the economic abyss,” said Rutgers economist James Hughes. And that was reflected in the housing market, which continued to pay for the excesses of the housing boom.
It’s too early to tell how 2010 prices will shape up, although many analysts believe housing demand will slacken after the tax credit expires next month.
In fact, prices in 2009 were down about 15 percent from their peaks in the middle of the decade — much less than the roughly 30 percent average decline seen nationwide. Even more striking, the number of sales in the two counties has plummeted by 62 percent since the market peak, The Record’s analysis found. Only about 7,400 residential real estate sales were recorded in Bergen and Passaic, down from 19,300 in 2005.
For most people, who are neither buying or selling, lower values reduce household wealth, making consumers less willing — and able — to borrow and spend. This lost housing wealth has added to a sense of unease about the economy, which has been plagued by unemployment rates around 10 percent.
Median prices dropped most in areas with the lowest and highest prices. In communities where the typical price is less than $300,000, the median price sank 15 percent in 2009. At the high end, where homes generally sell for at least $750,000, the typical price dropped 11 percent.
Total sales volume in the two counties plummeted from $9.3 billion in 2005 to $3.3 billion in 2009.
In a separate sign of market trouble, there was one category of sales that did not drop in 2009. Roughly 1,500 sales were recorded during or immediately after foreclosures by lenders against owners who stopped making mortgage payments, about the same as in 2008.
The market has lost roughly $22.5 billion in total value since prices started falling in 2007. That figure is reached by multiplying the typical home loss — $60,000 to $65,000 — during the slump by the 355,000 housing units in the two counties.
Hardest hit last year were less-expensive markets such as Paterson, Fairview, Hackensack and Prospect Park, where the median price sank 18 to 27 percent. Many affluent towns also were affected. The typical price dropped 13 to 29 percent in Allendale, Edgewater, Norwood and Old Tappan.
A few places seemed to escape the market’s wrath, with stable prices and even some gains seen in Cliffside Park, Englewood Cliffs, Ho-Ho-Kus, Mahwah and Totowa.
All told, 76 of the 86 municipalities in Bergen and Passaic saw continued dips in prices.