From NJ Spotlight:
Even as real-estate agents see encouraging demand for Shore rentals, and home prices in parts of New Jersey creep gradually higher, analysts and academics say foreclosures continue to slow the state’s housing market and economy.
In some areas, such as previously fast-growing counties on the suburban fringe or long-depressed urban areas, low prices may be precursors of lasting economic change, according to the experts.
While the overall numbers have improved, New Jersey continues be among the leaders in both foreclosures and mortgages in trouble. Home values, which in much of the country have rebounded strongly since the Great Recession, continue to tread water in much of the state.
In some communities, the picture is worse. Atlantic City and Trenton rank first and second in the nation for foreclosures. Beyond those obvious sore spots, observers point to areas like Ocean County, where they say the twin blows of the recession and superstorm Sandy may be changing the long-term dynamics of the real estate market.
In the midst of preparing his firm’s latest, generally cheerful overview of housing trends around the nation, Daren Blomquist, a vice president of RealtyTrac of Irvine, CA, agreed to take a closer look at New Jersey markets.
“In many ways what we’re seeing in those areas, and for New Jersey overall, is running counter to the positive national trend,” Blomquist said. “There are still a lot of foreclosures, a lot of distressed mortgages and prices remain well below the pre-recession peaks.”
By RealtyTrac’s reckoning, median home prices reached their peak in New Jersey at $350,000 in July 2007, a bit later than most of the nation. Even after a jump in March, they are now at $265,000, 24.3 percent lower, the firm reported.
The numbers vary, but CoreLogic, another Irvine, CA, real-estate analytics firm, agrees that New Jersey is lagging. In April, it reported the state’s average housing prices rose by 1.6 percent during the previous year. But that gain was less than 46 other states and the District of Columbia. For the nation, the increase was 6.8 percent, CoreLogic found.
“NJ has experienced a high foreclosure rate and large number of distressed sales that have slowed home-value improvement,” said Frank Nothaft, CoreLogic’s chief economist.
Another housing-data firm, Seattle-based Zillow, calculated that housing values have dropped 11 percent in Atlantic City in 12 months, and 26.7 percent of mortgages there have negative equity, debt higher than the property value.
The problems extend beyond the city. Egg Harbor and Pleasantville were both down more than 7 percent, according to the firm. Dennis and Woodbine townships in Cape May County both saw double-digit drops in home values, though based on fewer sales. In Cumberland County, Bridgeton homes are worth only an average of $68,300, but their prices are also falling.
In Mercer County, Zillow showed the average value of a Trenton home is $83,000, down 1.4 percent. Prices are nearly twice as high in Neighboring Hamilton Township, but they dropped 1.9 percent, the firm found.
In Newark, where for a time housing values were coming back slightly faster than the state average, recent CoreLogic report shows them stagnant or receding, down half a percent in the most recent findings.
In contrast, housing data from the firms show Philadelphia prices rising 29 percent. Brooklyn has become one of the least-affordable places in the country compared to its historic norms. The New York City area as a whole, including Jersey City, saw a 4.3 percent year-over-year price increase.
Asked to assess these trends, Professor Charles Steindel of Ramapo College, the state’s former chief economist, pointed to the same culprit in the problem areas. “Foreclosures are still high” in much of the state, he said.
But Steindel added he is “a little encouraged that home prices are falling” in some of those places. To an extent, that reflects properties moving through foreclosure and coming to market at lower prices, he said. “The number of (new) cases is finally coming down,” Steindel said, creating a path toward potential improvement.