In the overheated housing market of 2005, Barbara O’Leary and Dennis Poletto bought a Bergenfield colonial for $440,000 — just five years after the previous owner had paid $175,000.
Now, they’d like to downsize into a place with no stairs. But they feel they can’t move, because real estate agents have told them their home would probably sell for about $330,000.
“Nobody expected the world to fall down and the housing market to fall through, and that’s where we stand now,” said O’Leary, 77, a retired executive secretary.
The couple’s experience is common across North Jersey, especially in lower-priced housing markets. Ten years after home prices peaked — before tumbling into the worst downturn in decades — most homes are still worth less than they were in mid-2006. One reason: New Jersey leads the nation in foreclosure starts, as the state catches up on a backlog of distressed properties.
An analysis by The Record found that last year, the median home price in Bergen County ticked up only 2.5 percent, to $415,000; it remains 13 percent behind its peak during the housing boom. In Passaic County, the median was unchanged, at $285,000 — 25 percent off its peak.
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The Record’s analysis also found a sharp contrast between North Jersey’s struggles to regain home values and far more robust gains in other metro areas around the country — particularly in the South and West — where stronger job and population growth have helped fuel a rising real estate market. The area’s woes also stand out in comparison to Manhattan and Brooklyn, where home prices have shot past their housing-boom highs by 44 percent to 55 percent.
There are some positive signs in New Jersey, analysts say: New Jersey employers are creating jobs at a more lively pace. Lenders are whittling down a backlog of homes destined for foreclosure. Mortgage rates remain low. And rising rents may persuade more young households to make the leap into homeownership. As long as the economy can stay out of recession, analysts say, demand for homes should support rising prices.
But as 2016 began, median home values in North Jersey were about where they were in late 2003 or early 2004, meaning that the majority of homeowners who bought in the last 12 or 13 years have, at best, broken even. The pace of sales has been dampened because many homeowners — like O’Leary and Poletto — are reluctant to sell at current prices. The number of sales is down about 37 percent from the peak in Bergen County, to about 8,900 last year, and down about 47 percent in Passaic, to about 3,500.
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In lower-priced areas like Hackensack, Garfield, Paterson or Passaic — where foreclosures are still an issue — values remain down by more than 25 percent from their peaks in mid-2006, with the typical house or condominium selling for less than $300,000, according to The Record’s analysis.
By contrast, in upper-end towns, prices are typically less than 10 percent below their previous peaks. In a few very pricey communities — such as Ridgewood, Alpine, Ho-Ho-Kus, Demarest and Englewood Cliffs — median prices have rebounded to within 5 percent of their prior peaks, or even surpassed them.
“There’s no question that the lower-income markets fell the hardest during the housing correction and have been the slowest to recover,” said Jeffrey Otteau of Otteau Valuation Group in East Brunswick, a widely followed analyst of the New Jersey housing market.
