NEW JERSEY: A Housing Market Divided


HEADING SOUTH This house on Forge Road in Cherry Hill has been on the market almost continuously since 2008, when it was listed for $324,000. The asking price is now $250,000.

The New York Times
By ANTOINETTE MARTIN
Published: October 15, 2010

IT seems that the story of what is happening in the real estate market has very nearly become a tale of two states: northern New Jersey and southern New Jersey.

Both are hurting, of course, but the southern half is a world of hurt apart, according to a new analysis of sales statistics proffered by the Otteau Valuation Group in New Brunswick.

Looking at sample towns grouped geographically, the Otteau analysts concluded that:

?Median sales prices fell 2.7 percent in the northern suburbs during the first nine months of this year, compared to last year; the decline in the southern suburbs was 7.2 percent

?For shoreline communities, median prices rose 3.79 percent in the north and fell 6 percent in the south.

?In towns along rail lines, median prices increased 5.72 percent in the north, and fell 6 percent in the south.

In seminars being conducted this month, Jeffrey G. Otteau, the president of the Otteau Group, is briefing brokers on some of the new findings. He says that in the southern part of New Jersey, starting with Burlington and Ocean Counties, the housing market probably won?t even start to recover for at least a year.

Meanwhile, the buildup of unsold inventory in three southern counties has become severe, according to sales data drawn from multiple listings.

?In Salem County, on the southwestern side of the state, it would take 46 months ? just short of four years ? to sell all the homes now on the market at the current rate of sales.

?In Cumberland County, just south of Salem, and in Atlantic County, stretching to the eastern oceanfront, the inventory stands at 22 months.

?The counties with the lowest inventories are all in northern New Jersey: Union and Middlesex, with 9.5 months; Essex with 10.2; Bergen, 10.3; and Somerset, 10.6.

Mr. Otteau attributed the gap to the north?s being ?New York-centric? and the south ?Philadelphia-centric.?

When it comes to those buyers who are choosing New Jersey as a lower-priced alternative to their first-choice city, he said, New York exerts greater influence on New Jersey?s real estate market than Philadelphia. There are two reasons for that, he suggested. First, the price disparity is greater between New York and New Jersey; second, the range of housing options is wider in northern New Jersey than in southern New Jersey.

That is not to say the north hasn?t had its issues. The New York City residential market?s recent malaise strongly affected Hudson County, which is due west of Manhattan.

For instance, in four representative Hudson County communities grouped in a ?basket? for Mr. Otteau?s study ? Hoboken, Jersey City, Weehawken and West New York ? the median price declined by 8.23 percent this year. That was more than in the southern suburban group, which consisted of Cherry Hill, Egg Harbor, Mount Laurel and Washington Township. (Median price is the midpoint number; half of the prices were above, and half below. By a different measure ? average price ? the dip was greater in the southern suburbs.)

In Manhattan, though, sales prices and pace are picking up again, by most accounts, and Mr. Otteau predicted that ?overflow? buyers in New Jersey would increase in number within about six months. In the Philadelphia area, he noted, analysts have not discerned the same signs of strengthening.

Along train lines, towns with stations offering Midtown Direct train service to Manhattan, like Millburn and Montclair, continued to hold their own this year in terms of home value; the median price for that group rose to $683,750 by Sept. 30, from $646,750 a year ago, according to the new analysis. Also, the number of sales increased 24 percent over last year.

Towns along the River LINE light-rail service, which offers a connection to Philadelphia ? Brigantine and North Wildwood are in that group ? had a 19.5 percent increase in sales volume over 2009. But the median price fell to $352,500 from $375,000 for the same period last year.

Certainly, southern New Jersey has its own standout performers ? for instance Margate, the shoreline town known as the home of the six-story-tall ?Lucy the Elephant,? a novelty structure built in 1882 to help sell real estate. Margate had a 19 percent jump in median sales price over the nine-month period. (The average price was up 13 percent.)

?I just had clients settle on a $1.6 million house last week,? said Paula Hartman of the Hartman Home Team at Prudential Fox and Roach Realtors. ?I had a $2.5 million sale, new construction, and a bunch of other sales. People still want to be here.?

Ms. Hartman said that many sellers of high-end oceanfront homes were concerned about having to carry their properties through the winter, when shore area sales are sparse, and were willing to make repairs and upgrades to get deals done now. ?The good stuff is on sale,? she said, ?and there are ?steals? available.?

In other communities, though, even a price break and a cash offer may not be enough to make buyers jump. In the Philadelphia bedroom community of Cherry Hill, a trim-looking raised ranch at 178 Pearlcroft Road was offered last April for $329,000.

The federal tax incentive for first-time buyers expired soon afterward, so the sellers offered to compensate: they specified in the listing that they would pay a buyer $8,000 at closing.

It is now five months later, and the four-bedroom two-and-a-half-bath house is still for sale. Its price has been cut to $295,000.