Home prices see first rise since '07: North Jersey's 2% hike gives hope to market
Home prices in the New York metropolitan area, including North Jersey, rose slightly in the first quarter of 2010 - the first such increase since 2007 and the latest sign the market is stabilizing.
The median price of an existing single-family home in the region hit $436,900 in the first quarter, up 2 percent from a year earlier, the National Association of Realtors said Tuesday. But values have dropped since 2006 and 2007, when the median price was around $540,000. The last time prices rose in the area was in the third quarter of 2007.
Nationally, the median price of an existing single-family home was $166,100, down 0.7 percent from a year earlier.
The North Jersey price rise was in line with gains in household incomes, said Patrick O'Keefe, an economist with the accounting firm J.H. Cohn in Roseland.
"While the region's economy is beginning to recover, it will be quite some time before business conditions - and employment - return to pre-recession levels," he said. "As a consequence, housing will recover only slowly."
The number of sales statewide was up 14.5 percent over the first quarter of 2009, probably because of an $8,000 federal tax credit for first-time home buyers and a $6,500 credit for repeat buyers. Since both credits expired April 30, buyers had an incentive to jump into the market during the first quarter. The increase in sales also reflected the fact that the market was very slow during the first quarter of 2009, which was just a few months after the financial market crisis.
The expiration of the tax credit may lead to slower home sales during the rst of 2010, some analysts say. In a recent report, appraiser Jeffrey Otteau of East Brunswick said the real estate market will be affected by the end of the tax credit and an expected rise in mortgage rates later this year. In addition, he said, the inventory of homes for sale has been rising in New Jersey, as homeowners who waited out the recession put their properties on the market.
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Mary Ann Sgobba, a real estate agent with ERA Realty Center in Totowa, said most of the sales activity has been in the most affordable end of the market, under $400,000. She said that there have been multiple offers on bank-owned properties, which tend to be priced below competing properties.
The end of the tax credit, she said, has removed many buyers' sense of urgency.
"People are still looking, but they're not as motivated," she said.
Nelson Chen, a Fort Lee real estate broker, said buyers who missed out on the tax credit are trying to buy a house before mortgage rates rise from their current levels around 5 percent.
"There's an unwritten deadline for them to get in," Chen said.
Nationally, prices rose in almost 60 percent of the areas tracked by the NAR, including Boston (up 10.7 percent) and San Francisco (up 29 percent).
Several hard-hit regions continued to see price declines, including Las Vegas (down 11.8 percent) and Miami (down 6 percent), while Phoenix prices actually rose 9.1 percent. The Fort Myers, Fla. area declined 1 percent, but is down a whopping 68 percent from the market peak in 2005. These "sand state" markets suffered a severe boom-and-bust cycle after developers overbuilt and lenders loosened mortgage standards, allowing unqualified buyers to get into homes they couldn't afford.
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