When Kathy Owens decided to help her mother sell the two-bedroom Bedminster town home this spring, Owens had one sales price in mind, and her mother had another. They turned to their local real estate agent real-estate agent for advice.

The agent suggested a price that was between the figures the two women had in mind, and listed the town home. Within a week, they had an offer. Within two weeks, they had three offers, and the unit sold for $5,000 above the asking price. The sale closed the Friday before Thanksgiving.

But this sort of quick sale is more likely to happen in certain price ranges and in high-demand communities such as the Hills in Basking Ridge/Bedminster.

In Hunterdon County, where most of the new construction in the last 10 years has been very large, custom estate homes, sales have fallen dramatically. For example, in Union Township, there were 68 sales throughout the town in the first half of 2005, and the median price of homes was $396,000. In the same period this year, there were only three sales, and the median price was $175,000. This reflects the drop in home prices and the fact that expensive homes are not selling as well as less expensive homes.

Overall, in Hunterdon, Somerset, Middlesex and Union counties, the number of home sales fell in the first half of 2009 compared with the same period last year, which echoed a statewide trend, according to residential sales data reported to the state.

But while the state isn’t yet reporting sales data for the second half of the year, industry experts who track these trends have seen an upsurge in activity, with sale prices stabilizing in the lower price ranges during the second half of 2009.

Real-estate agents will tell you that a better gauge of market change is to find a home that sells twice in the given period.

  • In Lebanon Township, 17 Hickory Run Road sold for $700,000 on Sept. 12, 2007. The same home sold again on Nov. 7, 2008 for $595,000. In that same period, the median price of homes in Lebanon Township rose from $370,000 to $456,000, but the number of sales dropped from 34 to 7, so one could argue that the median price may not accurately reflect the market’s dramatic slowdown.

 

  • Likewise, 107 Wildcat Trail in Bethlehem sold on Aug. 18, 2006 for $875,000. The new owners invested $50,000 in improvements, Beatty said, but they sold it on Nov. 13, 2009 for $742,000.

 

William O. Keleher, chairman and CEO of Prudential New Jersey Properties, divides the current New Jersey real-estate market into the segment less than $600,000 and the segment more than $600,000.

“Segment 1 (below $600,000) has strengthened significantly over the past five months, with unit sales significantly increasing year over year. In fact, in October and November, unit sales have actually reached and in some cases surpassed 2007 levels,” Keleher said. “As a result of these market conditions, homes in this segment have stopped depreciating, and have in fact begun to appreciate over the past 90 days.”

He attributed this improvement to three factors:

  • A significant improvement in affordability as a result of the depreciation that has occurred during the last 30 months, and dramatically low interest rates.
  • A pent up demand that began developing in 2005 and 2006 as the market experienced incredible appreciation, and many first-time homebuyers were priced out of the market.
  • An extraordinary financial stimulus provided by the first-time homebuyer tax-credit program.

 

Keleher said this is not the case with the more expensive segment, where home sales have strengthened only marginally during the last five months, with unit sales increasing very modestly year over year. “This segment of the market has continued to depreciate throughout 2009, and is projected to depreciate a bit more in the first six months of 2010,” Keleher said.

He attributes the lack of recovery in this segment to four factors:

  • The very significant job losses in the metro New York area that occurred in the upper-income positions.
  • Extreme property taxes imposed by the state on higher-priced homes.
  • Other taxes and penalties that New Jersey has imposed on higher-income individuals and families during the last several years.
  • An extremely strong self-fulfilling prophecy indicating that now is not the time to buy because prices will go even lower.

Keleher concluded that as a result of all of these issues, on average, properties in the first segment have depreciated approximately 7 to 8 percent in the last 12 months and now are increasing in value at a moderate rate. But he said that houses in the more expensive range have depreciated 15 to 18 percent in the past 12 months, and will continue to depreciate for at least the next six months. Beatty said in Hunterdon County, he’s seeing a general depreciation in the higher prices of 18 to 30 percent.

The best answer to the growing number of people being forced to sell short because of job losses will a stabilizing of the job market, experts agree.

Jeffrey Otteau of Otteau Evaluation Group in East Brunswick, said, “We’ve never seen this magnitude of increase (in home sales) when unemployment was rising – ever.”

But most real-estate professionals will tell you that until the job situation improves, many people will sit on the sidelines and the more expensive homes will languish in the market.

Joseph J. Seneca, a professor at the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, said he thinks the New Jersey and national housing markets will continue to improve heading into 2010, albeit with sales at much lower levels than in the middle years of this decade.

“The number of people losing their jobs is getting smaller each month, but people are still losing their jobs,” he said. The labor market must grow in a sustainable way, which would “provide a key critical factor in sustaining the housing market recovery.”

In the meantime, Diane Dilzell, president of the NJ Association of Realtors, said that the federal tax credits for first-time buyers gave the real-estate market a needed boost this year, and that the spring market is expected to be stronger because those credits were extended and expanded to include certain repeat buyers.

“Next year will be better,” Dilzell said. “And let’s face it, the housing industry drives the economy. When people buy new homes, they also buy new furniture, contract for repairs and do other things that help keep the economy going.”

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