Real estate market is losing air
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By
PRASHANT GOPAL
STAFF WRITER
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The
pace of existing-home sales in New
Jersey was down 16.3 percent in the second quarter,
compared with the same period in 2005.
Nationally, the pace of home sales in the second quarter slowed to a
seasonally adjusted rate of 6.69 million units, down 7 percent from the
prior-year quarter, the National Association of Realtors said Tuesday.
With inventories of unsold homes mounting, price appreciation is
slowing. Nationally, the median sale price for an existing single-family
home was $227,500 in the second quarter, up just 3.7 percent over a year.
The nation's strongest increase was in the Northeast, where the median
price rose 6.3 percent.
In the New York City region, which
includes Bergen, Passaic
and Hudson
counties, the median sale price was $549,200 in the quarter, up 8.4
percent but short of the double-digit annual increases of recent years.
"It's not too much of a surprise," said Sean Maher,
associate economist with Moody's Economy.com. "Housing is slowing
down."
Local Realtors say sellers need to bring their expectations in line
with the market.
"When your house is priced higher, you don't get as many
showings," said James Collins, a Realtor in the Alpine/Closter
office of Coldwell Banker. "When they come down 5 to 10 percent, you
start to get showings, and you'll see homes moving."
According to separate data from the New Jersey Multiple Listing
Service, the median sale price for a one- to four-family home in Bergen County was $488,000 in the second
quarter, a 5 percent increase over the same period last year. The price
increase also was 5 percent in Passaic
County, to
$390,000.
By contrast, prices increased 19 percent in Passaic
County from the second quarter
of 2004 to the second quarter of 2005, and 15 percent in Bergen County, according to the MLS data.
Bob Clarke, an agent with Classic Realty Group in Tenafly,
acknowledged that the market has slowed down, but said it appears to be
stabilizing.
A recent drop in interest rates has helped, he said. The rate for a
30-year fixed mortgage, which crept up from below 6 percent in 2005 to
6.63 percent earlier this month, stood at 6.55 percent last week,
according to Freddie Mac.
"Three or four months ago, there was a lot of fear," Clarke
said. "Nobody wanted to buy right before the market tanked. Nobody
knew where interest rates were going. People have the sense now that the
market isn't going to tank. It's leveling off, and interest rates have
leveled off."
But James Hughes, dean of the Edward J. Bloustein School of Planning
and Public Policy at Rutgers
University, said
the future of the housing market remains cloudy. He said there is no
certainty on interest rates, and he noted New Jersey has a relatively weak job
market.
"There's still the potential to have a housing-led
recession," Hughes said. "I don't think a soft landing is
guaranteed."
Hughes and other economists say the condo market is particularly risky
because of speculators who entered the market during the housing boom,
trying to make huge profits with quick sales.
Speculators are more likely to panic and sell in a down market, Hughes
said.
Nationally, the median condo price was $225,800 in the second quarter,
down 0.3 percent from 12 months earlier.
In Hudson County, where luxury towers are rising along
the Hudson River, the median condo and
co-op price in the second quarter was $370,000, up 5 percent over the
period ending June 30, 2005, according to the Hudson County Multiple
Listing Service.
The condos in Bergen
County sold for a
median of $400,000 in the second quarter, up 3.5 percent, according to
the New Jersey Multiple Listing Service. The median condo price in Passaic County was $360,000, up 8.3
percent.
New Jersey's wealth and its proximity
to New York City
have fueled the area's long real estate boom. But New Jersey was one of many former boom
areas that saw a drop in sales volume last quarter.
New Jersey
had the 10th worst drop in sales pace in the nation in the quarter. The
steepest declines were in Arizona and Florida, each at
about 27 percent. Low sales volume can often result in downward pressure
on home values.
The greatest sales growth was in Alaska,
with a 49 percent increase, and Arkansas,
which was up 18 percent.
Overall, 28 states had slower sales.
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