New Jersey Home Prices Dropped as Foreclosed Homes Climbed

Just like in many other U.S. states, home prices in New Jersey declined in March compared to the same month in 2008, as the number of foreclosed homes increased across the state.

In the Standard & Poor’s/Case-Shiller Home Price Index released on Tuesday, home prices in the New York City area, including 14 counties in neighboring New Jersey, declined by 11.8 percent, compared to home prices in March last year.

Maureen Maitland, index services vice president at S&P, predicted that home prices will decline further as more bank owned homes enter the housing market.

Housing analysts in the area expected home prices to drop further by about one percent a month.

Unemployment and other uncertainties are battering the housing market, according to Joseph Seneca, professor at Rutgers University’s Edward J. Bloustein School of Planning and Public Policy. He said that job security concerns are hindering those who are employed to consider buying a house although home prices are at record lows, especially prices of foreclosed homes.

Seneca cited unemployment concerns as one of the negatives clobbering housing market positives such as record-low home loan rates, the $8,000 tax credit and high level of affordability.

Seneca added that about 55,000 jobs were eliminated in New Jersey since January this year.

Further home price declines are affirmed by Jeffrey Otteau, a top executive at Otteau Valuation Group, a firm that monitors and analyzes real estate data in New Jersey. He believes that home prices will fall further down as foreclosed homes and job losses increase and then will bottom out in the last months of the year.

Otteau and fellow analysts cite the Wall Street collapse in September last year as the main reason for the increased pace of home price declines in the New York-New Jersey area. They said the full effect of the collapse is being realized as it is spreading into the housing market and into home prices.

Although home price declines in New York and New Jersey are not as steep as in other states mainly because the pace of foreclosed homes is not as high as in foreclosure-battered states, home prices decreases are considered record declines in the area.

Jim Diffley, a top executive at Massachusetts-based HIS Global Insight, said the employment situation will determine when home prices bottom out.

Aside from the employment factor, the other major factor influencing home prices is the pace of repo homes and other types of existing homes entering the housing market.

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