About Me

My photo
Sohail is a Founding Member of International Luxury Society and Sohail is now a International Real Estate Specialist, aka IRES. Having said this, we can better position the marketing of the properties those are listed with Sohail of Keller Williams Real Estate. A service owners/builders dreamed of is now available with Team Sohail. Please contact us should you need more information on this. He Cares, He Listens, He Gets Results!

Tuesday, May 20, 2008

Bucking the trend

Jersey's housing market is doing better than most other states
Wednesday, May 14, 2008
BY SAM ALI
Star-Ledger Staff

The median price for a single-family home fell 7.7 percent, to $196,300, in the first quarter, compared with the same period last year -- the largest year-over-year decline since the National Association of Realtors began reporting prices in 1982.

But the Northeast region bucked the national trend, with existing home prices rising 3.2 percent during the quarter, to a median of $280,000. The Northeast was the only region in the country to show a rise in home prices during the first three months of the year, according to quarterly housing data released yesterday by the NAR.

In New Jersey, the housing market continued to fare better than the nation as a whole.
Home prices in the Garden State rose in a number of areas, including the Atlantic City region, where the median sales price increased 4.8 percent in the first quarter, to $277,400, and the Trenton-Ewing market, where the median price rose 1.6 percent, to $288,200. The median is the price where half the homes sold for more and half for less.

And in stark contrast to the rest of the country, New Jersey was one of only three states where the volume of existing home sales actually rose in the first quarter compared with a year earlier.
Nationally, existing-home sales -- which generally account for 85 percent of all home sales -- dropped 22 percent from the first quarter of 2007, the NAR reported.

However, in New Jersey, the sales volume rose 4 percent. The other two states that posted increases in home sales for the quarter were Alaska and Illinois.

Kenneth Fears, an economist with the NAR, attributed the jump in existing home sales in New Jersey to a dramatic drop in 30-year fixed mortgage rates over the past six months. Fears said interest rates on conforming, 30-year, fixed-rate loans slipped to as low as 5.8 percent, from 6.8 percent, making home buying more affordable.

The low rates, coupled with sluggish sales the previous two quarters and New Jersey's proximity to Manhattan, apparently led to a spike in demand during the most recent quarter.

"Part of what we're seeing now is pent-up demand is getting released again," Fears said. "Sales in New Jersey were very slow for awhile and it was hard to get financing and rates were higher. It has since loosened up."

Also helping spur sales in New Jersey is a resurgence in the number of lenders getting approved to make FHA loans -- mortgages backed by the Federal Housing Administration that cater to people with blemished credit and low-to-moderate income households, said Lawrence Yun, chief economist of the NAR. Demand for FHA loans, which historically accounted for about 20 percent of mortgage originations, dried up during the housing boom as homebuyers were lured by the ease of securing subprime loans, Yun said.

FHA applications rose 95 percent in the fourth quarter of 2007, Yun said.

"To originate FHA loans, lenders first need to get certified from the HUD (Department of Housing and Urban Development), and more and more lenders are trying and getting approved," he said.
Yun said he expects an even bigger rise in FHA loan usage this year.

The housing market in other parts of the country clearly did not fare so well during the first quarter, according to the NAR report.

The NAR's quarterly survey of home prices showed prices in the South, dropped 7.5 percent, to a median of $164,200; in the Midwest, they fell 7.9 percent, to $142,700; and in the West, they plunged 12.3 percent, to $296,300.

All told, median prices in 100 of 149 metro areas fell in the first quarter of 2008.
In New Jersey, existing home prices in the Newark-Union area, which includes Essex, Hunterdon, Morris, Sussex and Union counties, fell 3.4 percent, to $409,300. In the New York-northern New Jersey area, the median price fell 3.9 percent, to $445,4000. And in the Edison area, which includes Middlesex, Monmouth, Ocean and Somerset counties, the median home price fell 0.6 percent, to $361,200.

But even in those parts of the state where prices fell, the declines were modest compared with most of the rest of the country.

The NAR blamed much of the record decline in home prices on liquidity problems that are making it difficult for homebuyers to secure financing for expensive homes in high-priced markets.
Indeed, lenders are charging between 1 and 1.5 percentage points more for so-called jumbo loans, compared with conforming loans under $417,000, said Keith Gumbinger, a vice president at HSH Associates, a financial publisher based in Pompton Plains. And the higher rates are discouraging sales in higher price ranges, he said.

As of last week, the average rate on a 30-year fixed jumbo mortgage was 7.18 percent, compared with 6.03 percent for a conforming loan, Gumbinger said.

Also hurting home prices and sales is the big spike in foreclosure rates over the past 12 months, Fears said.
A separate report yesterday showed the number of home foreclosures rose sharply last month compared to April 2007, jumping 65 percent nationally. Data released by the California-based research firm RealtyTrac showed more than 54,500 properties were repossessed by lenders nationwide in April. In all, about 2 percent of U.S. households were in some stage of foreclosure during the month, RealtyTrac said.

"In areas where you have a lot of foreclosed properties, lenders are fire-selling those homes at deeply discounted prices, so that is skewing median prices down as well," said Walter Molony, a spokesman for the NAR.

No comments: