The housing market is slowing improving in New Jersey, but foreclosures could ruin the celebration.  Patrick O'Keefe, economic analyst with J.H. Cohn in Roseland, says foreclosures and distressed properties are a major concern when we look at the housing recovery.

"New Jersey will see a spike in distressed properties in the new year as we iron out the legal issues that were complicating the mortgage resolution process, but by mid year I think that will be behind us and the state will be back on the path to normal and more vibrant housing economy."

He says new home construction coupled with more optimistic home builders suggests that the housing market may be finally be bouncing upward.

"A lot of the impoteus to that is the multi-family component or the rental part of it...and that improvement should accelerate in the new year here in the state."

Looking ahead to the new year, O'Keefe says it will move forward in a good direction, with some stumbling blocks along the way.

"I think 2012 will be a year of will be slow because of the foreclosures, but a year from now we will look back and say that the housing market in New Jersey is much better than it was 5 years ago."