NJ Housing Prices Down; Will They Start Rising Soon? [AUDIO]
Everybody seems to agree the economy is getting better – but for the fifth month in a row, new data shows housing prices have dropped.
So what’s going on here? And when will things turn around?
Pat O’Keefe, the Director of Economic Research at JH Cohn says the decline in prices is actually evidence that market is healing – because in addition to the conventional market where sellers are offering their houses “we have a very large over-hang – nationwide and here in New Jersey – in fact in New Jersey we have one of the largest over-hangs proportionally – of properties in the foreclosure pipeline.”
He says, “That foreclosure inventory had accumulated substantially over the last 18 months as a number of administrative and legal issues surrounding the appropriate ways in which to process foreclosures had to be resolved, so what we’re seeing now is the combination of those foreclosure properties increasingly are coming to market, and we have perspective sellers who have for a long time been looking for an opportunity to sell their homes…we’re beginning to whittle down the inventory of unsold homes – ultimately that will not only cause prices to stabilize but begin the process of increasing.”
O’Keefe adds, “With growing employment here in New Jersey as well as nationally, incomes up a little bit, all those things are favorable, but in the near term, we can expect that some downward pressure on prices will continue…what we need to keep in mind is the marketplace is aware of the amount of inventory that is on the market – and the amount of inventory – because foreclosures are no secret – that will be coming to market in the not-too-distant future.”
He points out the upside to all of this is “an increase in transactions – and ultimately as those transactions draw down the inventory, prices will also start up again…over the next 6 to 9 months that inventory will be whittled down – and my expectation is that the end of this year we will see a rise in housing prices…this is a recovery that is taking time, it is requiring adjustments on the part of sellers, buyers and banks that are financing the transactions:…we’re taking baby steps, but they’re baby steps in the right direction.”