Despite an improving economy, low unemployment and cheap energy prices, the housing market continues to sputter in New Jersey.

PARK RIDGE, IL - DECEMBER 29: A "House For Sale" sign is visible in front of an existing home December 29, 2005 in Park Ridge, Illinois. Sales of existing homes in November fell, reportedly, by 1.7 percent, spreading concern with economists on the state of the housing market. (Photo by Tim Boyle/Getty Images)
Tim Boyle, Getty Images

And while real estate markets in other parts of the country have been slow to recover from the housing bubble, New Jersey's recovery has been even slower in comparison.

“What we’ve seen is that the state’s housing markets have lagged behind that slow national pace,” said Patrick O'Keefe, director of economic research at CohnReznick.

Nationally, housing prices today are about 1 percent below where they were at the prior peak, and they are even lower in New Jersey.

"In New Jersey, housing prices are more than 20 percent below where they were prior to the housing meltdown, so you can see the gap that exists,” O'Keefe said.

The homeownership rate, which is the share of homes that are owner-occupied, has declined almost one-tenth from where it was in 2005, according to O'Keefe, who added that the lower rate can be attributed to stronger mortgage underwriting standards.

O'Keefe said other factors include New Jersey's slow and subdued economic growth, a foreclosure rate that is still very high and virtually no inflation.

“What you have is a situation where people can’t afford to sell their current home because they’d have to go to the closing table with a check rather than walking away with one,” O'Keefe said. “We expect it to be a long slog back. Home prices are going to have to come up considerably before the current residents will be able or willing to list them for sale.”

So how long will it take for the state's housing market to make a strong comeback?

“Forecasting forward is extremely difficult because for the most recent quarter, for example, there was some backsliding in prices both in New Jersey and nationally,” O'Keefe said.

For those hoping to see a recovery soon, it's not going to happen.

“It’s going to be a long time, a decade or more, but if inflation starts to heat up the value of the dollar will decline, and since mortgages are a fixed amount at a fixed rate, inflation will work to the benefit of the borrower," O'Keefe said. "However, virtually all of the stars are aligned against a more rapid rebound in New Jersey.”

He said the bottom line is if you bought a house 10 years ago for $400,000 you probably can’t afford to sell it today.

“On a $400,000 house, that would mean today it’s worth about $320 ,000,” O'Keefe said.

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