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Latest story: In mortgage crisis, deals - and even lenders -are going under

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Latest story:  Bill lets towns tax sale of homes

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'Short sale' from lender bails out stranded sellers

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Hackensack Homes for Sale Summary

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Home sales fell in North Jersey in 2009
Sunday, March 28, 2010
Last updated: Sunday March 28, 2010, 1:22 PM
BY KATHLEEN LYNN AND DAVE SHEINGOLD
The Record
STAFF WRITERS

Click here for a chart of median homes sales in Bergen/Passaic counties.

See housing market changes, at the county level, the muncipal level and within market value segments.

North Jersey home prices dropped 8 percent last year, falling to their lowest level since 2004 and draining billions of dollars from the housing market.

Despite federal efforts to prop up the market with low mortgage rates and an $8,000 tax credit, the median price for single-family homes dropped 8 percent in Bergen County and 9 percent in Passaic County, according to an analysis of sales data by The Record. For the year, homes sold at a median price of $415,000 in Bergen and $320,000 in Passaic. Prices dropped the most at the low and high ends of the market.

"We entered 2009 staring into the economic abyss," said Rutgers economist James Hughes. And that was reflected in the housing market, which continued to pay for the excesses of the housing boom.

It's too early to tell how 2010 prices will shape up, although many analysts believe housing demand will slacken after the tax credit expires next month.

As painful as 2009's price declines were for sellers, they opened the door to homeownership for many first-time buyers.

"Houses that were $350,000 can be under $300,000 now," said real estate agent Ellen Weiner of Weichert in Clifton.

In fact, prices in 2009 were down about 15 percent from their peaks in the middle of the decade — much less than the roughly 30 percent average decline seen nationwide. Even more striking, the number of sales in the two counties has plummeted by 62 percent since the market peak, The Record's analysis found. Only about 7,400 residential real estate sales were recorded in Bergen and Passaic, down from 19,300 in 2005.

For most people, who are neither buying or selling, lower values reduce household wealth, making consumers less willing — and able — to borrow and spend. This lost housing wealth has added to a sense of unease about the economy, which has been plagued by unemployment rates around 10 percent.

The analysis also found that:

    * Median prices dropped most in areas with the lowest and highest prices. In communities where the typical price is less than $300,000, the median price sank 15 percent in 2009. At the high end, where homes generally sell for at least $750,000, the typical price dropped 11 percent.
       
    * Total sales volume in the two counties plummeted from $9.3 billion in 2005 to $3.3 billion in 2009.
       
    * In a separate sign of market trouble, there was one category of sales that did not drop in 2009. Roughly 1,500 sales were recorded during or immediately after foreclosures by lenders against owners who stopped making mortgage payments, about the same as in 2008.
       
    * The market has lost roughly $22.5 billion in total value since prices started falling in 2007. That figure is reached by multiplying the typical home loss — $60,000 to $65,000 — during the slump by the 355,000 housing units in the two counties.
       
    * Hardest hit last year were less-expensive markets such as Paterson, Fairview, Hackensack and Prospect Park, where the median price sank 18 to 27 percent. Many affluent towns also were affected. The typical price dropped 13 to 29 percent in Allendale, Edgewater, Norwood and Old Tappan.
       
    * A few places seemed to escape the market's wrath, with stable prices and even some gains seen in Cliffside Park, Englewood Cliffs, Ho-Ho-Kus, Mahwah and Totowa.
       
    * All told, 76 of the 86 municipalities in Bergen and Passaic saw continued dips in prices.

"For those homeowners who bought at the height of the market, from 2004 to 2006, the implications were sobering," said Barbara Ostroth, a Coldwell Banker real estate agent in Oradell. Some of those homeowners ended up in short sales, selling the property for less than was owed on the mortgage to escape foreclosure.

But for buyers, the lower prices were an opportunity. Danielli and Jim Wells, for example, thought they could afford only a condo. But with prices down, they were able to buy a Cape Cod in Clifton for $320,000 last April.

"When we decided to buy, we had a lot of people telling us not to do it, a lot of Debbie Downers telling us it wasn't the right time," said Danielli Wells, 27, a child-care worker. Friends and family advised them to wait for prices to drop further. But they felt if they could keep their monthly mortgage costs close to what they were paying in rent, they'd come out ahead in the long run. As it turned out, their mortgage payments (not including property taxes) are only about $50 more than the rent they paid for a one-bedroom apartment.

"And the $8,000 from the government didn't hurt, either," Danielli Wells said, referring to the federal tax credit for first-time buyers.

Chris Rotio, a 26-year-old health care administrator, bought a ranch on a cul-de-sac in Waldwick for $360,000 and renovated it into a four-bedroom colonial of almost 4,000 square feet. He and his agent, Sheldon Neal of Re/Max in Oradell, think the house would have sold for $450,000 at the height of the market.

"I felt that timing was everything," said Rotio. "The tax credit, mortgage rates, home prices — everything came together and we really hit the trifecta."

For trade-up buyers, the lower values cut both ways — they got less for their old homes, but also paid less for the next one.

Kris O'Boyle and her husband, Tim, first put their Teaneck house on the market in 2007, hoping to move to Monmouth County, where they have relatives. But the real estate market was deteriorating, and the O'Boyles soon realized they couldn't get the price they wanted. So they took their house off the market and decided to concentrate on building up their savings.

When they put the Teaneck home back on the market last year, they started with an asking price about 10 percent below what they asked in 2007.

"We were a little disappointed that we were going to get less for our house, but we knew that we'd be ending up with more house for our money in the area we were moving to," said Kris O'Boyle, a financial analyst.

Between their extra savings and the decline in home values, they were able to get a four-bedroom, four-bath house in Middletown, a big step up from the three-bedroom houses they'd originally considered.

"I know two years ago, we wouldn't have been able to touch the house we're in now," O'Boyle said.

Prices fell most at the top and bottom of the housing market. At the low end, rising unemployment and tougher lending standards pushed potential buyers out of the market. In addition, a rising number of those sales were foreclosures, which typically sell at distressed prices, said Hughes, the Rutgers economist.

Luxury home sales were also hit by the credit crunch, with jumbo mortgages becoming more expensive and harder to get, Hughes said.

In Saddle River, only three homes sold for over $2 million through the multiple listing service in 2009, down from 16 in 2008, according to broker Charles Gildea of Marron Gildea & Donohue, which has offices in Saddle River, Ridgewood and Ho-Ho-Kus.

Affluent households continue to hold back because of concerns about the economy and employment. Though Wall Street lost fewer jobs than expected after the 2008 financial meltdown, talk of tougher federal regulation of financial firms has added to uncertainty in that sector, Gildea said.

"I think the upper-end towns will continue to soften," Gildea said.

E-mail: lynn@northjersey.com and sheingold@northjersey.com

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