By David Cruz
Since the collapse of the real estate market a few years ago, thousands of Garden State homes have lost their value and ended up underwater, worth less than their mortgage, or worse, gone into foreclosure. But, according to many industry watchers, the market’s gray skies are starting to clear.
“I think the affordability index has come down to the point where people can again afford a home,” says Valley National Bancorp CEO Gerald Lipkin. “Interest rates are still low; prices of homes are down, so if you’re going to buy a house, now’s the time.”
A low affordability index may not sound so great, if you’re selling. House prices in New Jersey have fallen as much as 30 percent since the market peaked in 2006, according to some estimates. Lipkin says that’s probably going to be the case for at least a couple of years.
“They still have a lot of product on the market and that just causes supply to be high enough, [so that] even though the demand or the purchasers are coming into the market, the prices haven’t moved,” he said.
Realtor Steve Gucciardo is lucky to be selling homes in downtown Jersey City, a market which has remained fairly stable, despite what he says has been a 15 to 20 percent correction since 2006. He says he’s seen sales tick upwards slowly but agrees with Lipkin that there’s still a long way to go before the market returns to pre-2006 levels.
“If you bought from 2005 to 2008 and you got one of those creative loans and now you’re looking to sell because either your job changed or you don’t have a job or you’re moving to other areas of the country, you’re going to suffer the consequences of the downturn in the market,” he said.
Ultimately, realtors hope that you hurry up and buy some of the inventory so that supply can diminish just as demand is increasing. That’s when real estate prices will again start to go up, which they say is an excellent indicator of an economic recovery.