New Jersey home prices still exceed the national average by a wide margin, but according to the Federal Reserve Bank of Philadelphia, South Jersey continues to be hardest hit with declining home prices.
In its latest quarterly home pricing report, comparing the purchase prices of homes in New Jersey, Pennsylvania and Delaware, New Jersey saw its price index drop 0.4 percent, to 213 percent, compared to a home price in 1991 (100 percent) in the third quarter. Year over year, the New Jersey index dropped 4.8 percent.
Jeffrey Otteau, president of East Brunswick appraisal firm Otteau Valuation Group, said the pace of home sales across the state has stabilized over the past six months, and the inventory of homes has decreased by 12 percent in the same time period, but South Jersey has not seen the same benefits as the rest of the state.
According to Otteau, most of the homes coming off the market are high-priced properties in North Jersey.
"When you start to break the market down into submarkets, you start to see very different patterns," Otteau said. "The largest declines are occurring in rural markets, urban markets and southern Jersey."
The Philadelphia Fed reported home price indexes in Atlantic City and Camden decreased more than 7 percent, and Ocean City saw its index decline by nearly 8 percent. The Vineland/Millville/Bridgeton area, according to the Fed's results, saw its home price index decrease almost 10 percent since third quarter 2010.
"All of these markets — rural, urban and South Jersey — have lower household incomes, and as a result, higher unemployment rates," Otteau said. "These were the markets that experienced the highest number of subprime mortgage originations back during the boom … as a result of that, they have the highest levels of delinquency today, the highest percentages of short sales, and all of that creates downward pressure on house prices."
"South Jersey does not benefit from inbound migration like North Jersey does," Otteau said. "If you work in Philadelphia, it's counterintuitive to live in New Jersey, because you're generally going into a market with higher house prices and higher taxes, whereas in North Jersey, it is intuitive … because home prices are lower, because it offers a suburban lifestyle which is not available in New York City, but is available in suburban Philadelphia."