By KEVIN POST Business Editor pressofAtlanticCity.com
The housing market shared in the summer economic slump, brought on by the downgrade of the U.S. credit rating, impotent congressional squabbling over deficit reduction and Europe’s self-inflicted debt crisis.
Home prices fell again, but by less in the southern New Jersey shore market, the latest data from the National Association of Realtors show.
Home sales, though, increased everywhere from a year ago — up 13 percent in New Jersey — helped by record low mortgage interest rates.
In the Atlantic, Cape May and Cumberland counties region, the median home price in the third quarter was down 3.8 percent from a year ago to $220,600.
That was better than the 4.7 percent decline nationwide and 6.5 percent drop in the Northeast.
Anthony D’Alicandro, president of the Atlantic City & Atlantic County Board of Realtors and broker/owner of Coldwell Banker Casa Bella Realtors in Linwood, said the price drop is a function of supply and demand, with too much inventory and too many distressed properties on the market.
Another factor is low consumer confidence, which is lower than it was in 2008, he said.
But overall, D’Alicandro said he feels good about the housing market and “the little bit of growth we’re seeing.”
A healthy market grows slowly, as it did in the early 1990s, he said, not like the housing bubble in the following decade that ended in the current oversupply.
“We will see an initial decline in prices, and then nine to 12 months from now, we’ll start to see true stabilization and a little bit of growth by the end of 2012,” D’Alicandro said.
Mortgage rates that remain about 4 percent will continue to motivate buyers as long as they last, and the shore region will remain an appealing market to home buyers, especially those looking forward to retirement, he said.
“We have an attractive place to live, near the shore, with lots of things to do, near the big cities of Philadelphia and New York, with a nice climate, and we’ve seen a tremendous increase in the quality of health care, which is important,” D’Alicandro said.
Jarrod Grasso, the chief executive officer of the New Jersey Association of Realtors, expressed a similar sentiment about the statewide market in explaining the strength of New Jersey home sales.
“The resiliency of Garden State infrastructure and industry, plus our location between the New York City and Philadelphia markets, places us in a strong position for employment and stability,” Grasso said in a statement.
Thanks to low mortgage rates and fallen housing prices, home affordability continues at record-high levels.
NAR’s Housing Affordability Index was 183.8 in the third quarter, the highest ever except for the record level in the first quarter this year. The index gauges how readily those with a median income could afford a mortgage for a median-priced home. The median is where half are higher and half lower.
A third of home purchases in the third quarter were for cash, and two-thirds of those cash buyers were investors, the Realtors said.
D’Alicandro said that with rents for homes soaring, housing makes sense as an investment again. “We’re seeing rates of return in the 9 percent to 11 percent range.
Distressed properties — either short sales or foreclosures — made up 30 percent of home sales in the quarter, down from 33 percent in the second quarter, the Realtor survey said. Those houses typically sold at a discount of about 20 percent.
D’Alicandro said that while there is a large backlog of distressed properties from the legal system’s slowdown of foreclosure processing, he doesn’t expect those to undercut demand much for normal homes.
“If you think about a 28-year-old who is exceptionally good at writing HTML code, I don’t know that he wants to buy the house that’s been sitting vacant for three years,” he said.
The 3.8 percent decline in the regional home price follows a 5.8 percent increase in area home prices in the second quarter.
The current median price in Atlantic, Cape May and Cumberland counties is about the same as it was in 2009, and 13 percent lower than it was in 2008.