Rural Areas Slower to Rebound

By ANTOINETTE MARTIN
Published: January 12, 2012

FOR whatever reason, homes sales picked up in New Jersey in the latter part of 2011. A new statewide market report shows contract signings increased in six of the seven months from May through November, compared with 2010.
Also, the inventory of homes for sale shrank every month since May, according to Jeffrey G. Otteau, an analyst, whose Otteau Valuation Group in East Brunswick does monthly reports for the real estate industry; he called the latest news a concrete sign that the market was “stabilizing.”

His December report was the first one in several years to sound a hopeful note. Until the state’s huge foreclosure backlog comes back on the market — and how fast that happens is important — the market may improve sometime this year to the point that prices stop declining and perhaps even modestly start to rise.

But that is the statewide picture. A great division in market fortunes between northern and southern Jersey — and urbanized areas close to Manhattan and more rural regions — became clear during the recent recession and remains stark in the fresh statistics. Mr. Otteau predicted that the gap would shape the timing and pattern of potential recovery, and several agents in the field agreed with him.

“Simply put,” said Dawn Rapa, a Coldwell Banker Elite agent working in rural Salem County, “the only people I’ve seen selling their houses recently are those who absolutely had to — because they were in financial disarray, a job change, divorce or death.”

Salem County, rich in historic houses and farmland but short on well-paying jobs or a quick commute to an urban center, has the largest inventory of all 21 counties surveyed: 44.5 months’ worth of houses, the preponderance of them priced under $400,000.

That compares with a statewide inventory of 13 months, both over all and in the under-$400,000 category.

Several other counties in southern New Jersey have inventories about twice the size of the state average — 29 months’ worth in Cumberland County, 26 in Cape May County, and 24 in Atlantic County.

In Cape May and Atlantic, the primary backlog is for more expensive homes, many of them built in the boom years to appeal to shoreline vacationers. Atlantic has just shy of six years’ worth of inventory in the $600,000-to-$1 million range.

For homes priced from $1 million to $2.5 million, the Otteau report predicted, it will take more than four years to sell the inventory in Atlantic County and close to seven years in Ocean County.

In Cumberland County, which like Salem is part of the Delaware Valley area that extends eastward from Pennsylvania, the homes are mostly priced under $400,000. There are not enough homes priced higher to be statistically significant, according to the report. Ms. Rapa said she sold 37 houses in Salem County last year, but prices were down “considerably.” And multiple listing numbers indicate that although inventory dipped 10 percent, there were 14 percent fewer sales over all compared with the year before.

Two of the Coldwell Banker agent’s listings that have sat on the market for many months despite price drops: a restored and modernized 1851 colonial in the historic hamlet of Alloway with three bedrooms and two baths, now offered at $186,000; and a four-bedroom two-bath house on a horse farm with a barn and 10 acres in Pilesgrove, now listed for $349,900.

“We just had an offer for $312,000 on the Pilesgrove house,” first listed in February 2011, said Ms. Rapa, “but the owners won’t go there.”

The market misery is not all concentrated in the south, however. In the northernmost county, Sussex, the inventory is 20 months. In the $400,000-to-$599,999 bracket, five and a half years’ supply is already on the market.

In the town of Vernon, which is home to several popular ski areas, and where construction was booming in the mid-2000s, the average sale price of a home was $250,000 in 2007, according to the real estate Web site Trulia. Now the site has it at $100,000.

A large house set on 1.3 acres there, with a view of ski slopes from the deck, was built and sold in 2004 for $392,000. The house, with three bedrooms and three and a half baths on Cherokee Trail, has been on the market since October, and the asking price is now $358,000.

Nearby in the somewhat more affluent town of Sparta, a number of large houses built about a decade ago on one-acre or larger lots are now being offered at reduced prices or as short sales.

“Houses are selling,” said Catherine Kut, an agent at Weichert Realtors in Sparta, “but they have to be in fabulous condition and still occupied, as a rule.

“I had a closing yesterday,” she said earlier this month. “The house was $438,000, and it sold in less than 90 days, but it was a cream puff. It had almost five acres of land, a finished walkout basement, brand-new granite counters — everything.”

Another of her listings was in great shape when it went on the market for $525,000 last February after the owner lost his job. A four-bedroom two-and-a-half-bath house, it is set on 1.3 acres and has a pool, and it was attractively decorated.

But the seller had to relocate for new employment. Now the vacant house is on the market as a short sale, in which a lender agrees to accept less than the amount owed on the mortgage, and listed at $445,000.

An ice dam formed on the roof earlier this winter and caused exterior damage, so a credit is being offered on the sale price to cover the cost of repairs.

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