Have we hit bottom?
It’s the question anyone with an interest in the U.S. housing market is asking. The answer, not surprisingly, is a matter of perspective.
According to local real estate experts, the South Jersey region, including Moorestown in particular, was somewhat insulated from the brunt of the damage caused by the market crash four years ago.
“Our market, and the Delaware Valley in general, has been spared compared to the rest of the country,” said Theresa Krouse, manager at .
Attorney Benjamin Dash, whose handles a great deal of real estate litigation, said the rate of foreclosures in Moorestown—compared to the rest of the county, state and nation—is “definitely lower, just because this is a more affluent town, and therefore there are less people feeling the same crunch. But certainly there are people feeling it nonetheless.”
And don’t think the pain is confined to the low- and moderate-income members of the community, Dash said. His firm has handled numerous short sales in upscale communities and even short sold seven-figure shore houses.
The simple definition for a short sale is when a homeowner—through negotiations with the bank, usually via an attorney like Dash—is able to sell their home for less than they owe on their loan. More and more homeowners left with underwater properties post-crash are seeking this route, according to Dash, who said the most recent data (from 2011) showed close to 40 percent of the residential real estate in New Jersey was either underwater, in foreclosure, or owned by the bank.
“This has grown into something that really doesn’t discriminate at all,” he said. “We’ve had some people come through here who are very well-known in this town. I think people would be very surprised. It happens.”
Short sales are an attractive alternative for homeowners in danger of foreclosure, or for those who may have tapped their home’s equity, seen the value of the property plummet, and realize it’s never going to reach pre-bust levels, so why pay all that money back to the bank?
“Your home is your home, there’s no doubt about it,” said Dash. “But there are a lot of people that start to look at it economically as a business transaction and say, ‘My home’s never going be worth $700,000 again. It’s only worth $450,000—why would I do this?’ and that makes a lot of sense.”
While short sales and foreclosures are still trending somewhat, local real estate agents said there’s good reason to be optimistic about the housing market.
According to the Multiple Listing Service (MLS), an online database that tracks real estate transactions, there are about 450 fewer homes on the market in Burlington County in the first quarter of 2012 than in the first quarter of 2011, and closed sales in Moorestown specifically are up 22 percent.
Alyce Klaus, sales manager at , called this a “dramatic increase.”
“I think anyone in the industry would agree we’re seeing a stability right now,” said Klaus. “We have seen a lot of activity—not just here (at Weichert), but also every one of our brokers that we talk with.”
Krouse took an even more optimistic view of the landscape based on the sales data in front of her, saying, “We’re seeing an increase in houses going under contract in Moorestown and a decrease in inventory, which is a good trend. If your inventory starts to go down, that’s a sign of a recovery.”
Of the roughly 7,800 housing units in Moorestown (per the 2010 Census), 258 are currently on the market—about 3.3 percent.
Perhaps more tellingly, Krouse explained the general mood in the real estate world—kind of a downer the last few years—is drastically improving for buyers, sellers and brokers. It may not look or feel like 2005 or 2006, but it certainly doesn’t look or feel like 2008 or 2009.
“Over the course of the last two years, we’ve seen enough positive movement, that we’re starting to get excited,” she said. “There’s a lot more buzz going on. We’re getting a lot of calls … We’re starting to see bidding wars again … I think the bottom is definitely behind us.”
Of course, part of what’s driving the recovery is the drastic drop in prices, which is making homeownership more attractive and attainable than it’s ever been. Dave Lewis, broker/owner at , said the cocktail of cheap(er) homes and historically low interest rates has made for a “once in a generation” market.
According to MLS data, the median sales price for a home in Moorestown today is $325,000, a 42 percent drop from the first quarter of 2011. Data taken from the 2005-2009 American Community Survey put the value of a single-family home in Moorestown at right around $500,000.
Whether home values will ever reach their pre-bust levels is debatable, but Dash argued those values were the result of a ballooning market in which “you could buy a house today and turn around and sell it tomorrow and gain.”
Though there’s a certain amount of guesswork involved, he believes New Jersey has yet to hit bottom, predicting an “even bigger wave” of short sales and foreclosures once the backlog of foreclosures—estimated to be around 250,000 statewide—is unclogged in the not-too-distant future.
“Markets are cyclical. In the ‘70s we certainly saw a tremendous real estate depression that we rebounded out of. We saw another mini one in the ‘80s,” Dash said. “The issue is, people today … are only living through this one, and what we’re accustomed to seeing is significant growth. Now I think what we’re going to go back to is a realistic level of growth, once the market does, for lack of a better term, bottom out.”
Anyone seeking more information about short sales can contact Dash Farrow LLP at 856-235-8300 or visit their offices at 400 N. Church St., Suite 260.