Posts (RSS)Rise in Repo Home Listings Reduces Home Prices in NJ
The growing number of properties on repo home listings in New Jersey is pulling down home prices in the state. According to market data, about 16,800 homeowners with properties on listings for sale have reduced their market prices. This represented discounts of about $730 million.
Large price cuts on properties were reported in cities of Paterson and Newark, while slight reductions were seen in Woodbridge and Edison.
Before the rise in the number of properties on repo home listings, the average price of a home in New Jersey was $517,727. But the foreclosure crisis forced 16,800 homeowners to reduce the prices of their properties on sale for an average of $43,478 per unit. The current average market price of homes on sales listings is $474,249.
Meanwhile, New Jersey cities that have a high number of properties on foreclosure home listings are experiencing the biggest decline in home prices. For example, Newark registered an average 15 percent price decline or $45,628. This indicated that the average listing price of a property in the city is $263,651.
In Edison, listing prices of homes showed a 6 percent drop, resulting to an average price of $356,301 after reduction. On the other hand, Essex County showed the highest reduction in home prices, with 11 percent off the original value.
Real estate agent Donald Fanelli said that these places have the most inventories in repo home listings because they have the highest foreclosure rates in the state. According to Fanelli, he was trying to sell a Federal Home Loan Mortgage Corp.-owned house which was posted on repo home listings in November with a price tag of $121,000.
However, by March this year, the price of the property dropped to almost $73,000. He attributed the price decline to vandalism, gang activity and theft in the area where the house is located.
He also said that it is difficult to sell a property in the current market because people with a not-so-perfect credit are having difficulty obtaining financing. And those who have the capacity to purchase pay in cash and rent the houses out, Fanelli added.
According to industry experts, the decline in home prices could have a ripple effect on the housing market in a certain area because values are driven by prices at which neighboring houses have been sold.
Economists said that they expect home prices to continue to drop throughout the year if the rise in the number of properties on repo home listings remains unabated.