NEW BRUNSWICK – While the recent uptick in New Jersey single-family home sales bodes well for a recovery, one expert said Thursday the housing sector will continue to be stifled for some time.
Patrick O’Keefe, director of economic research for JH Cohn Accountants and Consultants, said homebuilding rates are at “near record lows.” Also, the homeowner rate in the Garden State has decreased steadily since 2005, O’Keefe said.
“It implies more lower prices and more sellers (to come),” he said.
So far, 8.4 percent of all mortgages in New Jersey are in the foreclosure stage. That’s the second highest in the country, with Florida having the highest amount. Since the financial crisis hit four years ago, New Jersey has seen 1.23 million mortgage delinquencies and foreclosures.
When foreclosed homes are sold at discounted rates, O’Keefe said there will be “additional downward pressure” on housing prices as a whole.
Much of the recent home sales are for previously-occupied homes, as opposed to brand new houses.
Earlier in the economic conference here, Rutgers University economist James Hughes said the current generation of residents, known as Echo-Boomers, are more likely to be renters than homeowners.
Data provided by O’Keefe supported that theory, as 50 percent of recent construction permits were for multifamily dwellings.
O’Keefe said part of the reason for New Jersey’s slow economic recovery is because it’s disproportionately reliant on the goods and services sectors, and has a relatively small manufacturing sector. States that have rebounded faster than New Jersey, especially ones in the South, tend to have much bigger manufacturing bases, he said.
Even more disturbing is that there are approximately 80,000 residents who are “underutilized,” largely because they are working part-time when they would prefer full-time work.
Adding fuel to the proverbial fire is a shrinking state government, which may sound good to streamlining advocates, but also means smaller revenues. Between 2008 and 2012, O’Keefe said state revenues have fallen $3.4 billion, largely due to smaller proceeds from personal income and sales taxes.