The number of homes sold in New Jersey during Q1 2008 dropped by 30% on account of credit crunch, higher mortgage rates, foreclosures, and spiraling food and fuel prices.
According to New Jersey Association of Realtors (NAR), the number of houses sold in New Jersey during the first three months of 2008 slumped by 30% whereas the sales of houses at the national level plunged by 22%, as reported by mycentraljersey.
NAR disclosed that the New Jersey housing industry saw the sales of 114,100 homes in the first quarter of 2008, a decline from 163,000 houses sold during the same period a year ago. Also, the median home prices in the state fell by 0.6% to $361,200 from $363,500 in the first quarter of 2007.
The fall in the New Jersey housing sector was largely attributed to the declining housing affordability because of credit crisis. Moreover, the mortgage rates and home prices flared up, bringing down the home sales. Also, the housing industry saw a significant rise in foreclosures by residents, who obtained large write-downs and risky loans from financial firms.
Besides these, another main reason that continued to take toll on the housing industry was that borrowers failed to obtain big loans as banks tightened the lending standards in response to subprime meltdown. Furthermore, the fall in the New Jersey housing sector during the first quarter of 2008 was added on by low income and spiraling food and fuel prices. People refrained themselves from buying new homes as prices of essential commodities soared.
In addition, the home construction industry might not support the economic growth of the state this year, making home developers less optimistic. Hence, considering the economic slowdown, tight lending standards, along with depreciation in dollar, the New Jersey housing industry is anticipated to further decline in future.
According to a Research Analyst at RNCOS, “The number of homes sold in New Jersey in the first quarter of 2008 slumped because of higher mortgage rates and foreclosures. Also, the housing industry is expected to see further fall in future, as the state economy is showing no sign of high growth. The home buyers are struggling to access loans due to high lending rates and tight borrowing standards.”
Related Market Research Reports:
Opportunities in Indian Housing Sector (2006-2007)
