Jersey's hot home market a bit cooler

es, it is mid-August -- vacation time -- hardly what real estate agents would describe as the ideal home shopping season.

But in a housing market known for multiple offers, bidding wars and frenzied buyers waiving their rights to property inspections to snatch up homes, all those stale "For Sale" signs are getting a bit hard to ignore.

And yesterday the latest statistics from the National Association of Realtors suggested that despite New Jersey's sizzling temperatures, home sales in the Garden State appear to be cooling down a bit. In its quarterly survey, NAR found existing home sales in New Jersey, which included single-family homes and condos, were little changed from April through June, dipping 0.6 percent compared with the same period a year earlier.

This stands in contrast to the Northeast, which reported the strongest increase in existing home sales in the country, with second quarter activity rising 7.5 percent. Nationally, existing home sales rose 4.6 percent during the second quarter.

While predicting the housing boom's demise is a guessing game, at best, most housing experts said the apparent slowing in New Jersey home sales during the second quarter had more to do with price -- the median price of a home in the state was $322,500 -- and less to do with buyers' appetites.

"I would guess what is going on is an affordability issue," said Celia Chen, the director of housing economics at Economy.com, a research company in West Chester, Pa. "The prices have been rising very fast, curtailing sales."

Indeed, home prices continued to soar across the country in the second quarter. Nationally, the median price of a home rose 13.6 percent to $208,300. Of the 149 metro areas surveyed, 67 showed gains of more than 10 percent.

David Lereah, NAR's chief economist, called the increases unprecedented. "When you look at appreciation of home prices relative to the overall rate of inflation, these are the strongest increases on record," he said.

In the Northeast, the median price of a home -- half sold for more, half sold for less -- rose 13.1 percent for the second quarter to $243,100, the NAR reported.

Meanwhile, some of the biggest increases happened in New Jersey.

In the Atlantic City area, prices jumped 25.7 percent to $244,900 and 22.8 percent to $394,100 in the Edison area, a four-county span that includes Middlesex, Monmouth, Ocean and Somerset counties.

Home prices in the Newark metropolitan region -- a five-county span that includes Essex, Union, Morris, Warren and Sussex -- rose 9.9 percent to $414, 400.

"The houses are definitely staying on the market longer and, in our area, people are asking too much money for them," said Michael Lattimer, president of Lattimer Realty in Fairfield and president of the West Essex Board of Realtors. "I don't think the market has slowed down. I think people are asking too much money."

Consider the case of a small three-bedroom home on Rector Street in Millburn -- an upscale town where expensive homes are sometimes snatched up before they're even listed for sale. The "For Sale" sign planted on the front lawn hasn't budged for months and so far, not a single buyer has made an offer.

Originally, the owner -- an elderly widow who has since moved -- was asking $550,000. Three weeks ago, Joseph Ricci, a real estate agent at Century 21 in Millburn, took over the listing and marked the price down to $495,000.

Still, there have been no bids.

Ricci said the home is small and so is the property. It doesn't have central air conditioning. It needs work and there is no garage.

"It's overpriced," he said. "That's why a lot of homes don't sell, because of the price."

But it isn't just Millburn. Local real estate brokers said they have sensed a shift -- homes are staying on the market longer.

"The market is not wild, crazy like it was before," said Irwin Schrager, the regional manager for RE/MAX Village Square in South Orange, Maplewood, Livingston and Montclair. "It has slowed down a bit, but not dramatically. There is more of a balance between buyers and sellers now."

Still, in the world of real estate, what you think you see isn't necessarily what you're seeing, according to Jeffrey Otteau, founder and president of the Otteau Appraisal Group, an East Brunswick-based research firm that analyzes residential real estate trends. Just because sellers are reducing their prices doesn't mean the housing market is getting soft, he said.

"From a statistical standpoint, the market has not slowed down yet," he said. "But with all the hype we have heard with the real estate market, sellers' expectations are beyond what buyers are willing to pay. When something is offered at a price that makes sense, it still sells."

Indeed, a key indicator of market strength is the Unsold Inventory Index, which measures how many months it would take to sell the existing inventory of active listings at the present sales pace, Otteau said.

That figure in New Jersey stands at 3.3 months as compared with 3.5 months one year ago, he said. Back in the 1980s, when the residential real estate market hit the skids, the figure ranged from 9 months to 24 months, he said.

"This indicates a continued under-supplied market wherein the number of buyers is increasing faster than the inventory of unsold homes," he said.

Still, one troubling area Otteau is keeping a close watch on: the number of homes being offered for sale, which increased by 4 percent between May and June, and stands at its highest level in recent years.

"This is significant (because) any weakening in the residential market will ultimately hinge on an increase in the number of homes offered for sale to the point of exceeding buyer demand," he said.