‘I sold a house for $585,000 in 2005 and just resold it for $462,000,” says Dawn Petrozzini, a real estate agent with REMAX Greater Princeton. This house is in South Brunswick, but it could be in any town in central New Jersey. The story is the same everywhere. Prices are down from highs reached during the buying frenzy that marked the end of the real estate run-up that began in 2000.
The price dips have lowered listing prices from 10 to 20 percent — sometimes more — and have gotten the attention of buyers, who are flocking to open houses. “There are tremendous bargains out there,” says John Burke, office manager for Gloria Nilson’s Hamilton office. “We’ve never had a time with both falling interest rates and home prices.” An additional incentive, he points out, are the tax credits — up to $8,000 — that the government is offering to first time buyers.
“The tax credit ends in November,” says Burke. “There’s no telling if it will be extended. Tell you the truth, I hope it won’t be extended. We need to get people off the fence. They’re looking at more and more houses, but they’re waiting.”
Homebuyers could be hesitating because, even with plentiful bargains in every price range and every town, prices are still falling. Trulia, a real estate website at www.trulia.com, has just added a “price reductions” category. Type in the name of any area town, and it lists pages of price reductions, many of them recent. The cuts are happening in every town, but they are especially steep and plentiful in Princeton, where prices appeared to hold up well in the early stages of the down market.
A listing price for a home at 199 Cherry Valley Road in Princeton dropped 15.1 percent, to $675,000, on May 2. A home at 250 Mercer Street fell 11.5 percent, to $3,495,000, on April 16. A home at 46 Ridgeview Circle dropped 9.5 percent, to $693,000, on May 22. At 562 Ewing Street, a house fell 3 percent, to $639,000, on May 22. A condo at 215 Bayard Lane was reduced 9.5 percent, to $488,000, on May 29. Trulia lists 82 price reductions in Princeton zip codes during the past two months. Given that Princeton’s 08540 zip code stretches into other towns, some of the houses are not actually in Princeton borough or township, but most are.
Like Princeton’s elastic zip code, bargains stretch to every corner of the real estate market — starter condos, multi-level mansions, mid-market Colonials, they’re all on sale.
“Prices have dropped about 18 percent,” says Petrozzini. “In Princeton you’re not getting $1.4 million, you’re getting $1.1 million. In Hopewell Ridge and Hopewell Hunt, you’re not getting $1.2 million, you’re getting closer to a million or something in the high $900,000s.”
Moving down the price ladder, Petrozzini talks about a house at 7 East Acres Drive in Hopewell that sold in 2006 for $650,000 and is now on the market for $579,000. Another home, on 19 Carson Road in Lawrence “with a Princeton mailing address,” would have been listed for “at least $850,000” in 2006, she says, and is now “a steal” at $699,000. Meanwhile, Bob Angelli of Gloria Nilson Hamilton, saw two houses sell during the last week in May “in the $400,000 to $430,000 range.” Both sold quickly, and would have fetched “over $500,000 in 2006.” The reason for the quick sales? “A drop in price,” he says with no hesitation.
“With a lack of comps, it’s hard to know what the price is,” he says. “A house drops until buyers say ‘this is what it’s worth.’ It’s hard to find the new market — to set prices to get buyers excited.”
Roberta Parker of Prudential Fox Roach in Princeton has a house that could excite buyers with a modest budget, a willingness to do some updating, and an appreciation for character. The Hightstown home, at 218 Morrison Avenue, has an enormous, rocking-chair-ready wraparound porch. “It’s on a tree-lined street, right down the street from a school,” says Parker. “It’s a real old-fashioned neighborhood.” What’s more, this house has a legal apartment and a three-car garage. On the market for $398,000 last October, it now carries the bargain price tag of $299,000.
Like other real estate agents, Angelli is seeing bargains across the price spectrum. “I just listed a really nice house at 49 Crestwood Drive near Mercer County Park for $429,000,” he says. “It would have been $490,000, near $500,000. Condos in Society Hill I and II that were $210,000 and $215,000 in 2006 are now $170,000 or $175,000.” While others are reluctant to put a date to the bottom of this down market, Angelli says that it has already come and gone. “The best deals were a month ago,” he says. “I’ve sold more houses in the last two weeks than in the preceding two months.”
Angelli’s listings tend to cluster around Hamilton and Yardville. Rhada Cheerath of Burgdorff ERA’s Nassau Street office has many listings in West Windsor, where the bottom may not yet have been reached. “There are certainly bargains out there,” she says. “In West Windsor prices are down 15 to 25 percent from 2005. There are great bargains to be had.”
Cheerath says that buyers sense that the time is right — or is getting close. “When I do open houses for homes in the $500,000 to $1 million range, I get 15 to 20 people,” she says. “There are a lot of buyers out there. They realize that prices are pretty good, but they’re not stepping up to make an offer.” Cheerath thinks that two factors are at play. “The problem is fear of job loss,” she says. “A huge number of West Windsor residents are in IT, and they have taken a hit in both the biotech industry and the finance industry.” Even those who believe that their jobs are secure, and who have not seen bonuses shrink or hours cut, are holding back, trying to time the housing market. “Some are looking for the perfect bottom,” says Cheerath.
When every factor is taken into consideration, she says the perfect bottom could be here. “I would say houses now at $800,000, across the board, would have been $1 million in 2005,” she declares. “With interest rates at 4.75 percent, it’s the bargain of the century! These interest rates won’t last.”
Also working in West Windsor, Lori Stohn of Long & Foster agrees that prices are down. “We’ve got a listing at 21 Sapphire Drive,” she says. “It has five bedrooms, two-and-a-half baths, a finished basement, a fully-updated granite kitchen, and an absolutely stunning two-tiered patio.” The homeowners bought the house in 2007 for $765,000. It is on the market for $699,900. Comparable homes sold in the recent past for $800,000 to $900,000. This particular home, says Stohn, does have an issue. “It is near power lines,” she says, “but when the market was booming, no one thought twice about power lines.” Buyers can now be picky, and Stohn finds that they are exercising that prerogative with a vengeance. “Most people want a house that’s done,” she says. “Done and a bargain.” The bargain part is no longer hard to find. “In the Estates of Princeton Junction the builder sold the highest price homes for $1.2 million,” she gives as an example. “They’re now going for $900,000.”
Even with this drop, sales are far from automatic. Anyone who is serious about selling must accept that the bubble has returned to earth, and is flatter than the potato fields on which so many West Windsor houses were built. Has the message gotten through to sellers? Stohn says that for the most part it has. “Sellers are not fighting on price as much,” she says. “Last year we were constantly fighting with them (over setting a listing price). Sellers are now more open. They’re looking at price reductions. They’re listening. Last year some sellers were testing the market. Not now.” Stohn points out that a relatively new phenomenon should make sellers think twice about going for a price that is higher than an informed real estate agent suggests. Even if an enthusiastic buyer agrees to a price that is higher than that being paid for comparable homes, there is an excellent chance that the seller will not get that price — and may well lose the deal altogether. “The deal is dead if the appraisal does not come in,” says Stohn. In the recent past the value of a home was nearly always what a buyer and a seller agreed that it was. Appraisers, who come into play whenever there is a mortgage, analyzing both the home under contract and comparable homes that have sold recently, rarely held up a sale. But now, with banks toppling under the weight of bad real estate loans, the rules have changed. If a home is not priced in line with comparable homes, it is very unlikely that it will earn an appraisal that will convince a bank to provide a mortgage. “Sellers need to take the emotion out,” says Stohn. When setting a listing price, they need to forget about how much love and money they have lavished on their home. They need to blank out the wonderfully high prices their neighbors’ homes fetched just two or three years ago — and even last year. Then, they need to get busy. “Staging is essential,” says Stohn. The house must be perfect, completely de-cluttered, and inviting in every single way — inside and out. When this is done, and the price is just right, a house will not only sell, but, yes, harking back to the boom, it will sell fast — and maybe even with multiple offers. “I know an agent who just sold her house with multiple offers,” says Stohn. “She had it decorated down to the nines. It was gorgeous.” It was also priced for the spring of 2009. “It sold in the $800,000s,” says Stohn. “At the height of the market it probably would have gotten $1 million.” Joan Eisenberg of REMAX Greater Princeton has also begun to see multiple offers again. “It’s not as frenetic as it was,” she says, “but, yes, we are seeing multiple offers. We just had one at 3 King Haven in Plainsboro. It was well priced, at $875,000.” The house would have sold for more than $1 million two years ago, she says. Another example is an older home not far from the first. “It very well maintained, but everything original,” says Eisenberg. She and the sellers worked hard to price it right, at a price that was about 20 percent less than it would have been at the height of the boom. “We had two offers,” she says. Correct pricing was key in pulling in multiple offers for each. Condition was important, too. “Buyers want pristine condition,” says Eisenberg. They also want to see an updated home. “Wallpaper,” she declares, “is the kiss of death.” In a sign that a bottom may indeed have been reached, at least in some segments of the housing market, Eisenberg says that investors are out again. “I have investors buying condos, prices are so low,” she says. One area that is attracting investors’ attention is Canal Pointe. “Prices were so high that rentals wouldn’t cover expenses,” she says. But that has changed. Prices are now low enough so that investors can install a renter and turn a profit. Like Stohn, Eisenberg says that it can be hard to get a home appraised for the amount that a buyer is willing to pay. “Appraisals are more difficult than they used to be,” she says. “It’s a reality we have to live with. We don’t celebrate until an appraisal comes in.” Eisenberg is not seeing many foreclosures, and a check on real estate website Trulia confirms that the number of foreclosures in the greater Princeton area is very low. It lists 9 with a Princeton zip code (again not all in the township or borough), 9 in East Windsor, 10 in Plainsboro, 29 in Hamilton, and just 2 in West Windsor and in Hopewell. There are also short sales, says Eisenberg. These are situations in which the lender has agreed to accept less to settle the mortgage on the house than the amount that is owed. Given the drop in prices that occurred during the past three years, coupled with easy refinancing during that time, there are many homes in that category. But Eisenberg advises buyers to be wary of both foreclosures and short sales. They may seem to be the ultimate bargain, but they are far from easy to secure. “These are difficult purchases to make,” she has found. Buyers may spend a lot on home inspections and then may never even hear back from the bank. “Steer clear,” advises Eisenberg.
While Eisenberg is warning of the dangers of foreclosures, Roxanne Gennari is seeing tremendous price reductions in solid, seller-owned homes in a range of prices. “I have a house at 50 Martin Lane in Hamilton,” she says. “It was on the market for $639,000. It has been reduced in increments. It’s now on the market for $364,900. This is a really unbelievable price. A house across the street, at 59 Martin, sold for $528,000 in September, 2008.”
The same thing is happening at the high end. “I have a house at 2 Bailey in Hopewell Township,” says Gennari. “It’s on the market for $1,099,000. You would never touch that home for that money two years ago. It has all the upgrades in Hopewell Hunt — a conservatory, a first floor sun room. It’s professionally landscaped. It has a circular drive and an in-ground pool and waterfall. It’s on a premium lot.” The owners of the eight-year-old house, she says, spent $100,000 on the driveway pavers alone. The sumptuous pool area was another $250,000 to $300,000. “A similar model that doesn’t have the upgrades — no conservatory, no sun room — sold for $1,220,000 in 2004 before the market crashed,” says Gennari. Another house in the development, at 17 Caroline, sold for $1,175,000 a year ago, she adds. That house did not have 2 Bailey’s upgrades either. Gennari is dismayed at the fact that the home at 2 Bailey has been reduced to $1,099,000. “It’s crushing,” she says. Gennari talks about another high-end bargain in Hopewell. This home, in Todd Ridge, had been on the market in 2008 for $1,575,000, but was quickly taken off when its owner was transferred overseas. It is now back on the market — at $1,299,000. “It’s exquisite,” says the real estate agent. Exquisite though they undoubtedly are, high end homes in Hopewell — and throughout the area — are struggling to match up with buyers. “The luxury end has further to go in the Princeton area,” says Sue Cook of NT Callaway. “There is five to six years inventory in the $2 million plus market.” A big part of the problem, she says, is that “our luxury buyers were coming from the financial market.” Wall Street’s decline is definitely being felt, as is the wariness that is enveloping corporations of all sizes. “We’re not seeing the CEOs coming in,” says Cook. Surplus inventory is a little less of a problem further down, but prices are not holding up. “Princeton Oaks was up to $1 million,” says Cook of a West Windsor development. “Now it’s in the $600,000s, $700,000s, $800,000s.” A large brick home at 5 Sleepy Hollow has just been reduced to $980,000. “I would have sold for well over a million,” she says. Similar drops are occurring throughout the town, despite its stellar reputation. “An AOL survey just named West Windsor the best town in the U.S.A. for families,” says Cook. Another fine town in which to raise a family, says Cook, is Lawrenceville, where homes in Kings Brook, a top development, had been selling for $1 million. “We now have one under contract in the low-$700,000s,” says Cook. Another home in the development, at 2 Registry, is listed at $630,000. “It’s in great condition. It would have been over $800,000,” she says. One of the bargains in Princeton, says Cook, is a single family house in Governor’s Lane, a development made up largely of townhomes. “It’s four stories, beautifully appointed,” she says. “It’s on the market for $1.2 million, and probably would have sold for $250,000 more.” This is truly a buyer’s market, Cook emphasizes, adding something to the “location, location, location” mantra. “Negotiate, negotiate, negotiate,” she advises. Don’t be afraid to approach a house with a big price tag. The way to snag an outstanding bargain, she says, is to “choose houses that are overpriced and negotiate.” At the same time, she urges buyers not to get carried away. “I really counsel people that a house is not a bank,” she says. “It’s a roof over your head. The new normal is not what it used to be.” What the new normal could be, the real estate agents agree, is good news for nearly everyone, even for those who will lose money on a sale. “Don’t look at the $250,000 you’re leaving on the table,” Petrozzini urges move up buyers. “Now you can afford the house you couldn’t afford three years ago, in the town with the school system you want.” As for first time buyers, she says they may never again have such an opportunity. Depressed prices, low interest rates, and help from Uncle Sam. Oh my! All of this is doubly good for engaged couples. “The tax credit applies to the person, not to the house,” says Petrozzini. Find a great condo at a bargain price, say $200,000, use two tax credits, and, she points out, the government will chip in up to $16,000 toward the purchase price.
In a bit of just slightly unusual June wedding advice, she says: “Buy before the wedding, and let the tax credit pay for the honeymoon.”