While Princeton’s middle market housing — that in the $300,000 to $700,000 range — has shown resilience in the tumult of the Great Recession (U.S. 1, August 31), the borough’s high-end market tells a different story.

“Anything over $2 million becomes more difficult to sell in a timely fashion,” says Pete Callaway, president of N.T. Callaway Real Estate at 4 Nassau Street. “What we used to be able to sell in 90 days might take us a year or more now.”

Above $3 million is especially dicey for real estate agents these days, even downtown, where overall demand outweighs the number of houses on the market. That demand, however, is aimed largely at the middle-market range. “Over $3 million, we’ve had very few sales this year,” Callaway says.

An example of this is 48 Sycamore Road, a four-bedroom, five-bath single-family home built in 2007 and listed by Henderson Sotheby’s. The property went on the market in October, 2010. The house, featured in NJ Monthly magazine at the time it hit the market, is now pending sale, nearly a year later.

At least in the high-end market, the real estate bubble in Princeton Borough peaked in July of 2005, according to Callaway. From his own research, he says that housing prices overall in the borough rose 141 percent from 2000 to 2005. From 2006 until now they have dropped 24-40 percent, depending on where you look.

For the owner of a $2 million-plus home in the borough, this has translated into a waiting game. As sales have eroded, so has patience among homeowners. The lucky ones, says Callaway, were those who bought their houses in the 1990s. But if you bought post-2005, it’s been a long haul and much less financially rewarding for those who have sold.

Callaway is guessing that rock bottom will come next spring, when the traditional real estate sales crush usually begins.

Or it might wait until after the presidential election, which he says tends to make people hang onto their decisions to buy or sell homes. Or it could be some other time entirely. The day-to-day market and the mood of the country, he says, make it tough to gauge when anything resembling the bottom might show up. “The world needs to settle down first.”

Whenever the bottom comes, however, Callaway cautions people to keep something in mind — the market “will not go shooting up the way it used to.” This is why he and his agents tell buyers and sellers not to wait for the bottom to hit. With everyone waiting for it, the eventual resurgence will increase prices, but it also will increase the federal interest rate, which currently sits around 4.5 percent.

Low interest rates are a selling point for Callaway, who says that such low rates will save buyers a great deal of money if they can buy right now. Once housing sales start coming back, that rate will go up and savings will diminish. “If you wait for the bottom,” Callaway says, “everybody is going to come out swinging.”

In Princeton Borough, high-end sales have suffered from this waiting-out mentality. This year alone, 20 high-end houses have come off the market due to lack of potential buyers. When houses sit on the market for a long time, as the $2 million and higher homes are doing, potential buyers start wondering what’s wrong with them, and then it becomes its own self-defeating cycle, Callaway says.

One of the high-end houses to come off the market recently is 19 Vandeventer (the Beatty House), which was profiled in U.S. 1 in its May 19, 2010, issue. The house, built by a colonel of the Continental Army circa 1780 on what is now part of Princeton University’s land, then moved to its current location on the corner of Vandeventer and Park Place, was on the market in spring, 2010, for $2.195 million. By the time it came off the market a few months ago, the asking price had dropped to $1.795 million.

Callaway says that homeowners often remove their properties from the market to reset the number of days that it has been for sale. Public records keep track of when a house goes up for sale, but if it is off the market for more than a month, the days-on-market counter goes back to zero (though the Trend system of real estate records will show that it formerly was up for sale for however long). So Callaway suspects that many of the houses that have been pulled from the market will come back.

Nineteen Vandeventer has plenty of company this year. Two other $1.5 million-plus houses in the borough that have lower asking prices than when they first hit the market:

6 Hodge Road, a four-bedroom, 3.5 bath townhouse and listed by Callaway, originally had an asking price of $1.7 million (March) and is now on the market for $1.6 million. The property, built in 1878, comes with a full basement and a two-car garage. Taxes: $31,557 per year.

51 Cleveland Lane, an 1861 Colonial-style single-family home with six bedrooms, 3.5 baths, a two-car garage, and a full basement, went on the market in May for $2.15 million. It is now asking $1.895 million. Taxes: $33,116 per year. Listed by Coldwell Banker.

Three other high-end borough homes that have been on the market since earlier this year have held at their original asking prices:

280 Nassau Street, a five-bedroom, 3.5 bath Colonial built in 1881 (and nicknamed the “House of Seven Gables”) has been on the market for $1.795 million since June. Taxes: $26,346. Listed by Henderson Sotheby’s.

159 Library Place has held its asking price of $4.6 million for six months. The house, a Georgian-style home built in 1906, features six bedrooms, five full baths, and two half-baths. Taxes: $60,180. Listed by Callaway.

129 Hodge Road, an all-brick John Russell Pope Colonial manor built circa 1900 has held its original asking price of $4.5 million for five months. The home features 18 rooms and seven fireplaces, plus arcaded gardens, a reflecting pool with a fountain, and a swimming pool. Taxes: $78,270 per year. Listed by Henderson Sotheby’s.

Callaway says that many homeowners at the higher end of the market do not want to drop their prices. But the truth, he says, is that this is the new reality of the real estate market. Houses need to be priced to move, and right now, even in coveted Princeton Borough, where demand outweighs supply, houses above $3 million are simply not priced to move.

“The borough is selling well and so is the township,” Callaway says. “But still, over $3 million — you’ll have to wait.”

#b#N.T. Callaway Real Estate LLC#/b#, 4 Nassau Street, Princeton 08542; 609-921-1050. Norman “Pete” Callaway, president. www.ntcallaway.com

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