Editor’s note: This report on the Camden, N.J., market is an excerpt from a special report by Inman News reporter Andrea V. Brambila, "10 Prime Real Estate Markets for First-Time Buyers," identifying the 10 metro markets with the greatest share of first-time homebuyers relying on mortgages backed by the Federal Housing Administration (FHA) in 2011.
Art director Diane Kidawa, 38, and her husband waited until the Camden market "settled" to purchase their first home last September in Medford Lakes, N.J. The sales price for their three-bedroom, two-bathroom home was $211,000. They bought it with a USDA loan and a 3.5 percent down payment.
Kidawa’s biggest fear about owning a home was not negative equity — the couple plans to stay in home for at least 30 years — but rather "staying employed so I can pay for it," she said.
Her husband currently stays at home with their children but is in search of a full-time job.
"This market is very tough. Being able to pay for (the home) and all that comes with it without a job would be my worst fear," Kidawa said.
"Two incomes are better than one," she added.
In the first quarter, 87.4 percent of area homes were affordable to those earning the area’s median family income, $87,075 — the highest median among the 10 markets.
At 8.4 percent, the March unemployment rate in the greater Philadelphia-Camden-Wilmington metro area — of which Camden is a metro division — was on par with the national rate. Job growth in the Camden metro specifically is expected to be slightly higher than that at the national level in 2012.
|Camden, N.J. metro|
|Population estimate (2011):||1,251,921|
|% of total sales to first-time buyers with FHA loans (2011)||26.6%|
|Median sales price for new and existing homes (Q1 2012):||$168,000|
|Median sales price drop from peak:||-27.0%|
|Total home sales (2011):||9,374|
|% chg. total sales (2011 vs. 2010)||-18.4%|
|% of area homes sold affordable to median-income families (Q1 2012)||87.4%|
|Unemployment rate (March 2012)||8.4%|
Ray Moorhouse, a team leader at Re/Max Main St. Realty in Moorestown, N.J., said employment is a major concern for first-time buyers. First-timers make up about 65 percent of his business.
"(They wonder) ‘What if something goes wrong — can I afford it?’ I think that’s why they may be a little more concerned with their inspections," Moorhouse said.
"I think it’s just hard for them to just jump in. And when you’re young and you have children, what’s the impact of that. I think it’s hard for young people today. It really is. They have a lot to think about."
For his part, he’s built a network of people available to answer questions from any buyer.
"I have plumbers, electricians, roofers, mortgage brokers, home inspectors. (I’m) always trying to educate my buyer so now they can make a decision based on fact," Moorhouse said.
"(If they ask) ‘How much is it going to be to put in a new kitchen?’ (I say) ‘Well, let’s get some carpenters in here. Let’s get some plumbers in here.’"
The median sales price in the Camden area was $168,000 in the first quarter, down 7.2 percent from first-quarter 2011. The area’s median price peaked in fourth-quarter 2007, at $230,000, and has since declined 27 percent.
Home sales in the area fell 18.4 percent in 2011, by far the largest drop among the 10 markets.
"We have definitely hit a road bump, but working with first-time buyers is always fun. They have not been soured by the market loss, and so many of them are (so) grateful for the opportunity to buy that it refreshes you as a seasoned agent," said Kelly-Anne Shoaf, a team leader at Keller Williams Realty in Medford, N.J. Kidawa is one of her clients.
"Working with first-time buyers is the best part of my job."
As in other markets on this list, her first-timers tend to be in their late 20s and early 30s.
"Over the years I have helped quite a few women purchase property as singles, only a handful of men as singles," she said.
"Last year we had two (first-time buyer) families; the rest were singles or couples."
Most are looking for single-family homes at a cost of around $200,000, but that "price range is very rarely the ‘Pottery Barn-ready’ home, so we end up going the condo or townhome route," Shoaf said.
"We love that as a team because it means we get to work with that client again at some point."
First-time buyers with FHA loans accounted for 26.6 percent of overall home sales in the area in 2011. FHA buyers overall accounted for 35.1 percent of sales.
"Over the past 36 months I have certainly seen an increase in both the volume of first-time buyers and the volume of FHA borrowers in the South Jersey area," said Michael McNamee, senior mortgage adviser at Oak Mortgage in Marlton, N.J.
He estimates that about 20 percent of his first-time buyer clients use FHA loans.
"Many of my borrowers are taking the approach of coming up with larger down payments to reduce their (private mortgage insurance) cost and avoid the chance of going underwater on their loan in the future should home prices take another down turn," McNamee said.
"Most (of) the borrowers who have ended up taking my FHA options have been those taking advantage of the lower down payment required … and possibly the larger seller credit options and not so much due to credit issues or (the) slightly lower (interest) rate being offered currently with FHA."
That lower rate has been offset by the recent increases in mortgage insurance premiums for FHA loans, he said.
Nearly12 percent of the Camden area’s overall sales during the fourth quarter were either short sales or REOs, about half the share at the national level. The Camden area also had a somewhat lower foreclosure rate in the first quarter: 1 in 284 units received a foreclosure filing.
New Jersey is a judicial foreclosure state. From start to finish, the foreclosure process in the state currently takes an average of 270 days, according to RealtyTrac. Only three other states — New York, Wisconsin, and Illinois — have longer foreclosure timelines. All three either primarily or only handle foreclosure through the courts.
A buyer considering buying a short sale in New Jersey may wait a long time for the lender to approve their offer, Moorhouse said.
He’s had approvals take anywhere from three months to 19 months, he said.
"If the buyer is living at home with mom and dad, it’s easier to wait for approval. But if the buyer is married with two kids (and) a dog and a cat," that’s a different story, Moorhouse said.
While depreciation in the Camden area is starting to slow, he said, shadow inventory — homes that are delinquent but have not yet begun the foreclosure process — looms over the market.
"We’re not sure what the impact is going to be. We don’t see many REOs today because they haven’t foreclosed. When you have an REO property … you can settle in 30 days. We’re going to see a lot more than that. It’s going to impact some neighborhoods more than others," Moorhouse said.
"We know that the banks are now able to move forward, but nobody’s pushed the button yet," he added.
Moorhouse expects that to change after the presidential election in November, and when it does, he expects the Camden market to be even more attractive to first-time buyers.
"It’s going to be a feeding frenzy if interest rates hold down. I paid 16-plus percent for my first house, so when someone tells me I can pay 3.77 (percent, and) some of these rates are even 2.5 percent — that’s outrageous," he said.
"There’s a sale on housing and there’s a sale on financing. Tell everybody."
|% of total sales to first-time buyers with FHA loans (2011)||26.6%||15.3%|
|% of total sales to overall buyers with FHA loans (2011)||35.1%||20.1%|
|% first-time FHA buyers receiving down payment assistance (2011)||26.2%||27.8%|
|Median sales price for new and existing homes (Q1 2012):||$168,000||$162,000|
|Median sales price % change (Q1 ’11-Q1 ’12)||-7.2%||-1.8%|
|Time median sales price peaked:||Q4 2007||Q4 2005|
|Peak median sales price:||$230,000||$254,000|
|Median sales price drop from peak:||-27%||-36.2%|
|Total home sales (2011):||9,374||3.78 million|
|% chg. total sales (2011 vs. 2010)||-18.4%||-6.7%|
|Population estimate (2011)||1.25 million||311.6 million|
|Sales per population (2011)||134||82|
|Median family income (Q1 2012)||$87,075||$65,000|
|% of area homes sold affordable to median-income families (Q1 2012)||87.4%||77.5%|
|% chg. affordability (Q1 2012 vs. Q1 2011)||7.1%||3.9%|
|Unemployment rate (March 2012)||8.4%||8.4%|
|1-yr forecast job growth (Q4 2012 vs. Q4 2011)||1.9%||1.7%|
|% foreclosure sales (Q4 2011)||11.7%||23.7%|
|Foreclosure activity rate (Q1 2012)||1 in 284 units||1 in 230 units|