In Northern New Jersey’s slowing market, Passaic County was quick to stall.
The state’s northernmost county is experiencing the largest slump in the state’s luxury housing market for the “inner-ring” counties close to Manhattan.
New figures released by Jeffrey Otteau, president of the Otteau Appraisal Group and the author of a widely followed New Jersey market report, show a 40-month inventory of homes priced over $1 million in Passaic County. That’s more than double the minimum of 18 months it would take to sell out comparable higher-end home inventory statewide, the report said.
Otteau points to Passaic County’s location as the primary reason for the downward slump in the luxury housing market. At the northern tip of the state, bordering upstate New York, Passaic is primarily within driving distance to the office parks of neighboring Bergen, Morris and Essex counties, but to reach Manhattan by train, one has to switch trains at the Secaucus Transfer Station. Buses from the city head directly to the Port Authority bus terminal.
“Essentially, it has been outside the primary market area for luxury homes,” Otteau said. “It is not near the major employment centers, which generate the income for those homes.”
There are currently 40 homes on the market in Passaic listed for more than $1 million, and the county had no homes listed over $2.5 million, according to the report.
Otteau compares the luxury market to the communities of Millburn and Short Hills in Essex County and Summit in Union County when looking at Passaic. He noted that these communities have faster sell-out rates because of the Midtown Direct train service provided by New Jersey Transit to New York and Hoboken. In addition, he noted these communities have well-defined downtown areas, and housing stock remains a walkable distance from the train station.
“Where we have the highest [unsold inventory] of luxury homes statewide are either secondary markets like Passaic, rural areas that are remote, or in Cape May, which is a vacation home market,” Otteau said.
The rural areas include Warren County in northwest New Jersey. Development has grown in Warren County in the last decade as luxury housing communities have sprung up in what was once farmland. The area is farther from public transportation lines to New York, and it is not uncommon for residents to drive to Morristown to catch a train to the city.
Otteau’s report shows that the lion’s share of Passaic County’s luxury home market is centered in Wayne, with 22 homes on the market there. Ringwood and Totowa have the second-highest amount, with four apiece. West Milford, North Haledon, Hawthorne and Clifton round out the market. Passaic County is anchored by the nation’s first planned urban community, Paterson, which has fallen into economic distress over the last two decades. While urban decay eats away at Paterson, neighboring communities have transformed from rural areas to suburban sprawl communities with strip malls dotting the landscape. Small downtowns are in several of Passaic’s older suburbs.
Lynn Brescia, a sales agent for Coldwell Banker in Wyckoff, said the market for luxury homes has been sluggish in Passaic, but differed with Otteau’s assessment of the role of transportation in the downturn, saying that mass transit options abound in the county.
She noted that the $1 million-plus benchmark represents the top tier of Passaic County’s housing market. Most buyers of these houses are either trading up from smaller homes in the county or are relocating from other parts of the country to the New York area and are looking to get more for their money than in neighboring counties.
Noting that the $1 million dollar housing market in Passaic has exploded in recent years, fueled primarily by new development, Brescia said that it is hard to compare places like Wayne with Summit and Short Hills. She noted that more $1 million dollar-plus houses come up for sale in these historically wealthy communities.
“Our transportation, that is not an issue,” she said, noting that many residents commute by car to nearby office parks and that the completion of the Secaucus transfer station in 2003 has improved train access to Manhattan.
Joe Simone, an agent for Preakness Realty in Wayne, said he has not seen evidence of a slowdown in the housing market in Passaic County. He noted that a $2 million lakefront house he is handling is currently locked in a bidding war with five offers.
But appraiser Otteau said Passaic’s trajectory has differed from other parts of the state.
“We are not seeing the evolution of towns in Passaic as we are seeing in primary markets,” he said.