Housing Market Decline Stoking Fears In N.J.

PLAINFIELD, N.J. (CBS 2) -- Investor fear is now closely tied to the declining housing market and alarming unemployment rate.

As CBS 2's Christine Sloan reports, one place especially hard hit has been New Jersey, where many homeowners are wondering if they'll be able to sell their homes.

The Sleepy Hollow section of Plainfield, N.J., has always been a place where you can get more for your money on homes. But even here it's taking longer to sell.

What's more telling, prices on most homes have been reduced. It's what Dean Sluyter said he had to do. He's moving to California to marry the love of his life.

"I figure either there is someone out there who's going to buy my house who just hasn't turned up or else I'll own this house for eternity," Sluyter said.

The number of foreclosures surged across the nation in July, forcing homeowners to slash prices by $30 billion.

The news isn't good for Sluyter's neighbor, who is also trying to sell.

"If I have to come down, like most people expect to offer less than what it is listed for," Budd Leo said.

Coldwell Banker realtor John DeMarco blames it on the high unemployment rate and said buyers are afraid to take advantage of low interest rates on mortgages.

"I have buyers who want to buy up but they're so frightened that tomorrow they may not have a job they're just waiting," DeMarco said.

Those who deal with people going through foreclosure say many homeowners who are struggling just choose to walk away from their homes instead of putting them up for sale.

"More often there is no buyer to pay a price that's more than they actually owe on the loan, so they hand in their keys to their lenders," said Phyllis Salowe-Kaye of Citizen Action.

Will it get any better? CBS 2 asked an economist.

"I think once we get over this hole we dug, because we moved sales into the spring, I think we'll see a pick-up again. I think we'll see employment pick up," said David Crowe of the National Association of Home Builders.

And that seems to be the only good news.

The Obama administration is sending $3 billion to jobless homeowners who are struggling to pay their mortgages. New Jersey is one of a dozen or so states receiving that help.