I've never thought of Paterson as being particularly bad. I wouldn't even put it in my NJ Top 5.
Camden > Newark > Atlantic City > Trenton > Jersey City*
(*except the waterfront)
Problem with say, Jersey City or Newark is that they both have some pretty nice areas as well as the bad areas. Paterson is definitely NOT a nice place to live and you're not going to find anything like Grove St./Exchange place in Jersey City or even anything like the Ironbound or downtown Newark. I think Newark is way underrated and I don't think Jersey City necessarily belongs on there. Maybe certain parts of JC or Newark (or the surrounding towns), but for me the big questions are whether anything nice exists in those places, whether people will pay money for Real Estate, companies set up shop, etc. You've got plenty of nice things going up in Jersey City and Newark, but Paterson is just a dump.
FWIW, I have lived in Newark and Jersey City, but never in Paterson although I've been there plenty of times.
