The unsold housing bulge is starting to look like a pig in a python and buyers are increasingly waste-wary.
The number of single-family homes for sale  in the mid-Hudson Valley area has seasoned Realtors saying it”™s been 20 years since this much inventory was available.
As the number of unsold homes continues to rise, the number of foreclosures ”“ expected to continue rising through 2008 and into early 2009 ”“ is adding to the problem as adjustable-rate mortgages reset upward.
Buying a home in the subprime boom was sometimes as simple as furnishing a Social Security number to a faceless broker. But those days are over and subprime lenders who have survived are tightening their belts considerably in the face of massive losses.
The good news is many of these woes are someone else”™s, with states like Florida, Arizona and Nevada housing markets tanking. The regional market is in good shape, if softer than a couple of years ago.
Countrywide, the nation”™s largest lender, recently laid off 3,000 members of its work force and holds the bag on more than $676 million in foreclosed real estate at the end of the third quarter, up from $251 million for its entire calendar year of 2006.
Here, brokers and sales associates are going the extra mile to move inventory, including putting in their own sweat equity to “stage” Â properties to enhance curb appeal with touches like flowers and apple pies on the kitchen table. Some are offering vacations, paid taxes for a year or new cars. New construction developers are throwing in everything ”“ including custom kitchen sinks and granite counters ”“ in a market where sales of high-end home sales are moving, though slowly.
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AVR Realty recently unveiled its scaled-down plan for Hudson Landing in Kingston, where “none of our housing is built on spec,” said senior partner Tom Perna. In a market where new homes languish, more conservative builders like AVR have pulled back the reins on new construction and will wait for buyers to come forward. Others, like building giants Toll Brothers and Lennar, national outfits that also build regionally, took the spec leap of faith and now report losses on their ambitious gambles.
William Lavery, regional vice president for Houlihan Lawrence in Poughkeepsie, says his company”™s nearly 1,000 agents in Dutchess, Putnam and Westchester counties are definitely working “a lot harder, a lot longer hours for a lot less money. It”™s going to take a long time for the price changes to come through the system.”
Lavery says overall transactions are down more than 30 percent from 2004 when subprime markets just started catching fire. But Lavery cautioned those waiting for the other shoe to drop not to wait for a big fall.
“Don”™t expect huge dips in prices,” he says. “We will realize a moderate decrease but not the ”˜big bust”™ potential home buyers  who are holding out are waiting for.”
Lavery says while he has some sympathy for those now unable to pay their mortgages, “These folks were adults who should have taken the time to read what they were buying into. And some lenders just made it too easy to say yes to what essentially was a bad deal for the buyer and the economy as a whole. I don”™t see a federal bailout happening for these people. Perhaps there”™s a lesson to be learned in all of this: There”™s something to be said about saving for what you really want instead of refinancing over and over.”
Prudential Nutshell Realty, with offices in Stone Ridge and Kingston, is relatively new to the Ulster County real estate market, coming on the scene five years ago. Laurel Sweeney, associate broker and one of the owners, says sellers are becoming creative in some areas. “There are those willing to pay the first year”™s taxes, particularly in places where there is no commercial infrastructure to support the tax base. Woodstock might be a place where you”™d see a seller making an offer like that.”
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Otherwise, Sweeney says, “Ulster has not seen a lot of ”˜overbuilding”™ in new construction. Part of the education all brokers have gone through with their sellers is coming to terms with unrealistic expectations when it comes to what they think their house is worth. The market has changed. For the first-time home buyer, for people who are moving for business or personal reasons, there are mortgages out there for them that are within their reach. But the price of the property has to be right.”
For traditional banks, the subprime boondoggle hasn”™t hit them they way it has brokerage firms like Countrywide and its counterparts.
“There”™s mortgage money out there, without the middleman,” says Jack Fanning, a mortgage consultant with Ulster Savings Bank”™s Goshen office. “We don”™t do subprime and what little (subprime exposure) we had was sold off to Countrywide or Wells Fargo. It”™s a good time to be in the banking industry. Our 30-year fixed is 6.25 per cent with no points. When people hear that, they are shocked. They think mortgage money is off limits to them, but the money is out there, and rates are good.”
Lenders have tightened restrictions, but Fanning says it is possible to build some of the closing costs into the mortgage, and some revenue avenues are still permitted, such as gifts from relatives, to obtain cash to fund the closing. He says, “With 100 percent financing and being able to build in 3 percent of your closing costs, you can still get into a house for practically nothing. We don”™t have any junk fees because we are direct lenders.”
Will a Federal Reserve rate cut help traditional community banks? “Not really,” says Fanning. “But they do have a direct effect on home-equity loans, and some of that trickles down to us.”
June Stokes, managing agent for Prudential Rand in New City, left the New Jersey realty market and has been doing business in Rockland County since 1990. She describes herself as a “survivor of the crash of 1987.”
Stokes says Rockland”™s market is getting some breathing space because “overpriced listings have been reduced and sellers are able to sell. People who can”™t afford to reduce are out of the market place, especially if they bought in the last two to three years. They have to stay put.” And she notes: “Agents are working harder this year, just keeping the deals together and replacing the ones that fall through. Plenty of buyers are scared by what they are hearing in the media. You can”™t really blame them, but Rockland”™s prices are stabilizing, and the prices are fair.”
If New York could find a way to fix the property tax inequity, say Realtors, it would help ease conditions considerably. “Mortgages are manageable but the real property taxes just keep going up and up,” said one weary agent at Orange County Association of Realtors”™ anniversary gala Oct. 25. “Put the two together and it just makes the monthly payment, even on a modestly priced home, an impossible goal for many.”
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