Modest recovery
Residential real estate in New York and southern Connecticut is showing signs of life, but even the most optimistic observers caution it is merely a modest improvement and warn the market will likely remain fragile well into 2011.
“The best hope for residential real estate now is that pent-up demand and a decent supply of reasonably priced properties (by Westchester County standards) and low mortgage interest rates will overcome the consumer reluctance to buy created by persistent high unemployment and regulatory and foreclosure turmoil in the lending industry,” said P. Gilbert Mercurio, chief executive officer of both the Westchester Putnam Association of Realtors Inc. and the Empire Access Multiple Listing Service Inc. “But that”™s a hope, not a prediction,”
Empire Access, formerly the Westchester-Putnam Multiple Listing Service, serves Westchester, Putnam, Dutchess and northern Bronx counties.
The latest housing statistics show continued signs of stabilization in house prices and high home affordability, largely because of record-low mortgage interest rates. Although home values slipped in the third quarter after climbing the first half of the year, most real estate agents say there is no reason to panic.
But current median sale prices still show a slight gain over the previous year in Westchester, the Hudson Valley and Fairfield, Conn. Drew Kessler, former president of the Rockland County Board of Realtors, characterizes this as “a great sign that we”™re moving in the right direction.”
“Worst is behind us”
“All and all, the worst is behind us,” said Kessler, who is also managing director at KMG Mortgage Consulting in Wappingers Falls. “Mortgage rates are at all-time lows, housing is affordable and money is available from banks with as little as 3.5 percent down payment if you can document your income, which makes it a great time to take advantage of the real estate market.”
The current New York state median sale price is $215,850, an increase of 7.9 percent from the October 2009 median of $200,000 and up slightly from the $213,000 median in 2008.
The current median sale price in Connecticut is $237,000, up 4.86 percent from the $226,000 median of a year ago. But that price is still significantly lower than the 2008 statewide median of $379,063.
Both Kessler and Mercurio described 2010 as a year of gradual recovery and increasing stabilization in the housing market. Homes even sold relatively briskly in the first two quarters, a marked departure from the sluggish sales in the preceding ones.
But Mercurio said that much of that volume, particularly in the lower-priced condominium and cooperative sectors, was stimulated by the first-time homebuyer tax credit. At the height of the spring selling season, the credit had a contract deadline of April 30 and a closing deadline of June 30.
“Although the closing deadline was later extended to Sept. 30, that didn”™t help the (number of sales in the) third quarter, which were poor in relation to 2009,” Mercurio said. In addition, “the early reports on October closings indicate that the slowdown is continuing and deepening.”
And some real estate professionals remain extremely concerned about the market outlook.
“Well, my partner (Frank Lessa) and I are going on 20 years as exclusive buyer brokers,” said Peter Bell, president of Balch Buyers Realty in Mamaroneck. “In that time, even if the market was going down, there was always deals and buyers you could put together. In this cycle of our country”™s economy, even real estate brokers are having a tough time.
“In the past, when prices went down, the lower priced homes would sell to help you pay the bills. These days, even lower priced homes aren”™t selling or the banks are being so cautious that it is practically impossible for potential buyers to get financing,” said Bell, who works with clients in Westchester, Putnam, Dutchess and Fairfield counties.
High-end home sector strong
Mercurio said the strongest market sector right now is high-end single-family homes priced at more than $1 million.
“Their increasing proportion of sales in relation to moderate and lower priced sales is creating the statistical illusion that prices are shooting up,” he said. “The reality is that when high-end properties are factored out, the average price of moderately priced properties in the $450,000 to $700,000 range is increasing only about 2 percent to 3 percent per year, or just keeping up with inflation.”
Tara-Nicholle Nelson, consumer educator at real estate Web site Trulia.com, said buyers are extremely price conscious. “Comparatively speaking, we”™ve found that seasonal considerations, combined with a lack of urgency on the part of would-be buyers and continued job market doldrums nationwide, have led to more significant reductions during this time period than during the same time frame in 2009,” she said.
Ronald Phipps, president of the National Association of Realtors, said unemployment is the single biggest variable in the housing market”™s recovery. “In fact, we need employment to come back for the sake of our country as a whole ”“ it”™s beyond housing,” he said.
Undercurrent of optimism
Still, there appears to be an undercurrent of optimism among many real estate professionals. Terri Shand, president of the Ulster County Association of Realtors and broker/owner of
Colucci Shand Realty in Gardiner, went as far as calling it a “good market.”
“I think we hit bottom last year,” she said. “Prices are slowly creeping up, and I think we”™re going to sustain the momentum.”
Shand said Ulster County is still attracting a fair number of weekend homeowners ”“ Manhattan-based buyers looking for a second home.
Gail Lilley Zawacki, an agent at Coldwell Banker Real Estate in Westport, Conn., acknowledged that challenges still exist.
“The pace of the recovery will be largely determined by labor conditions,” she said. “If hiring improves at a faster pace than expected, many economists say home sales will likely see a stronger gain in 2011. And though the October housing data are mixed, just a relatively healthy number of sales may be enough to keep the broader economic recovery moving confidently in the right direction.”
Zawacki said it remains difficult for owners to get their optimal sales prices and that some buyers still have trouble obtaining mortgages. “However, there are some once-in-a-lifetime opportunities out there, and plenty of happy results can be had for both buyers and sellers,” she said. “The key for both groups is to remain flexible, adaptable and diligent.”
And even Phipps said he was “cautiously optimistic” there will be gradual improvements during the coming year, even though “they”™re going to be hard-fought improvements with a propensity to be arduous at points.”