‘Buyers Reclaiming Bargaining Power’ In The Northeast
Inman News has this report on the changing markets in the northeastern US. “Only a few months ago Joseph and Kianna Jackson made a resolution for the coming year: They vowed to make an offer on their first home by March 15, their daughter’s second birthday. But like so many other New Year’s resolutions, their promise has so far been unkept.”
“As mortgage rates crept higher in the first two months of 2006 and sales in their local market slowed, the Jacksons decided to postpone their home-buying plans because they think prices could be a lot lower in the summer or fall than they are today. While real estate agents from Brooklyn to Boston say that the Northeast’s housing market will remain strong, it’s the decisions made by families like the Jacksons that will ultimately determine whether the region’s sales and prices gains simply moderate or come to a screeching halt.”
“‘A year ago, the market was super-hot and it was hard to find a Realtor or builder who would even return our calls,’ says Joseph Jackson. ‘But now, I’m getting a couple of calls a week from people who want to sell me a home,’ Jackson says. ‘I just tell them to call back in a few months, and I’ll let them know whether I’m interested in buying again.’”
“With inventories nearing 10-year highs in some Northeastern markets, ‘buyers are reclaiming some of the bargaining power that they had lost as prices soared over the past several years,’ says Lawrence Yun, an NAR economist. ‘The most softness in values will be felt in the priciest markets, like Boston and New York City,’ the economist adds. ‘Those are the areas most at risk from rising interest rates, their prices are already so high that a lot of buyers who could qualify for a mortgage at 6 percent won’t be able to qualify as rates move toward 7 percent later in the year.’”
“As price gains cool, a handful of Northeastern markets have found themselves at the top of some dubious lists. Foreclosures in pricey Connecticut had leapt tenfold from a year ago.”
“Further proof that many Northeast markets are shifting came in a conference call that publicly held Cendant Corp., the New York-based parent of realty giants Century 21 and Coldwell Banker, placed just a few weeks ago. In the call, Cendant execs said that its company-owned real estate offices in New England (as well as Florida and Southern California) had seen a staggering 30 percent sales-cancellation rate in December.”
“The softness in the Northeast’s resale side is also being felt by builders of newly constructed homes. Northeast building giant Toll Brothers Inc. recently announced that its orders for new homes plunged 29 percent. To stimulate sales, the company is offering free upgrades at many of its projects and has even slashed asking prices at a few. CEO Chad Dreier of development giant Ryland Group Inc. said his company’s sales in some East Coast markets during January and February were down sharply from year-earlier levels.”
“Dreier said it was ‘too early to tell’ whether the recent slowdown in sales represented a mere pause in housing’s long run-up or the start of a long-term decline. ‘The year,’ said Dreier, ‘is going to depend on what we sell from March to July.’”