‘Sellers Start ‘Blinking’ On Long Island
The Long Island Business News has this update from New York. “On May 10, a Long Beach beachside colonial went on the market for a hair under $800,000. Two months later, the asking price dropped to $749,999. Last week, agent Renee Weinberg chopped another 55 grand off the four-bedroom home.”
“‘A year ago, I would have gotten 749 (thousand), no problem,’ said the sales associate, who got an offer for $525,000. ‘I said, ‘Forget it, tell them to get real,’ Weinberg said.”
“But this is residential’s new reality. After five years in the passenger’s seat, buyers have taken control of the market. Inventory is skyrocketing and shoppers are taking their sweet time as sellers drop prices, and as Weinberg can attest, buyers now scoff at asking prices.”
“That’s a change from the last few months, when there was a standoff between buyers and sellers. But in the last few weeks, said Pearl Kamer, chief economist of the Long Island Association., sellers started blinking. ‘Now suddenly you see prices begin to drop,’ Kamer added ‘[Sellers] recognize they’re going to have to do something to sell that house.’”
“A Babylon Village home, for example, languished at $459,000. When the sellers asked for $60,000 less, a buyer snapped it up. In nearby West Babylon, an owner sliced more than $40,000 off a two-story colonial that remains up for grabs. ‘Everybody who’s selling their home, no matter where you live, is dropping their price,’ said Peter Killian of Lindenhurst, who also whacked $40,000 off his price tag.”
“Desperation is apparent in some ads. ‘JUST REDUCED, OWNER WANTS ACTION,’ screams one for-sale-by-owner Web site. ‘REDUCED FOR A QUICK SALE,’ shouts another.”
“There’s a glut of inventory. In the Long Island and Queens area, 33,724 residences are available, a nearly 70 percent leap from a year ago, according to the MLS of Long Island. ‘Now we have certainly less buyers and we have a lot more listings,’ said Bob Herrick, an owner/broker in Bay Shore.”
“Real estate agents said most sellers just don’t realize that. Sellers, they said, demand the prices their neighbors got a year ago, and drop the price only when they realize that’s not possible. That’s what happened to Lindenhurst’s Killian. In December, he listed his West Lake Drive ranch at $539,000, $70,000 less than he could have gotten last year. The price seemed reasonable, he said, because he spent about $200,000 to renovate the house with a new roof and siding and a $60,000 kitchen upgrade.”
“On Father’s Day, however, he dropped the price to $499,000. ‘This year’s market dictated the price,’ Killian said. ‘I think my house is worth a lot more, but the market just doesn’t.’”
All I can say for these folks is… “Ouch.”
Pearl Kamer is the one who was saying how prices were not going to fall a few months back - of course the sellers always blink first!
great to hear of lowball offers here, but also agree 525k is too much. only a matter of time before a big hurricane comes our way…
“The price seemed reasonable, he said, because he spent about $200,000 to renovate the house with a new roof and siding and a $60,000 kitchen upgrade.”
When will they learn. “reasonable price” is determined by supply and demand. That’s like saying I think a share of CSCO is worth $70 because I bought it at $80 in 2000. Peter, the market is telling you that you’re wrong, listen to it.
“great to hear of lowball offers here, but also agree 525k is too much”
********
Absolutely not - I don’t agree at all.
If the seller takes it, that’s the price the market will bear. If not, lowball away with someone else.
As I have heard people around here say (the way the market is presently), if you aren’t embarrased by your offer, you’re not going low enough.
Did sellers reject the “over the top” bidding we saw regularly here in SF in ‘04 and ‘05? Turn those down? Where there were in many cases a dozen or more offers for half million dollar nearly sh**box condos that eventually went for $200K over asking? (i.e., for $700K)
That’s right - they didn’t turn those down.
Provided sellers remain in denial, anyone thinking of buying anytime soon might want to vie for the title of “Lowball King.”
I meant too much, as in still too high a price - you can never make too low of a lowball imo!
My error - I didn’t see it that way the first time I read it!
Wow, offering 525 for a home listed at 749 - more than a 20% lowball. Pretty ballsy. However, fair when you consider Long Beach - the houses are on the tiniest lots ever, and it is essentially ground zero for any hurricane that may hit LI in the near future - it could be totally destroyed. They won’t even give them insurance there anymore.
“‘A year ago, I would have gotten 749 (thousand), no problem,’ said the sales associate, who got an offer for $525,000. ‘I said, ‘Forget it, tell them to get real,’ Weinberg said.”
It is NOT balsy to offer what the house is worth!
To me, 525K is a damn lot of money. I think many of these homes asking a HALF A MILLION $$ aren’t even close to meriting that price.
It is ballsy only in the sense that not that many people actually do it - we like to talk about it but it’s good to know there are people out there actually trying it.
And that house isn’t even worth 525, I’m sure. You have to know Long Beach to truly understand how gross it is - great beach, but to live there? Ugh.
20% off asking is not a lowball in my book, just a haircut. A truly ballsy lowball that I would make would be 400K or less.
The $525k is probably the best offer they will get. Is sounds like they need to “get real” and either price it right, or take it off the market and plan on owning it for another decade.
Wonder what they paid for it - and when. Asking for 800k if they themselves bought for half that 3 years ago would be a serious indicator of someone who needs to “get real.”
“‘A year ago, I would have gotten 749 (thousand), no problem,’ said the sales associate, who got an offer for $525,000. ‘I said, ‘Forget it, tell them to get real,’ Weinberg said.”
Alright, which one of you offered $525,000?
Yeah, haven’t you been reading? You offered too much!
That’s what I was thinking .
That person is my hero.
Let me be the first to post: That seller is going to regret their decision. This market isn’t just slowing, its stopping like I’ve never seen before (and yes, I remember Southern California in 1991-1995.).
Does anyone know the current “conversion rate” between “sold homes, pending” to closings? I’ve heard tidbits that its down to 70%, but please understand I’m looking for a better source. For as best as I can tell, the sales rate is even worse than it appears as buyers are wiggling out during closing. The likelyhood that will get worse is 100%
Neil
Neil,
Well said. When the carrying costs start eating this clown alive the would’a should’a could’a factor goes through the roof!
Bulletin to FB’s:
Lowballers are your BEST FRIEND!
How does one win here?
Be the highest offer in a bidding war and get treated like a jerk. (Purchase as is, no inspection etc. etc.)
Make “lowball” offer” at FMV (and get treated like a jerk).
Well maybe it’s just me but if you’re going to treat me like a jerk either way, I’ll be the lowball offer if it’s all the same to you!
agree, that seller will be regretting it…and the person who made the offer is going to be thanking their lucky stars that it wasn’t accepted!
Neil: your previous post about aerospace story was incomplete: please finish [if you are the same Neil]. Thanks.
(However, fair when you consider Long Beach - the houses are on the tiniest lots ever, and it is essentially ground zero for any hurricane that may hit LI in the near future - it could be totally destroyed. They won’t even give them insurance there anymore.)
More than that. The south shore, where these articles talk about, is the middle-income side of Long Island, with the exception of seaside areas (which have the problem you describe). Think Levittown. The north shore is the rich area. Think Great Gatsky.
The south shore is populated by people who fled Brooklyn when minorities moved in. Well, minorities are moving to the south shore now. Not poor minorities, no uneducated minorities. Working, highly educated minorities. But I think that in the next downturn, white flight is nonetheless a risk. The children of the current, aging homeowners either returned to Brooklyn or are leaving the state.
That’s right there’s been a huge amount of cashing out while the going’s good. I know several people who sold, left the state and bought a house cash somewhere else. Of course the person they sold to will be paying the bill for the next 30yrs.
I have yet to see the blink in my south shore neighborhood of seaford. as a kid, most of my friends had parents who were blue collared workers….though they still exist, most of those blue collared families bought before the boom and admit they would not be able to afford to live in this quiet suburb had they needed to buy now.
what’s amazing is the houses in my community on msli are the same house that have been on the market since winter. some have snow in their pic.Yet, no blinking…….still waiting……
it’ll happen, danni - just be patient. we’re in the same boat up on the north shore - watching homes sit, prices lowering a little - although as time goes on, I get more and more reluctant to even want to buy. not having grown up here, I’m more than willing to move off the island if the right opportunity arises. it’s a tough place to raise a family, unless you’re very wealthy.
Check out some headlines from the last housing bust on LI.
http://www.youdovoodoo.com/80sbubble.htm
Also I recall reading somewhere that the so-called “Baby-Bust” generation would have created it’s own glut of housing which might have changed the face of residential housing. I don’t know if that’s true, but I do remember public schools closing in the 70’s and 80’s due to declining enrollment. A lot of teachers were laid off.
Employment on LI has declined dramatically. Once there were great opportunities working for companies like Grumman, today the largest employer in Suffolk county is Suffolk county.
Newsday or the Times had a piece on Grumman giving financial assistance to it’s employees to help them afford to buy homes. It seems that 25% of their workforce still lives at home withtheir parents. The average engineer’s salary starts around $55K.
LI did bounce back from previous downturns, but I don’t know what source of revenue they can tap next. The government can not keep feeding (on) itself.
Wait until the blinking develops into a permanent facial tic.
Wait until the blinking turns into flinching.
(I have yet to see the blink in my south shore neighborhood of seaford.)
Still there, eh? My wife is from Wantagh. We live in Brooklyn. There are almost no members of her extended family left in Brooklyn, but as of now there aren’t may in Nassau either.
The connection to the Manhattan jobs is the key for the Island. If New Jersey gets that second tunnel to Manhattan, and Long Island doesn’t get the LIRR to Grand Central, Long Island is toast.
And it could happen that way, because New Jersey has a Governor who understands and says the connection to New York is the key to his state’s economy. And Long Island has pols who say they are separate and have little to do with the low-lifes in the city.
my family(all eleven of my siblings and my parents) not only live in the seaford, wantagh and massapequa area, but have generations of ties to the community.As a young mother, I had always wanted my boys to be raised in that enviroment. you know…kids playing in the street, the libarian remembers when your grandparents use tocome in, generations of family was married at the local church.So, much to my husband’s chagrin, we have been living in a tiny four room apartment with my two boys…waiting.The LIRR raises it’s rates every time my husband gets a raise with the local 3….more and more guys are getting laid off…..what’s happening to the average middle class families on LI bites the big one……and still she waits…..
Do I sound bitter ?
When the time comes hold their feet to the fire. The boot will be on the other foot then. The worm turns. She who laughs last laughs loudest. A stitch in time saves nine. (cliche tag off)
LMAO
Just remember. Bubbles go higher and last longer than expected. They also crash harder and go lower then expected. This is the mother of all bubbles. It is impossible to predict the timing. But when it’s done, the collapse will be as bad or worse than we imagine. Just be patient, it will be rewarded.
Go look up 97′ prices in your area and focus on that number. I am sure to get flamed again for that forecast but I’m sticking with it.
too funny! but ‘97 prices in manhattan would actually be below or equal to 1987 top prices, unadjusted for inflation. 2001 prices would probably approximate the long term trend.
a really serious EVENT would be required to return to 97 prices. in which case we’re probably all toast anyway.
it is my recollection that the last r.e. bust really didn’t reach ‘capitulation’ until 1995-6, when i saw several apts. finally dumped at rock bottom prices (45% below 1987 prices). that was after 5 years of virtually no sales, slimming of inventory with everything but desparate sellers pulled from the market, and unlike today, very little new construction.
i agree that it is going to be much worse this time, if only because of the explosion of new/pre-construction hitting the mkt. but ‘97 prices????
we’ll see! but that might not be until about 2014, after all the false bottoms that this bust may crash through on the way down.
No, ‘97 prices are indeed correct; that was before the start of the bubble. To return to historical average, a house would sell at its 1997 price times 1.212 to adjust for inflation.
I hope you’re correct but I’d be happy if they went back to 2000 levels. The bubble started in 2001 here in upstate NY.
If you really want to stimulate NJ, make a better rail system and put giant parking garages at every station. Would solve a great deal of the commute issue and increase ridership.
LI not connected economically to NYC? Tell that to the 100s of thousands of people who take the LIRR to Penn Station every day…
[i]‘I think my house is worth a lot more, but the market just doesn’t.’[/i]
Well gee why don’t you just sell the house to yourself then.
What something is worth is exactly what the market will pay for it. You may [i]think[/i] you look like Tom Cruise, but if the ladies don’t, you’re not getting any action.
Most parents think their child is more special and cuter than other kids:-}
And we all all above average drivers:-}
“All animals are equal, but some animals are more equal than others.”
BTW - I don’t look like Tom Cruise. I’m much taller, and MY wife has a master’s degree.
Since I’ve been told my “looks” are closer to Drew Carey than Tom Cruise I’ve always been forced to deal with FMV, market forces and……..gravity. Point well taken.
(much to my husband’s chagrin, we have been living in a tiny four room apartment with my two boys…waiting.)
We had to wait seven years from 1987 to 1994 to buy a house. It was worth it. Keep waiting. Local 3 — damn good trade, with a long-term shortage of qualified people. You’re better off than many.
“tiny four room apartment”
My wife grew up in what was essentially a two room + kitchen house. Mom, Dad, Grandma, Grandpa, & Her. One toilet, one bath.
She is the better for it.
The bubble is moving to Texas - pretty soon we’ll be seeing these nonsensical valuations and creative mortgages - should be fun.
Bell is tolling already. As loaner pointed out in another thread:
“In Texas, Vought Aircraft is the largest subcontractor for the C-17. Texas has more than 5,600 workers whose jobs are directly tied to the C-17.”
http://www.presstelegram.com/news/ci_4199820
And how many of those Dallas workers flipped homes or “invested” in multiple homes or upgraded to homes requiring 2 incomes? Or get their next job out of the area and have to sell?
Danny, …and that is just Texas. Boeing said it would let go 25K+ related to that closure in Ca.,Tx.,Fl. etc…How many of those were recent buyers with ArM’s? and I’m sure this is just the start for the Nationwide slowdown in alot of industries not to even mention RE.
OT, but can someone please explain to me why long term rates are dropping….
what is it that the fixed income investors see out there?
they are seeing a recession. Yield curve becoming more and more inverted. Think the 4.8% rate now is better than the 3.5% they may get during a recession when growth goes to negative.
Does that mean inflation is no longer a worry?
Have a read at this:
globaleconomicanalysis.blogspot.com
Mish’s thesis is that the housing boom lead to an expantion of money and credit, and as the boom turns to bust, we should see a reversal of that trend.
He makes a good point: there is a limit to how much debt people can take on, and the entire boom is predicated on this debt accumulation. No more debt, no more spending. No more spending, no more service economy. No more service jobs, no more house payments.
yep
I agree. I’m normally positivenon the economy, but I think the worst recession the country has ever seen is now unavoidable. The housing market crash will be the catalyst. The ripples caused will turn into tidal waves. If we don’t go into a depression, we’ll be fortunate.
I left the north shore at the end of 2003. Long Island is overpriced and overly expensive. The teachers, cops and civil servants have pay and benefits that the rest of us in the private sector can only dream about. Taxes are already punitive. The only thing that has kept LI municipal budgets from imploding has been the absurd RE appreciation with it’s consequent increased tax assessments. I’m a physician and couldn’t afford LI. How the heck are rank and file workers supposed to afford it? In theory, the paradigm was this: work and just be able to pay for your inflated taxes, expenses etc. - the savings is in your appreciating home which will always be desirable because it’s on the coveted Looong Eye-laand! Well, I for one think this paradigm has been obsoleted by competition from other regions, and the unfortunate decline of the middle class. The days of the privileged LI’er are now ebbing - and when it is apparent that home prices have peaked and started to decline, the old paradigm will collapse: the justification for the high cost of living and taxes will have vanished. And to those who would counter that LI offers a great quality of life and proximity to the big apple [NYC], I say: bull! Most LI residents I know almost never venture in NYC and say the roads and beachs are so crowded from all the illegal immigrants and illegal renters, that they prefer to stay home and grumble about their obscene LIPA electric bills and ever increasing property taxes. When I left the north shore, the average home had five cars parked in front: that’s an indication of all the illegal apartments homeowners install to generate some cash flow so that can pay the ridiculous expenses and still afford to eat. The only people who enjoy living on LI are the rich and the illegals who operate on cash and barter within the huge underground economy. The working stiff on the books is a fool to prop up the LI Ponzi scheme – but he stays because he has extended family on the island, or a wife who wants to drive a gas guzzling SUV, hang out with the other wives at neighborhood Tupperware parties, and is certain that all humans west of the Hudson are unsophisticated rednecks with a scarcity of teeth in their heads!
There’s gotta be a movie script in their…
Yes, there is:
“The Stepford Husbands”….watch in stunned horror as men are reduced to slavish automatons, working day and night, commuting for hours and hours, to earn money to pay exorbidant property taxes, utility bills and inflated mortgage payments on overpriced homes, to enable their wives’ lifestyle; wives happily attend cake sales, cavort with overpaid overweight school teachers at the numerous social school functions “for the children,” and shop for curtains, chocolate molds and fancy embroidered place mats, while their husbands toil at home doing odd jobs, mowing the lawn and endlessly touching up the house paint so as to impress the prissy neighbors. “Work you beast!” the wife exclaims, “we need more income! And stop complaining about the 12% property tax increase - it’s for the children!”
Did I say that I sounded bitter? I think I’ve been outclasses in that department! Easy killa, breathe deeply…..the horror is no longer yours.
I’m kidding you know. I am now removing tongue from cheek….though there are many who can relate to the dirty secret of “male suburban slavery” me thinks.
Paleez, my husband and you could tawk…..it’s that dirty little secret…….not “Desperate Housewives”…..it’s the Desperate Hubbyslave!!!!!! hehe
LOL! that’s hilarious…I’m going to send that on to a couple of friends!
LOL! I’m not kidding, this sounds just like the guys I know who live on LI and work in the city!!!
That sounds like my entire TOWN on the south shore that I grew up…guess my husband is smart not wanting to move to LI!
“In theory, the paradigm was this: work and just be able to pay for your inflated taxes, expenses etc. - the savings is in your appreciating home which will always be desirable because it’s in the coveted (fill in the blank)”
That’s it in a nutshell. This breaks one of the cardinal rules of investing. Don’t put all your eggs in one investment class. That’s why I also left one of these regions. Also, I was tired of hearing how great it was to live there. I thought otherwise.
What ‘chew looking at, boy? And what d’yew have ‘ginst toothless rednecks anyway? Chawin tabakker, fist fighting, and periodontal disease takes there toll y’know.
Out of curiosity, what is the current mill rate in long island? In the Canuckistani city of Calgary, Alberta, total residential tax rate is 0.0076833, and for non-residential its 0.0190263. The assessed values haven’t caught up to the bubble prices, which, fer me, is a good thing.
And to those who would counter that LI offers a great quality of life and proximity to the big apple [NYC], I say: bull!
I second that. What quality of life are they talking about. You can’t go anywhere, at any time, on LI and not sit in a traffic jam. It’s a nightmare, and expensive, any time you want to get off the island for any reason. I live in upstate NY 75 miles from the city and I can get there faster then someone who’s 20 miles out on the island. Getting off the island was the best thing that ever happened to me. Oh, and my electric bill last month, with several air conditioners going, was $45
Buyers don’t have enough money to blink first. So the sellers have to get the ball rolling.
- “‘A year ago, I would have gotten blah blah
- “That’s a change from the last few months blah blah
- But in the last few weeks, said Pearl Kamer blah blah
It sounds like the time line is changing…….
Let’s remember some compassion here for the people who really did put significant money into their homes, regardless of their flawed thinking. They’re not nearly as reprehensible as the flippers and the habitate-and-sell for a profit crowd.
Opportunity cost of money and risk management.
Enough said.
That doesn’t mean we should pay their asking price.
WHY did they put money into their houses? The day I spend on some home improvement project is the day you’ll know I have found the place in which I plan to stay for the foreseeable future.
Yeah, yeah - people move for various reasons. But, you and I both know that a plethora of idiots (flippers and non-flippers alike) have been dumping buckets of cash into their abodes FOR THE PURPOSE OF increasing value for when they sell. Used to be that home improvements were NOT economical decisions, but emotional ones (a better place to live for YOU). You expected NOT to recoup the full cost of the project.
Some dude upgrades a kitchen for 60 big ones? Good for him. But maybe, just maybe, my wife and I would like to improve our home OURSELVES… to OUR liking. I don’t give a flying rat’s batootie what someone ELSE thinks is a nice kitchen.
Before someone (even those to whom you would wish compassion) decides to pump tens or hundreds of thousands of dollars into a THING (as opposed to, say their child’s future), before they decide to do this, you better be goddamn sure you won’t have to move anytime soon.
Compassion? Yeah - I’m sad that some people have to be stupid in this world.
Amen to that!! When my hubby and I brought our house, our agent (we were first timers, and she really did rock, though I’ll never use a realtor again!!) our agent tried to ’suggest’ to us that we NOT do much home improvement, because we might not get our money back for it (we would end up with the nicest house in the neighborhood, basically).
While I appreiciated her giving us a heads-up, I was rather stunned by her implication that the ONLY reason you would do home improvements is to make more money on the sale. Screw the next owner, we are doing this for US.
Kiya,
RE: I was rather stunned by her implication that the ONLY reason you would do home improvements is to make more money on the sale.
Your agent probably was a nice good honest agent (yes, they exist, no I am not part of the RE industry.) If it was your 1st house you and hubby were maybe just starting out and she knew that 9 in 10 chances were that you would be moving probably in the not too distant (3 - 5 - 7 years.) Job transfere, job promotion, bigger house for more kids…
Agent probably just giving you some good advice, not to make a financial mistake.
right on.
When you are preparing your offers keep in mind that baby boomers have been the most reckless financial generation in US history. Of course, not all have been reckless, but the vast majority of boomers have been spending every penny they earn, and spending bubble money from their homes, etc. etc.
When this herd decides to downsize and liquidate to compensate for their reckless ways, I don’t think real estate is going to be safe. Most asset classes will be scary as boomers look for cash.
This isn’t just a top in a normal real estate cycle. This is a top in the baby boomer real estate cycle. This is a special one-time event.
Don’t underestimate the downside when you prepare those offers. If the sellers say no, they may be doing you the biggest favor of your life.
Wait till next year it is going to really unravel
Some of us “boomers” with no retirement programs haven’t been able to, or chose not to, spend recklessly. Or both.
We did not choose to leave you with this. The home appreciation was nice, but we never planned it that way. Easy credit and Greater Fools and Speculators have made it immensely more difficult to realize your dreams.
May well be the top of the RE “Boomer” effect. We hope so.
We (my wife and I) never prejudge any generation or nationality. I was born here; she wasn’t. We embrace diversity and would probably embrace you as neighbors, if you could afford our overpriced neighborhood.
Sadly, it may take your older “boomer” parents to give you enough down payment to commit financial suicide. Please learn from our mistakes.
Next year 525 K will seem to much
any price over 300,000 is high for long island. look back at 2000 before prices ARTIFICAILLY went up. 300,000 is a nice waterfront house on 100×100. when this happens people will start buying. people cant afford 3000.00 per month mortgage payment plus all other living expenses while saving. thats just a simple math problem. interest only falsely led millions.