Prices Fall “As Anticipated” In New York
The New York realtors report on October sales. “Sales of existing single-family homes in New York state in October dropped slightly more than 7 percent compared to October 2005, according to preliminary single-family sales data. The preliminary data showed a median sales price decrease of 6 percent compared to October 2005.”
“The October 2006 sales total of 8,721 represents a 7.3 percent decrease from the October 2005 sales total of 9,403. The October 2006 total fell 3.1 percent compared to the September 2006 sales total of 9,001.”
“Sales gains were reported in 24 of the 58 reporting counties compared to September 2006, while 17 reported growth compared to October 2005.”
The Evening Times. “The October 2006 statewide median sales price of $235,000 represents a six percent decline from the October 2005 median of $250,000. The October median did increase slightly, 1.1 percent, compared to the September median of $232,500. ‘As anticipated, the New York housing market’s shift toward buyers, driven by an increase in available inventory, has slowed median sales price growth to single-digit gains,’ said Charles M. Staro, NYSAR CEO.”
The Times Herald Record. “As the market slows down and the stock of unsold homes piles up, builders are emptying bags of cash onto their granite kitchen counters (now standard, at no extra cost) in an attempt to lure wary buyers.”
“‘Things have slowed down, so we’ve gotta be innovative in selling,’ said John Stack, a second-generation Orange County builder whose father offered similar incentives in the late 1980s, the last time the local market went south.”
“In Rock Hill, Ronstein Construction is offering a smorgasbord of perks. Owner Richard Steinberg sounds a little bit like the Crazy Eddie pitchman when he ticks off the company’s offerings: ‘We’ll give you one year’s taxes on standard inventory. We’ll pay your closing costs. We’ll pay your title insurance. We’ll pay your transfer tax and your mortgage tax, and we’ll get you 100 percent financing, so you can buy a house now without spending a penny.’”
“Steinberg tried offering a free Chevy Aveo with the purchase of a $245,000 townhouse, but got only one taker. Now he’s focusing on perks that affect the buyer’s bottom line. He recognizes the same thing Stack does: For many buyers, the sticker price on a home isn’t as important as the cash outlay required at closing and the monthly payments that follow.”
“For a buyer who’s strapped for cash, picking up $20,000 in taxes and closing costs makes a bigger difference than dropping the price by the same amount.”
“An upscale subdivision on the edge of Middletown is offering a grand opening special that includes upgrades to stainless steel appliances and granite in the kitchen. The package is worth about $8,000, said Tom Atkin (a) sales agency for the project. Atkin said that perks have become commonplace in the past several months, as builders struggled to sell into an increasingly difficult market.”
“‘If they’re not incentivizing, if they’re not doing something, they’re not making sales,’ said Atkin.” “Vacations are another popular perk, though some real estate agents say they’re not a very good idea, in part because they don’t add to the value of the home. ‘Once you move into a house, I don’t think you’re ready to go on vacation,’ said Theresa Budich of ARC Realty.”
“Some incentives target the buyer’s agent instead of the buyer. Popular carrots include vacations and larger shares of sales commissions. ‘I told my builders we should pay a buyer’s agent more than I’m getting paid,’ said Budich. ‘I want to entice buyer’s agents to come and look at the house.’”
“All of these incentives have one thing in common: They’re designed to help sell a home without lowering the price. Builders know that if they offer a discount to make a sale, the next buyer in line will ask for even more. ‘No builder wants to start to discount his property, because you taint it,’ said associate broker Robin White.”
‘We’ll give you one year’s taxes on standard inventory. We’ll pay your closing costs. We’ll pay your title insurance. We’ll pay your transfer tax and your mortgage tax, and we’ll get you 100 percent financing, so you can buy a house now without spending a penny.’”
“For many buyers, the sticker price on a home isn’t as important as the cash outlay required at closing and the monthly payments that follow.”
“For a buyer who’s strapped for cash, picking up $20,000 in taxes and closing costs makes a bigger difference than dropping the price by the same amount.”
How does a human not realize that a person who is “strapped for cash” should not be buying a property such as this?
These guys are so desperate they’ll do anything to make a sale.
All aspects of the industry are desperate to keep the sales going.
Got a new post up about the CAR (Ca Assoc Realtors).
SoCalMtgGuy
http://www.housingbubblecasualty.com
http://www.housingbubblecasualty.com/forum
“For many buyers, the sticker price on a home isn’t as important as the cash outlay required at closing and the monthly payments that follow.”
Right on NorthGeorgiaDave. The sleazy methods now sound just like selling cars….. Shiny suit and all.
SOCAL-Dont forget that you typically need to have 3 months piti to qualify for conforming loans. This would add close to 10k in the bank for the buyer to qualify over and above the down payment and other costs that you mentioned.
What the NAR/CAR doesnt realize is that they are their own worse enemy. The longer they perpetuate these lies, the longer it will take for them to make money again. There is no first time home buyer at the current level of affordability. The only people that can buy existing homeowners. So when they trade homes the delta to existing inventory is still 0.
I am really starting to dispise the field that i am in (i have never done an i/o or neg am loan). I just dont like being associated with all of it.
I wonder why just one self-described “investigative reporter,” from the MSM, doesn’t trace just one or two of these transactions, to expose who the bag-holders are. This seems like a simple-enough task for a “20/20″ or “60 Minutes” team.
Right Chip . I said it before that the builders with their “special lenders”where not requiring a greater down payment to adjust for the incentives .20k in perks should not also have a no down payment deal . So the bag holder final lender is making a more than 100% loan in a market like this so buyers with no money can buy while builders hate to lower the price . It’s the same as cash back to the buyers without a appraisal adjustment and it’s fraud as far as I’m concerned as long as the final bagholder doesn’t know they are exceeding 100% loan to value on the loan .It’s no different than a used home buyer inflating the appraisal to give cash back to a buyer on the side .
“For a buyer who’s strapped for cash, picking up $20,000 in taxes and closing costs makes a bigger difference than dropping the price by the same amount.”
Exactly. Someone who is “strapped for cash” shouldn’t be buying a house, except in extremely rare circumstances such as those few with extremely good credit, high income, and no debt. But, how many of those do you think aren’t concerned about the sticker price? Anything to prolong this hideous bubble.
Exactly. Someone who is “strapped for cash” shouldn’t be buying a house, except in extremely rare circumstances such as those few with extremely good credit, high income, and no debt. But, how many of those do you think aren’t concerned about the sticker price? Anything to prolong this hideous bubble.
i dont think i have ever met or taken an application from anyone that had that set of qualifications. Although i guess some big wig wth a nasty cocaine habit could fit the bill.
North GA Dave — “strapped for cash” is the exact phrase used last evening by a woman trying to borrow $80K from me towards the purchase of an $86K mobile-plus-lot-plus-clubhouse-privileges. In case I didn’t like the mere $6K she was putting down, she offered me a second on her (other) house in Sacramento. I won’t say ROTFLMAO, but I quickly referred her to another private lender whose refusal may be slower than mine. Strapped for cash? Don’t buy anything !!!!!
Aw, come on, AZ Lender. Not buying anything when you don’t have the money? What kind of a killjoy are you?
(True confession: I am a HUGE fan of that SNL skit featuring the clueless couple with Chevy Chase, who’s admonishing them not to buy things they can’t afford.)
“The October 2006 statewide median sales price of $235,000 represents a six percent decline from the October 2005 median…
The October median did increase slightly… compared to the September median…
‘As anticipated, the New York housing market’s shift toward buyers… has slowed median sales price growth to single-digit gains,’ said Charles M. Staro, NYSAR CEO.”
Jesus Tap-Dancing Christ. This man needs to be crucified for his sins.
Unbelievable isn’t it. Prices drop 6% and he falls back on the monthly number.
6% on sales from ? june/july
add inflation and 10-12% no problem
Does anyone calculate/publish an “incentive adjusted” number for housing prices? (ie: the housing price minus the value of the incentive). It would be incredibly interesting to get a glimpse of what’s really happening to housing prices behind the smokescreen of all these silly incentives.
I’m still shaking my head in disbelief. What’s the big deal with a 6% drop YOY when the previous year was a record setter or close to it? These idiots think they’re saving money by buying houses for 5-10% less than the seller’s original fantasy asking price. Unfortunately, it seems, most buyers are not as educated as we would hope they would be. If home prices doubled in a 3 year span, why do they feel that a supposed 10% reduction is a reason to jump in now?
Yeah, 5-10% from the fantasy asking price is now defined as “giving the house away”.
I’m not sure a statewide number makes sense for anything in New York, given how different the two halfs of the state are.
Bottom line — downstate you have a job, but can’t afford the housing. Upstate the housing is cheap, but you don’t have a job.
If you check the PDF from the NYSAR link, prices fell in most of the expensive counties, which wasn’t the case before.
http://www.nysar.com/pdfs/monthmedian.pdf
http://www.nysar.com/pdfs/monthsales.pdf
http://www.nysar.com/pdfs/quartermedian.pdf
http://www.nysar.com/pdfs/quartersales.pdf
http://www.nysar.com/pdfs/annualmedian.pdf
http://www.nysar.com/pdfs/annualsales.pdf
They don’t include New York county (Manhattan), and a substantial potion of Brooklyn sales are non-MLS, especially at the higher end. I do like that they have to give a two-year spread to make some of the counties look positive. I’d guess from their numbers also that some counties are highly variable due to the small number of sales. Making or not making a few high-price sales could skew those numbers.
One family homes are very rare in Brooklyn. Most are 2-4 families.
What’s going on in Nassau, Westchester, and Richmond (Staten Island) is more representative.
“I’m not sure a statewide number makes sense for anything in New York, given how different the two halfs of the state are.”
I had to rib ya on the 2 halves of NY: Considering the Albany area is considered “upstate”, “downstate” is, I’m guessing, geographically 5-8% of the state. Maybe by population you could half it. I was stunned to move here and realize that MOST of the state was in deep economic doo-doo.
SF just took a 19k equity haircut in last 2 months. The Wealth Effect steadily is “Slip Sliding Away” all over !
http://www.housingtracker.net/askingprices/California/SanFrancisco-Oakland-Fremont/
“For a buyer who’s strapped for cash, picking up $20,000 in taxes and closing costs makes a bigger difference than dropping the price by the same amount.”
This is probably true, but says a lot about the quality of current buyers, who are strapped for cash before they even think about buying.
SO tired of the incentives game.
“Steinberg tried offering a free Chevy Aveo with the purchase of a $245,000 townhouse”
You have to admit, when they start offering Chevy Aveos, then we’re talking some major incentives.
Yeah, I laughed at that one!
Wonder if you can offer to pay more NOT to take the Chevy Aveo?
Right ,and if that loan goes into foreclosure it’s worth 20k less that the creep lenders/builders appraiser brought the value in at so the bagholder gets the 20k loss .
The used home sellers are seeing the builders get away with this and they are doing the same thing without a appraisal adjustment .
Anything to keep this party going and not report another 10% loss in the value of homes because of the incentives .
It’s a mickey deal ,no question about it, and it explains how the industry is getting sales in spite of cheating on the loan to value .
Can you imagine that in a article there is open admitting to doing what just 7 years ago would be considered a major fraud to lenders .
Does anyone have a read on what Manhattan prices are doing and expected to do next year? I’ve been in a rent stabilized apartment for many years and have saved for a down payment, but at these unaffordably high prices I certainly don’t want to be the last sucker jumping in at the top.
basically unchanged to down slightly based on location/quality. Downtown co-ops remain pretty firm at $1000/sq ft. UWS and UES trading at a 10-20% discount to that. Some sellers have begun to make immaterial cuts to their asking prices…
well NYC rentals are as tight as ever which tells me 2 things. People are waiting out for a drop, people cant afford to buy (or dont want to buy).
Anecdote, a friend of mine has been trying to sell his co-op for months (1br 1 BA 800sf with 800sf big terraces). He started at $1.55M, then $1.45M, now $1.35M and has already bought a $2M+ condo. I hear he is getting offers at $1.25M. If he takes the offer at $1.25, minus commissions and the $50K he has put in the aprtment he loses money. It’s a bit of a penthouse bachelor pad, nice apartment, but not for a family. BTW, he bought this place in mid 2002, snapped it up after 1 day on the market for $1.15M
the moral of the story: there is competition. I hear the ultra luxury stuff is still flying off the shelves, not suprising since those that can afford a $10M+ pad wont be bothered by a downturn. But when you are competing with brand new ultra luxury renovated condos with no crawl up your ass with a microscope co-op boards, I understand why he’s having trouble.
that place is on the UWS btw
HEy, Finnman-
A real estate broker was telling me that he expects the rental market to soften up a bit as more condos come on line in coming months. He estimated that about half of the new condos in a new condo tower that just opened are being rented out by investors/owners. Should be a lot more supply coming online in 2007 and 2008 as neighborhoods like Chelsea has become giant construction sites.
im right around the corner from the new rental tower corridor in Chelsea. I suppose many of the investors will in fact end up renting their places out. $3-5K a month easy depending on the size of the unit. I would guess that 75% to 80% of the new condo units coming on line are investor owned looking for the flip. Here’s a good example. The building is only half way up.
http://corcoran.com/property/search.aspx?FP=BP&ListingID=869661&Region=NYC
more
hit this link and then hit the areas to see upteenth condos for sale
http://www.corcoran.com/property/nd/detail_overview.asp?ndevid=164
Then, hit the ‘view my listings’ in each building.
prices being paid for new construction in NYC are nuts. Wait until the tax abatement rolls off….taxes on some 1BRs that I have seen jump to $3K per month. It’s like a neg-am tax bill.
You can pick up a small 1Br for $350K…..if you go to Brooklyn.
‘We’ll give you one year’s taxes on standard inventory. We’ll pay your closing costs. We’ll pay your title insurance. We’ll pay your transfer tax and your mortgage tax, and we’ll get you 100 percent financing, so you can buy a house now without spending a penny.’”
“I’ll stand on my head to make a deal…. I’ll even eat a bug!” (go see Cal, and his dog Spot!)
This will piss you all off. I believe he’s referring to a property in NY. Of course, this guy has the worst market timing in history and doesn’t seem to mind showing it.
Real Estate Deals Re-emerge
By Jim Cramer
RealMoney.com Columnist
11/28/2006 10:38 AM EST
URL: http://www.thestreet.com/p/rmoney/jimcramerblog/10324583.html
Time to talk about what’s out there in real estate.
As I’ve mentioned previously, my wife and I have a substantial partnership in real estate that we have moved almost entirely to Mexico. We had invested primarily in New Jersey and Pennsylvania since 2001, when the onerous rules for stock ownership for us took hold.
It grew harder, however, to make a profit by buying places, refurbishing them and flipping them, after selling the land to the state to preserve the acreage from development; and we were continually outbid by Toll (TOL) and Pulte (PHM) and Hovnanian (HOV) . We even sold our shore properties, which were insanely overvalued. Our little bit of knowledge and love for Mexico made the choice to shift pretty easy.
Yesterday we were showed a property that would have traded at $1 million two years ago — a very nice farmhouse, five acres, a swimming hole, very private. The property has a gorgeous creek running through it, and no development is allowed nearby.
The seller needs cash and is tired of waiting for the buyers who never come. It’s ours for $450,000.
One million dollars to $450,000. Rates are so low we can inventory the place. So we are buying. It’s the first piece of property we’ve bought here since 2004.
That’s what is out there now. Economic buys. That’s what we are being shown.
Can we wait for lower prices? Why bother?
Time to start buying. The bargains are just too great to ignore. Maybe the place trades at $400,000. But maybe, and this is how bottoms are formed, we miss it, and we will kick ourselves.
Welcome to the tail end of the housing crisis.
Tail end of Cramer’s career can’t come soon enough for me
As I’ve mentioned previously, my wife and I have a substantial partnership in real estate that we have moved almost entirely to Mexico.
Yeah, that sounds like a legitimate business to me.
Maybe this guy’s nickname should be “Chief Falling Knife.”
Who is this person trying to impress? Himself? Some of his friends?
This is one of the most naive things I’ve read lately.
And buying in Mexico? Isn’t the first rule buying outside the US - avoid Mexican RE. RUN AWAY. As fast as you can.
Hmmm, worth $1mil? Who says? Have another go at whatever they use down that way. Peyote? The seller needs cash indeed.
This deal has sucker written all over it. But … better him than me.
To Jim Cramer
1 million to 450K, lets see … that is a 55% drop. Not a piddly 7% that you want us to buy into. So Mr Cramer, start showing us 55% off deals on houses we want in locations we want and we may have a deal.
Cool.
Cow_tipping.
LOL…Cramer will get deals insiders get. The unwashed get what they deserve….up their asses.
why would Cramer get an “insider” deal? Why would a random seller of a house have a special “Cramer Price”?
All of these incentives…paying mortgages and taxes for a year, paying association fees on a condo for a year…paying closing costs, transfer taxes, giving a car or vacation…are these taxable? What does the IRS think of all this?
How the Realtors/ Builders are making sales ?
(1) Cheating the lenders by giving cash back and incentives while not reporting the incentives as a loss in value on real estate price .
(2) Qualifying people on loans they can’t afford ,while getting people into over-appraised property by no move in costs and 100% financing .
(3) NAR creating urgency by ad campaigns, lying to people telling them it’s a good time to buy because the market will go up in 2007.
(4) The media not questioning the spin/numbers from the real estate industry .Projecting a false bottom and not being honest about the supply and demand problem because of excess speculation and building .
(5) Even easier qualifying with people buying with zero move in costs at the expense of the builder or seller with no adjustment to the loan amounts ,(at the expense of final bagholder lender )
(6) Realtors/Nar attempting to control inventory by suggesting to people that they take their house off the market, in spite of them needing to sell,by convincing sellers that the market will go up next year .
(7) Turning short term speculators into short-term landlords, based on the big 2007 rebounding market fairy-tale ,with the real motive being to reduce inventory to hide the suppy and demand problem.
(8) Not adjusting for cash kickbacks and incentives on appraisals resulting in paying buyers to move into houses .
(9) The real estate industry lying to people and not admitting that the last 4 years of prices were driven by a mania of speculation and easy money that priced locals out of the market leaving no buyers for local markets .Further the NAR/CAR painting a rosy picture about the affordability index in most areas .
(10) Lenders qualifying buyers on teaser rates that quickly adjust to being unaffordable to same borrowers .
I could go on and on but in spite of all this foul play ,the numbers are still down and the inventory is building . Just think of what the numbers and reductions/corrections would be at by now if it wasn’t for the foul play to keep the party going .
“All of these incentives have one thing in common: They’re designed to help sell a home without lowering the price. Builders know that if they offer a discount to make a sale, the next buyer in line will ask for even more. ‘No builder wants to start to discount his property, because you taint it,’ said associate broker Robin White.”
No builder wants to truthfully report the market value of their new homes. Doing so would imply their stock price is too high, as future revenues depend on the market values of the homes they are selling.