New York Home Sales, Prices Fall
The New York realtors have their December numbers out. “The New York housing market continued to slow down as the year drew to a close with sales falling 19.2 percent in December 2006 compared to the same time period in 2005. The statewide median selling price dropped 14.2 percent in December 2006 compared to December 2005.”
“‘Clearly, there was no ‘bursting bubble’ in the New York housing market in 2006,’ said Charles M. Staro, NYSAR chief executive officer. ‘The market stabilized as expected in 2006 with a slowdown in sales price and a return to balance between buyers and sellers.’”
The Star Ledger from New Jersey. “In December, contract-sales activity ran 2 percent higher than December 2005, ‘providing solid evidence that home buyers are begin ning to re-enter the housing market in response to lower home prices and continued low mortgage interest rates,’ the Otteau Valuation Group said.”
“Still, not all is well on the housing front. Indeed, a key indicator of market strength is the Unsold Inventory Index, which currently stands at a 10.6 months, as compared with 7.8 months one year ago, ‘which far exceeds the balance point at which home prices will rise,’ the Otteau Valuation Group said.”
“‘Therefore, while recent market improvements may signal the end of the housing decline, it should not yet be interpreted as a return to higher prices,’ the report said.”
“‘Keep in mind that these improvements have been fueled pri marily by lower home prices suggesting that Right-Pricing! remains the key to successful home marketing,’ he said.”
The Eagle Tribune reports from Massachusetts. “The number of homeowners who lost their homes to foreclosure reached a 10-year high in Rockingham County last year.”
“More than 250 homes were seized in the county’s 38 towns in 2006, almost triple the number of foreclosures in 2005, according to Cathy Stacey, Rockingham County Registrar of Deeds. Officials blame popular ‘exotic mortgage offers’ for the growing number of foreclosures in the most expensive housing market in the state.”
“Stacey said 253 homes were foreclosed in the county last year, but that doesn’t include hundreds of homes that are at risk of foreclosure or petitioned for foreclosure. State officials said they don’t know the number of petitions filed by mortgage companies last year, but they do know the list is growing.”
“In Massachusetts, state mortgage lenders reported there were 18,926 petitions to foreclose on homeowners last year, compared to 11,155 in 2005.”
“Granite State officials said there is not one particular demographic that is highest at risk of foreclosure. Rather, it’s those who take out mortgages they know exceed their ability to pay, but they find lenders willing to grant them anyway.”
“Other homeowners were investors who may take out a balloon loan. The idea is to resell the home before the balance is due. ‘But that doesn’t always happen,’ said Jane Law, spokeswoman for the New Hampshire Housing Financing Authority. ‘If you’ve taken out a balloon (loan) and you’re in the home for five years and haven’t moved out, it’s going to catch up to you.’”
“The majority of homes that are foreclosed on belong to homeowners who take out adjustable rate mortgages, according to James Kenney, president of a foreclosure notification service. When the interest rates go up, they’re required to pay anywhere from $300 to $500 more each month, Kenney said.”
“‘Sometimes, even an increase of a percentage point (in interest rates) can kill people,’ Law said. ‘Especially if you’re in the end of the market price you can afford; it can make all of the difference.’”
“Stacey said it often breaks her heart to see foreclosures, but other times she wishes prospective buyers would just smarten up. ‘Quite honestly, people need to learn to say no, but (lenders) make it so hard,’ she said. ‘It’s just like people getting inundated with credit cards - something needs to change because we’re a growing nation of debt.’”
‘The steepest declines in sales for December occurred in Long Island where Nassau County’s 559 sales represented a 38.6 percent decrease from 910 sales a year earlier and Suffolk County’s sales tumbled 41 percent to 674.’
Looking at the NYSAR PDF for the prices, YOY: Suffolk -3.6%. Westchester -4%. Nassau -4.2%. Orange -7.2.
‘The pending home sales index was down 4.4% compared with December 2005. On a year-over-year basis, pending sales are down between 4% and 5% in all four regions.’
on bright side of these horrible numbers is that prices are stabilizing and excepted to increase by june 2007 about same time Kristie Ally announces she has lost 100 pounds using Jeanne Craig as shown in a new commercial showing her from neck up or hidden behind a wine barrel in a darkened theater.
roflow
14% ain’t nothing but a thang
Yeah, if double digit price declines over a relatively short period aren’t “bursting” - then what the hell is?
Clever tactic is emerging here, argue against a burst just because it doesn’t happen all at once. Might just work in a society with the attention span of a gnat. Kind of like that frog is the pot of slowly heating water.
in - in the pot
No bursting bubble! Ha!
Try and tell that to anyone who put 5% down and bought a house last year, and now their job is transferring them to another location.
14% loss plus 6% realtor fees gone, versus 5% “equity” — that’s a bad equation. And given the nominal prices of some homes in New York state, you’re talking real money. Even at the state median, you’re looking at:
$255k * (1-14%) * (1-6%) = $206k realised from the sale.
The poor sod buying that for 5% down started owing $242k and after a year of 3-year payments at 6% still owes $239k! So just bring $33k to the closing table, my friend. Ouch! I don’t know about the rest of you, but for most of my friends who live in $250k houses, being hit up for $33k is a disaster.
“Kristie Ally “…still looks a little ‘Tubby’.
my ass she was 200 lbs - more like 250+….. she still weighs at LEAST 175….
If these kinds of drops in sales numbers was reported by a national retailer all hell would break loose.
Sorry Pal, the Bubble has indeed burst.
OOhhhuuuuuch! Double digit pain in this neck of the woods. Onandaga (Syracuse and close burbs) not so bad, only single digit losses. But my county (mostly farm country) got hurt in ‘06. Any links to info by town?
Thanks for NYAR link again Ben. Last time you provided that, my ailing computer system couldn’t download pdf’s. Now I see what I was missing. Guess I was waiting for the real drama to begin.
“The statewide median selling price dropped 14.2 percent in December 2006 compared to December 2005.”
“‘Clearly, there was no ‘bursting bubble’ in the New York housing market in 2006,’ said Charles M. Staro, NYSAR chief executive officer. ‘The market stabilized as expected in 2006 with a slowdown in sales price and a return to balance between buyers and sellers.’”
Is 14% a typo ? Prices dropped 14% and there is no bubble ? So what sort of drop would it take for him to call it a bubble ? 20 or 30% ?
Agreed.
14% of a home price could be a years salary for a lot of folks. That’s a big loss in my book.
“Is 14% a typo ? Prices dropped 14% and there is no bubble ? So what sort of drop would it take for him to call it a bubble ? 20 or 30% ?
Statewide median house price might be fun to look at, but what does it tell an individual looking for a certain type home in a specific community?
You could have the number of sales in say the pricy NYC suburban areas sharply decreasing and number of sales in the less expensive areas staying flat and even if no area had price decreases on true comparable homes, you could get a 14% increase, simply because the the weighting of high cost areas to low cost areas has changed.
Real estate is local and comps must be truly comparable - your type of house in your school district, etc.
What you find happening in NY is that the folks in the very expensive areas have the financial staying power to weather a down market. So they don’t feel a need to have fire sales and less homes get sold. The less wealthy have less staying power and they often have to sell.
So amidst say a 20% price drop, you could have only a 5% drop on comps (which is about all you’ll probably see in the wealthy areas). Yet the numbers do not contradict one another.
“…you could have only a 5% drop on comps (which is about all you’ll probably see in the wealthy areas).”
Bwahhhaaa
I remember the Upper East Side of Manhattan in the ’90’s. Five percent my arse. Wealthiest neighborhood in the world got cut 30% nominal. Nice try.
The wealthy towns in Westchester might dip 5% on true comps. The worst I’ve ever seen would be minus 10%. Maybe what you saw was apartments which could be a different type of market.
Your theory is that “very expensive areas have the financial staying power to weather a down market.” What difference does it make if it’s westchester houses or east side condos?
“The worst I’ve ever seen would be minus 10%”.
Is that a prediction or your rememberance of markets past?
“What difference does it make if it’s westchester houses or east side condos?”
Condos get investors and people bought many. Were you actually serious asking that question?
Also, people bought multiple co-ops. That end of the market was a house of cards.
There’s been plenty of flipping and speculation in expensive suburbs across the country including westchester. That includes quasi-specualtion ie people buying more than they can afford based on the assumption of continued insane appreciation. If you think all of westchester can affored their mortagages you’re dreaming. I know… it’s different there.
And the pricey town I’ve been looking at in Westchester saw a huge sales fall off and drops of about 10%…one house just got a price cut from over 900K to 600K because someone woke up from the dream. Now, that’s a huge and unusual cut to be sure, but another house I liked is down from 799 to 699, been on for over a year with no takers. Westchester is not immune.
I bought a house in Westchester at the end of 1995 for $325K, was on the market for over 1 year starting at $429K. Sold in Sept 2005 for $670K…bet it would be tough getting $600K now.
I’d say more than 5% is very possible in Westchester.
Drentzel:
To support your argument, Ben’s NYAR link shows my farming county outside Syracuse experienced a 24% drop in volume and a 25% median price drop Dec YOY. (The median home value was $125k in Dec 2006 and that’s with the skew of the lakeside estates in this town….in other words, you’re not gonna find a much less expensive area for housing!) That’s what made me yelp.
On a side note, I did get another call from my realtor again asking me to show the home (it’s NOT on the market) because there aren’t enough in this (lower) asking price. I could be wrong but that may be the sound of the McMansion values beginning to drop. If I thought I could feel safe about where to park the money while I rented I might be tempted to put it back on. Somehow I think I could lose a similar amount either way. No guarantees for any of us going forward is there? (unless you’re one of the top 5%)
“‘The statewide median selling price dropped 14.2 percent in December 2006 compared to December 2005.”
“‘Clearly, there was no ‘bursting bubble’ in the New York housing market in 2006,’ said Charles M. Staro, NYSAR chief executive officer.’”
No bursting bubble? A 14.2 percent decline in one year is huge, what’s this guy smoking.
Looks like Tweedle-dee beat me to it
*laughs. You can get it next time ! 14%… thats huge ! That pays a lot of rent !
http://img63.imageshack.us/img63/2567/realtorszf8.jpg
LOL, I hope they have a big supply of that stuff, because they’re gonna need it when they add up their 2007 commissions.
The market stabilized as expected ”
a friend mimicked that today
oh dear- this same guy lost a yoy price decline bet to me
what is the definition of racketeering and how could rico laws be applied to the real estate industry???
mike
Maybe they expected a 50% drop in prices YOY. Whew! That was close…..
I feel like polling the realtors Exactly what criteria would have to be met for you to define a bursting/crash?????
14% is MORE than most people use for a downpayment?
14% more
good one….sad, but true
I feel like polling the realtors Exactly what criteria would have to be met for you to define a bursting/crash?????
14% is MORE than most people use for a downpayment?
A 14% price decline doesn’t mean prices have gone down. If a less expensive part of the market or state has increases in the number of sales or if a wealthy part of the market or state has decreases in the number of sales you could get a 14% drop in median price.
The real price declines will be from 3-4 years of coming flatness coupled with inflation exacting its toll. It’s all about REAL dollar losses. If you go from making $100,000 to $120,000 over the next four years, that $300,000 house in 2007 will look like a bargain when it’s still $300,000 in 2011.
For many, living in a nice home is more important than catching the exact bottom of a market, so people do buy - even now - just not as often.
No, the real price declines will be from foreclosures sold at absolute auction or more slowly through a reincarnation of the RTC that set new comps and further depress psychology. The foreclosures will come from people that have little savings and owe $635K on a house they purchased for $670K in 2005 but cannot get any offers to cover the $635K + 5% realtor fees + 1% closing costs (in Westchester).
They become distressed with no offers or $500K (or less) offers and decide it’s better to take the credit hit of foreclosure.
“A 14% price decline doesn’t mean prices have gone down…..”
This is why I think you need to look at several averages or measures of the sales. Median, mean, mode and price per square foot. One poster suggested the 25th and 75th percentile measure as well, which I would agree with. No one measure or average alone will tell the story, and drawing conclusions from it is speculation.
However, I would me more inclined to agree with a 14% median decline was indicative of a 14% drop in all price ranges, than with your suggestion, which I think is, the upper end homes are just not selling.
The same argument could be made that it is actually higher than 14%, because buyers are getting so much more for the same money. This would also be an opinion supported by the fact that this is actually occurring.
“The 2006 statewide annual median selling price of $248,500 represents a 2.8-percent decrease from the 2005 statewide median of $255,675.”
What is the difference between the 14% price decline we’re talking about, and this 2.8% decline that is also in the article?
That’s an annualized number. Who knows how they come up with that.
“… how they come up with that.”
Obfuscation involving smoke and mirrors, no doubt…
no you are wrong it is different here
ok who has the popcorn?
Neil Neil NEIL NEIL
Somebody please wake up Neil.
While I’m at it, Neil I think you should trade mark “Got popcorn(tm) ?” It’s one of my favorite tags.
Personal savings hits a new low:
http://biz.yahoo.com/ap/070201/economy.html?.v=15
Apparently Americans are (or were) tapping out their home equity or borrowing in other ways to maintain their standard of living even as it is being degraded by global competition.
Put in other words, the bubble is a last ditch attempt to maintain our middle class lifestyle, which is rapidly going down the toilet as we are forced to compete with, or are being invaded by and having to pay for, hoards from the third world.
Nice set of graphs detailing the above savings #s
http://www.safehaven.com/article-6819.htm
Wow, we’re in deep crap. I bought silver, I bought Swiss francs, where else is there to hide?
How is Peso?
Hey, don’t you have real estate in LA? You’re safe as houses.
Just keep on spending folks, in the back to back recessions in the early 80’s the parking lots in front of retail stotes were lined with Cars & motorcycles for sale at bargain basement prices. In the 2002 bust My freind picked up a cherry Infiniti Q45 for next to nothing from some idiot with three cars he could no longer afford. I have cash and I can hardly wait for the fun to begin.
Hmmm… you know, it’s not just houses that were overbuilt, it was EVERYTHING. Bimmers & Benz, stainless appliances, fancy barbeques, ATVs & waverunners, etc. were bought way in excess of normal consumption. The manufacturers and retailers are going to get slammed when all that inventory comes back on the market at fire-sale prices.
Good point .
Why prices fell 14% statewide? Because that is the median of the homes that have sold.
Upstate, where there was no bubble, you still have sales. Downstate, where prices are so high no one can afford them, sales have slowed to a crawl. Hence cheap Upstate comprises a larger share of “statewide” total, so the average house that sells is 14% cheaper.
Given the differences between the two regions of the state, any “statewide” average is going to be misleading.
The key is, while December is not a big sales month, prices are down in much of Downstate. Miller Samuel reports an increase in Manhattan for condos/coops; the Realtors report an increase in Brooklyn for houses. Queens is flat. Everything else is down. The decline is hitting further out areas first.
‘Given the differences between the two regions of the state, any “statewide” average is going to be misleading.’
By how much have the market values of all those downstate homes dropped, given the sellers have listed so high they have priced out buyers forever? No data = no information.
“Upstate, where there was no bubble, you still have sales.”
Ummmm…..maybe not:
YOY DEC 05 to 06: My upstate county took a 25% haircut. Then there’s (-40%) Oswego county, (-30%) Sullivan and (-20%) Oneida counties…. Oswego, perhaps that’s about the lake effect white outs & snow emergencies? 5″/hr a few days ago….we had blue sky.
“2006 New York housing market third best on record despite slowdown from all-time high in 2005″
“The statewide median selling price dropped 14.2 percent in December 2006 compared to December 2005.”
“‘Clearly, there was no ‘bursting bubble’ in the New York housing market in 2006,’”
How does 14.2 percent stack up on the “biggest ever” list of NY housing median price drops?
Upstate NY is silly cheap. I have family in Oswego, you can get a livable house there for 25K and a pretty good one for under 100K. They also recently got buried in 3 feet of snow.
I would live there under these conditions:
1) I was retired and didn’t need to make money, not many jobs there.
2) Sometime in October I would stock my basement with a 6 months supply of food and beer. I would shut my doors for the winter, play video games and surf the web, and come out again in March.
“Upstate NY is silly cheap.”
That squares with WT Economist’s point about how 14% off confounds quality of what is selling versus changes in market value in what is not.
But I maintain that one cannot say from the sales price data alone exactly what has happened to market values in areas where nothing is selling. It would be helpful to have access to foreclosure auction results, but so far as I know, that is not public information.
There is no way these realtors will ever cop to a “bubble”.
They will use all manner of metaphors and will continue to obfuscate the obvious. Because, once the most benign and willfully ignorant Joe Blow Average figures out he was hoodwinked, the whole current structure of realtor as matchmaker between buyer/seller is over.
Amen.
In nearly every other industry, the Internet has removed asymmetry dramatically reduced middleman transaction fees. In other words, you can look up car invoices before shopping for a car, the entire travel agent business model is now dead, stocks can be traded for $5/trade instead of $250/trade, …..
In the UK, property transaction fees never really go above 2%. But in the United States, they are between 5 and 7%! WTF?
Think about it — we live in the most capitalistic and transparent economy in the world, yet we pay former librarians 5% to buy and sell our homes. WTF?
Next comes the sheer financial lunacy of the undertrained and over-caffeinated amateurs that perform real estate transactions. How quickly do you think a stock broker would get fired for recommending a stock and then saying “buy now or you’ll be priced out forever”, or, “this will go up and up” or, “take out this interest-only loan to and buy this stock and you’ll be rich”.
Idiotic.
This is beyond idiotic.
have bought/sold my own since 70’s
w internet you’ld have to be brain dead to pay a realwhore-what for?
Boy are you right IMHO Central Banker .
What’s hard to witness right now is how all the get rich quick professionals are blaming each other for the fallout coming from this “hyped “run up in real estate prices and faulty lending . I’m seeing articles where the realtors are blaming the lenders , the lenders blaming the realtors . It was a “team effort “by the professionals because the money was so good and regulation was so weak .Not to say that the borrowers weren’t in on the team effort based on greed or fear or brain-washing .
Going back to your point , it seems like during the housing mania people were not paying attention to just how much the so called professionals were making ,and what their vested interest was in the myths and spin . Not that I care so much about income if the professionals are doing their job ,but the cheerleaders and lenders became wolves in sheep clothing .
There is a implied liability with these professionals of the REIC that is going to come out in the wash with this real estate blow-up ,correction , whatever you want to call it . .If I was a RE broker , I would be double-checking agents under you.
Just look at how much advertising was going toward the real estate “deal” in the last five years . That RE industry was making so much money that you couldn’t watch TV on any channel without getting a real estate related commercial .This is why I think the media was not very challenging during this time-period IMHO.
The lockbox remains a realtor control point… One usually gets with a realtor to see most of the houses with lockboxes. Unless you really, really push the realtor, they won’t show you FSBOs or even discount brokers listings to protect the listing side of the busines. Of course, you can fire the realtor, but many don’t.
The people that own FSBOs by me tell me all they get is realtors looking to list their property. Most of them are priced too high…but a couple of them are not, and are good deals vs. realtor listed properties.
Indeed, a key indicator of market strength is the Unsold Inventory Index, which currently stands at a 10.6 months, as compared with 7.8 months one year ago, ‘which far exceeds the balance point at which home prices will rise,’ the Otteau Valuation Group said.”
inventory build up will continue for several years-they havn’t seen nothing yet.
““‘Clearly, there was no ‘bursting bubble’ in the New York housing market in 2006,’ said Charles M. Staro, NYSAR chief executive officer. ‘The market stabilized as expected in 2006 with a slowdown in sales price and a return to balance between buyers and sellers.’””
Yet just last summer Charles was predicting ’single digit’ appreciation for 2006… now he is saying that the 14% depreciation is the same as what he expected when he said ’single digit’ appreciaton?
“”The New York housing market data continue to support our forecast of a healthy 2006 market with single-digit appreciation,” Charles M. Staro, chief executive officer of the NYSAR, said in a press release. “”
http://albany.bizjournals.com/albany/stories/2006/06/26/daily4.html
So prices aren’t “softening” anymore. They’re falling.
Looks like progress.
Let’s see another 14% drop this year and another in 2008.
The bubble may not burst, but pretty soon we’ll be talking real money.
“Stacey said it often breaks her heart to see foreclosures, but other times she wishes prospective buyers would just smarten up. ‘Quite honestly, people need to learn to say no, but (lenders) make it so hard,’ she said. ‘It’s just like people getting inundated with credit cards - something needs to change because we’re a growing nation of debt.’”
I gotta cut her some real slack for saying that, mainly because
a) she’s not a realtor/lender or other form of remora (yes, she works for the county, but at least she’s not on commission)
b) she’s pretty darn right
And she asks THE question that needs an answer…what needs to change?
How can greed and stupidity be changed?
How can greed and stupidity be changed?
By allowing people to suffer the consequences of their actions and by removing any hope of being bailed out of their predicament.
Look, I’m a devout Christian, but sometimes people need to suffer for a while in order to turn from their wicked ways. In theological terms it’s called repentance. This country is long overdue for a financial whipping that will wisen up future generations to the tried-and-true ideals of living below your means and refraining from getting whatever you want whenever you want it.
Really, it doesn’t matter whether we think it’s a good or a bad thing that lots of people are going to suffer the consequences of their selfish, materialistic ways. The reality is that it’s coming whether we want it or not.
This country is going to look a lot different a decade from now.
I completely agree.
Thought I’d throw out the question, because it’s always interesting to see what manner of justification of victimization is posted here.
“How can greed and stupidity be changed?
By allowing people to suffer the consequences of their actions and by removing any hope of being bailed out of their predicament.”
See, that doesn’t work because people just aren’t that smart. Remember the dot com bust ? That was only 7 years ago. It was well advertised, but yet, here we are again !
The dot-com bust affected relatively few people. The housing bust is another story altogether.
It’s one thing to watch the stock ticker plummet. Having the sheriff throw your belongings on the curb in full view of your neighbors is slightly more eye-opening.
Saying that there is ‘no bubble’ after a 14.2 % drop is like covering the sun by holding up the tip of your index finger and then saying it’s really night-time.
The freaking bullshit I gotta hear from these realtwhores is UNBELIEVABLE.
Need some opinions…..If you were in the final stages of a divorce, and had the oportunity to buy out your ex for about $25-$45K, would you do it? If so would you use a second mortage or a HELOC.
Give me a break on all this “Westchester is too wealthy to go down” stuff. Most of lower Westchester is a high population density DUMP. Look at Yonkers, Mount Vernon ( grew up there) and Pelham. The Wealthy areas are all low density (SFH on 2acre lots etc) . The majority of people from westchester are struggling middle class, with tons of working and wellfare poor stacked in cheap apartments. Westchester went down in the early 90s and will go down again.