Buy 2006 Homes At 2004 Prices In Orange Co., NY
The New York press is reacting to the February housing numbers. “For a limited time only, you can buy 2006 homes at 2004 prices. OK, that might be a stretch, but Orange County’s median sale price dipped to $293,500 in February, the lowest it’s been since July 2004 (median $280,500).”
“It’s also the first time the median price for single-family homes has been below $300,000 since March 2005 (median $299,000), according to the Orange County Association of Realtors.”
“The February data is the latest evidence that Orange County’s real-estate market is cooling off after a remarkable five-year run that saw home prices more or less double. ‘There’s no question the deals are harder and more time-consuming,’ said (broker) Chris Scibelli.”
“Through the first two months of the year, there have been 380 sales in Orange County, down from 405 in the same period last year. ‘One of the things we don’t know here is who’s buying,’ said Ann Garti, chief executive officer of OCAR. ‘What is the market for these houses? Do we have investors who are buying to renovate, or are these buyers getting in at price points they can afford?’”
“Another thing yet to be determined: Is this just the usual winter housing lull, or the beginning of something else? After a slow start in 2005, activity picked up during the summer. But this winter has been even slower than last. Sales are down around the region, and prices are flat.”
“‘Last year, we were able to blame the weather. This year, January wasn’t really a weather-blamable phenomenon,’ Garti said.” Sales slump “Home sales last month were down across the region, while median sale prices were down in Orange and Sullivan counties, and up slightly in Ulster.”
“Home sales in Herkimer and Oneida counties mirrored a statewide drop in January. Oneida County’s median price dipped from $90,000 to $79,500. Existing single-family home sales dipped from 189 in December 2005 to 119 in January in Oneida County, while similar sales declined in Herkimer County from 23 to 18. Statewide, sales dropped 33.8 percent, from 8,984 in December 2005 to 5,947 in January. “
Pricing is the ultimate validation of the views espoused on this blog.
one should keep in mind that median or average sales do not say very much about ‘home values’. For that you need to track individual home values (probably a lagging indicator).
I’m not familiar with the US housing market, but in Europe average/median prices can go up or down because of many factors not related to valuation. Think of changes in sales numbers between cheap and expensive areas, differences in sales numbers between low-end and high-end properties, splitting up of large homes into several cheap homes, conversion of cheap rental housing, too many options.
Even with new homes, if the builders change their ‘product mix’ because of a perceived turn in the market this may have a big influence on the ‘average’ price level without changing valuations.
A turn in the market will probably cause many shifts like that and it is very difficult to predict the outcome on the national average.
For those who don’t know, Orange County is the exurbs of New York City, a 1 1/2 to two-hour commute away. Many in Orange actually commute to the closer in suburbs such as Westchester, where they can no longer afford to live. But Westchester is on the other side of the Hudson from the congested Tappen Zee Bridge.
The Catskills rise on the northern edges of the county — the other counties cited are even further north. That’s a pretty high prices for that far out.
Agreed. I would say that Dutchess Co, just across the river, share equally in pricing characteristics and trends as Orange. Commutable, but a hell ride.
Also in line with Orange County, but CA that is… just went to lunch the other day, and saw a lender go out of business. it was Home Loan Funding, a company in Irvine. They are located on Alton between Von Karmon and Jamboree. Signs are off the building and the For Lease sign is up. Man, they there just their last week…could they have moved? Whatever the reason for their disappearance, that was QUICK!!!!
Way OT…
But nice to know that my retirement is getting tapped so the gov. drunken sailors can continue their debt binge…
Retirement Fund Tapped to Avoid National Debt Limit
By Stephen Barr
Wednesday, March 8, 2006; D04
http://tinyurl.com/j77lz
Stop insulting drunken sailors, at least they only spend their money
Hey, maybe the US Congress should allow companies to “borrow” from their employees 401ks, wouldn’t THAT be grand.
Less and less like drunken sailors, more and more like pirates…
I play a game to pass the time while driving to work in Orange County, NY. Count the for sale signs, it’s hard to keep up.
http://www.ghvmls.com
This site covers Westchester, Sullivan, Orange and Ulster counties. 2 weeks ago the number of listings for sale was in the 8500 range. Today its 8832, by the end of the month i’m sure it will be topping 9K. Watched a frustrated RE agent, selling a house up the street from my parents, toss her open house sign in the back of her car and drive away, as no one showed up. Shocking no one wants a $250,000 19th century farm house “fixer upper” on .1 acres in the middle of town.
I live in Orange County, it’s filled with people chssed from the city and Westchester (fastest growing County in the state) where 600K will get you a 3000 Sq Ft home. That is the only thing keeping the bubble alive here, not the economy. What happens when the price in other counties, closer to the city, start to reside? Why would people buy here?
I work for the County government, the little town where it is located, Goshen, has 2,500 new homes slated for construction this year, all above 400K. If i’m your average county resident, and i can’t afford them, who is going to buy them?
The brilliant people who keep approving these card board cut out houses are now under fire for lack of road infrastructure that cannot support the massive amount of people. (Geee you think? Lets take a farm town and build on every square acre we can, while not updating the roads!) More tax dollars.
The schools are busting at the seams. My wife is a special area teacher, she will not have a classroom next year, but a cart! Good idea! Maybe she can teach in teh hallways. Schools need to be expanded. More tax dollars.
Taxes on these quarter acre crappers are roughly 10K per year, and thats a cheap estimate. I have no idea how people afford these payments. I have friends who work in the area and pay 3.5-4K per month (FYI taxes NEVER go down) working as teachers and NYC firemen, it boggles my mind that they are still able to put that fancy Expidition in the driveway.I’ve gone through the usual emotions of, “Buy now before it’s too late!”, “How am I ever going to do this?” Frankly its depressing. I will have a giant smile on my face when it all goes up in flames.
And so goes the imbecilic decisions of short sighted and sometimes corrupt town supervisors. All the trappings of middleclass stupidity can be found coming from the mouths of slime (who have more vowels in their name than consonants). It kinda goes something like this;
‘Yo! Tony. Yeah….. I’m mooving upstate. Yeah.. It’s only a 3 hour one way trip between my new “home” and the firehouse in da Bronx. Yo….. we finally got a piece of the “american dream.” ‘
Go figure, the county executive is sitting on the highest budget surplus ever. All smiles on his face, completely blind as to what is going to happen, since he has already spent it.
Complete opposite of what Bloomberg proposed for NYC.
at least the town supervisors are smart enough to understand that they don’t need roads, schools etc. for all these new homes - because they will not be purchased by real people, but by ‘investors’
These small town supervisors don’t stand a chance against a big developer who wants in. Happens around here all the time, as Toll, Hovnanian, Orleans and others gobble up the beautiful farmland. They take the townships to court, and can spend a few hundred thousand and years andyears on legal fees to fight the zoning regulations. The townships know it, and they can either go broke trying to fight it, or try to eke out the best deal they can (which ain’t sayin’ much) from the developers. It’s sad to watch.
How can these realtors say they dont know what’s happening . When interest rates go up less first time buyers can get in , supply goes up , prices go down .
The New York press is reacting to the February housing numbers. “For a limited time only, you can buy 2006 homes at 2004 prices. OK, that might be a stretch, but Orange County’s median sale price dipped to $293,500 in February, the lowest it’s been since July 2004 (median $280,500).”
Better act fast — these dollar-discounts on OC home prices never last for more than six years or so!
HELLO, CHRISTOPHER CAGAN!!!
Just in case you occasion to read here, we are looking for the updated version of your report “Has the Fire Burned Out” — remember the one with all the cool graphics which showed how much LA Basin home values dropped every year from 1990-1996? I loved the shade of blue you used to show those ongoing 10%+ year-over-year declines during the last SoCal housing market ice age…
Oops … wrong OC. (Never mind,…..,b!tch)
OT - Check out the NoVa market numbers at nvar.com, Market Reports. Arlington County - one of our hottest in the area - average SFH price is down about 10% YOY! Wow.
Just to give you an idea of how insane prices got it NY:
I purchased a 4-unit victorian duplex in Ulster County (next to Orange) in 3/2002: for $155,000. I spent $130,000 on renovations, plus a great deal of sweat equity (that’s $285,000.) I sold in the Fall of ‘05 for abt $500,000. Rental potential comes nowhere close to justifying that price. That property should have sold for about $350,000.
The Short-Term/Long-Term Pricing Theory
In the last couple years, a lot of people are willing to pay these high prices because they expect to be able to get in and get out quick, because of their expectations of continuing double digit appreciations. They knew that they can’t afford the properties in the long run, but can manage the payments during the teaser rate period. They expect the double digit appreciation to allow them to either refinance or sell before the honeymoon payment period ends and they will be facing financial ruin due to the negative cashflow and rate resets. The question now is, are they still willing to pay these high prices, now that they realize that real estate does not always go up, there will no longer be anymore double digit appreciations in the near future, they will be bleeding from their negative cashflows for a long time, and if they buy now they are going to be stuck for 10-20 years before they can breakeven on just the price, because the real estate market is stalling and prices are even starting to drop. If your honest answer is “Yes”, then we may have a soft landing. Otherwise, based on our medium household income, be prepare for a crash with prices dropping up to 50% or more in CA. Given their incomes, a lot people simply can’t afford the payments of these over-price homes on a long-term basis. They can only afford to speculate in the short-term. If there are no greater fools or double digit appreciations to save their butts, they will be financially ruined. I think most of the recent and current buyers would not be willing to pay these high prices, if their Realtors would honestly tell them that they may no longer be able to exit the game within 1-5 years, and based on currently market condition, they should realistically look at an exit windows of between 10-20 years. What do you think?
I think you are missing a point that has been working in the same direction for pushing up prices. I’m from the Netherlands, but I guess it will apply in the US as well.
There was an interesting report about the housing market from the Dutch banks 2-3 years ago, where they reported that financial speculation was a major factor for 70% of people who purchased a home. Surprising to hear this from a bank, isn’t it?
The interesting thing is that they defined ’speculation’ in the general sense as ‘making decisions based on things one cannot know’. If you look a bit deeper, many people were buying because they feared to be shut out of the housing market forever if they didn’t buy right away (and in the rental market, there isn’t much nice homes to choose from here).
Maybe this works a bit stronger in the Netherlands, because at that time prices had been rising at double-digit rates for about 10 years already.
Of course, this factor will also start working in reverse too once people clearly see that home prices CAN go down (that’s more than 25 years ago over here).
I too thought this article was referring to the other Orange County, the one in SoCal, and almost had a heart attack (in a good way) when I saw that the median resale price was less than $300k.
Poo-
We’re being more than a little elitist, aren’t we? There is nothign wrong with being a fireman from the Bronx — that’s probably a far more valuable and honorable occupation than whatever it is that you are engaged in — or with having more vowels than consonants in your name, for that matter.
I agree that people are stupid to overextend themselves for a McMansion and a Ford Expedition, but you can’t blame them for wanting to raise their kids in a decent enviornment. OC may be staid and suburban, but it’s a hell of a lot nicer than Jamaica, Queens.
Santimonious are we? Nobody is blaming them, nor their offspring but if the label fits then the label fits. The ugly reality of it is that these retards have no idea what they’re getting into culturally. We know how stupid they are with a fistful of someone elses dollars. You have no idea how ignorant and repulsive Tony Ronzoni is when he shows up in your town with a 300 lb. wife and 3 obese little consumers in the back of the Chevy SLOBurban. Wheres the Walmart? Where’s the street lights? Wheres the new pavement? Where’s my trash pick up? Where’s mine? Gimme gimme gimme.
Call a spade a spade my friend.
Actually, i wasn’t being elitist at all. As i said, i am friends with most of them. I actually feel bad for them, spoon fed the hype and diving right in.
Who is going to battle the fires when the forwarding address for the firemen is 3rd box on the right, behind Shop Rite.
Ben-
I wonder if there is any tracking of money going in and coming out of 1031 Exchanges. That vehicle made sense when prices were heading up, but seems to make no sense now. That might be an interesting topic to cover.
Great Idea - tracking 1031’s in a given market would be a good way of separating real investors from amateurs and to help determine what the smart RE money is up to.
What county(ies) are the Bear mountain park and Harriman park in? Beautiful country that.
Orange County
Just following up on khuezee’s comments above, I’ve noticed three for lease signs in one shopping center in my neighborhood. All used to be lenders/realtors of some kind. How do you guy’s think this bubble will affect commercial property? As far as jobs in the industry, I know people who became realtors during the boom who let’s just say are less than qualified…
I understand where long time Orange residents are coming from. The development comes in, and pretty soon they’ll need to up taxes to provide services. The new residents may be able to afford it, but you can’t.
It’s called the “infrastructure snake dance.” Rural America is subsidized, because it is not cost effective to serve people who are so spread out. So there is excess road/school/etc. capacity there. Developers move in and fill out that capacity, and for a while everybody’s happy. The schools are full, but now you can afford a marching band and have a good football team. The roads are full, but not overloaded.
But development keeps going. And pretty soon, it’s either serious money or quality of life hell.
Over development is common throughout the whole country. The city/county commissioner or counsels only care about revenue coming in. They approve anything that will increase their tax revenue. IN CA, around Sacramento, many McMansions have been built in flood plains, protected by levees built over 100 years ago. There has been a lot of press that they are very close to breaching. When they do, there will be a New Orleans type incident of all of the new McMansions there. Who will the homedebtors cry to when that happens. It is only a matter of time. Arnold is trying to make it a priority to fix those. Hope those McMansion owners bought flood insurance. The gov’t better not bail them out. The homebuilders will be nowhere to be found when something happens. A
IN CA, around Sacramento, many McMansions have been built in flood plains, protected by levees built over 100 years ago. There has been a lot of press that they are very close to breaching. When they do, there will be a New Orleans type incident of all of the new McMansions there.
We have similar problems with some new housing developments in the Netherlands. These new homes in/near the riverbeds are owned by relatively wealthy and powerfull buyers (of course, these developments shouldn’t have been built in the first place but as usual, it’s big money for local government).
In case there is danger of flooding, the national government has proposed to preemptively flood other areas (less populated, with older/cheaper homes and owners with less political influence). A special kind of ‘bailout’ …
This article is a few weeks old, but pretty much sums up the insanity.
Newcomers bring new points of view
A Brooklyn family heads to Sullivan
Editor’s note: Flashpoint is a new column that will focus on the spots of enormous change in our region where our past collides with our future.
By Steve Israel
Times Herald-Record
sisrael@th-record.com
Hurleyville - This is where the new Sullivan County could begin, this mostly unbuilt development of 111 homes starting at $300,000 each.
The Grande at Hurleyville targets a new market for Sullivan, where the median price of a home is $165,000. It’s a market of commuters like Brooklyn’s Luis Melendez, who’s moving here with his wife, Nancy, and their three teenage sons.
He’s a UPS driver in Manhattan. The family first learned about the eastern Sullivan development - by America’s largest builder, DR Horton - from an ad in the Daily News. Then they saw a glossy brochure with pictures of pastel siding, hardwood floors and copy that boasts of details like “ornamental grasses that catch the breeze and deliver a restful, soothing sound throughout the neighborhood.”
But they were really hooked when they showed the 2,600-square-foot floor plan to their friend in Goshen.
“This would cost $600,000 in Orange County,” the friend said. In Orange, the median price of a home is $317,000.
The Melendezes’ unbuilt home, which will be beige with green trim, is costing them $339,000.
They don’t care that the new homes in the “country” development will be two car-lengths apart and across the street from one another. In fact, the family, who lives in a three bedroom co-op apartment in Williamsburg, likes the coziness.
“This is exactly what we want,” says Nancy, “a neighborhood.”
They don’t mind that the home is set near a narrow Main Street with almost as many closed shops as open ones.
To the Melendez family, downtown Hurleyville looks “old-fashioned, unique.”
And the faded bungalows they’ll pass to reach their new home?
“Summer cottages,” says Luis.
The Melendez family likes their new home so much they didn’t even look for another one in Sullivan, where the median home price is about half of what they’re paying. They don’t realize that in this county, where one-third of the workers still make $8.50 an hour or less, the average person can’t even comprehend a $339,000 home - and taxes of $6,400 per year.
Luis Melendez isn’t even concerned about the two-hour drive to the city - where he’ll get behind the wheel of that UPS van. It’s nothing to him. Not since he once drove a big rig for a living.
The builder, DR Horton, is counting on lots of Sullivan newcomers like Luis Melendez. But the company’s vice president, Jay Goldberg, also knows the new Sullivan County may be a long time coming. Only two homes have been sold since they went on sale in November.
“Somebody needs to be the pioneer,” he says.
Have fun in that drive on Friday in the summer, when everyone is trying to escape the city. My guess is 3 or 4 hours.
Tha amazing thing is that Sullivan County was considered the arm-pit of Southeastern New York until about 5 years ago.
it’s all about expectations …
Around 1990, the most expensive homes (big, beautiful, very stylish, perfect condition) in my Dutch hometown were priced around 250.000 euro. If you offered one for sale you had to wait many months to find a serious buyer. People were scared to death to buy them, not just because of the mortgage but also because of maintenance cost and taxes.
15 years later, you can offer the smallest piece of sh** in awful condition for sale at 200.000 euro and people will nearly stand in line to make an offer.
Idiots watched too much brady bunch.