‘Home Buyers Are Willing To Wait’
The New York Times reports on Connecticut. “Listings throughout Connecticut are cluttered with winter leftovers. The inventory of available houses is up almost everywhere, suggesting that sellers who want their properties to move quickly have to come to terms with a cooling market. Pricing a house realistically is crucial in this more-competitive market.”
“‘You’ve got to be right on the button now with prices,’ said (broker) Rick Higgins in Fairfield. ‘People aren’t going to overpay, they’re afraid to overpay. Before, people felt, ‘Well, if we overpay, we’ll be O.K. in six months.’”
“The inventory of available houses in Fairfield County is up roughly 30 percent over last year. Darien’s inventory is up about 40 percent over a year ago. In Westport, 115 of the roughly 300 homes on the market earlier this month were in the $2-million-and-up range. ‘That’s huge, that’s like a year’s worth of inventory,’ said (agent) Darcy Sledge. ‘There’s a lot of new construction sitting. Buyers in that range are being very choosy.’”
And from the Journal News in New York. “The number of homes available for sale in Rockland County soared more than 80 percent during the first quarter. The inventory of unsold homes in Rockland rose to 1,325 from 734 a year ago. In Orange, the inventory of unsold homes rose to 2,796 from 2,122, a 31.8 percent increase.”
“‘What you’re seeing here is a little bit of resistance to the higher-priced listings,’ said Cathleen McVeigh, regional sales manager for M&T Bank in Westchester and Rockland counties. With interest rates rising and talk of a housing bubble bursting, home buyers are willing to wait, she said.”
“‘On the other side, there are sellers who have known that it’s been a seller’s market for a long period of time, and they’re aggressively pricing their house,’ McVeigh said.”
“(Agent) Peggy Connolly said she had noticed a shift in the market. ‘The market is softening. We have as many reductions every day as we have new listings,’ she said, referring to sellers who are lowering prices to entice buyers.”
“Still, many first-time home buyers may find Rockland’s prices a bit out of reach. After such long and steady climb, Bruce Mason, an economist in Orangeburg said, ‘If we had no price appreciation, that wouldn’t be a bad thing.’”
Next month we’re moving from one rental (landlord is selling it out from under us) to another. We signed a 14-month lease on a nice 4 bd/4 ba in a great neighborhood, owned by someone out in CA. The rental agent let slip the fact that she was stunned we weren’t buying, given our income and stellar credit. I told her we think there will be plenty of bargains to be had 14 months from now, and are happy to bide our time. Still, I hope that’s the last lease I ever sign. Good luck to all who have decided to sit out the madness: I think we’ll reap our just reward.
I’m renewing my lease too. I’m just trying to decide whether to stay in the 2 bedroom townhouse, get a 3 bedroom house for about 200/month more, or get a condo by the beach for the same price as the 3 bedroom house 10 miles from the beach.
My rent would be about 1/3-1/2 of what it would cost to own those places now.
Try to conserve and save as much cash as you can. When the market bottoms you’ll be in control. Cash is king.
Is this a house you are renting in Fairfield, CT or is this a general comment about renting?
Whenever I read an article about real estate in the Times, it really drives home the Times’ bias for the wealthy. The Times real estate section doesn’t see anything beyond Manhattan, and Fairfield and Westchester counties. A glut of $2M homes in Fairfield county! What a tragity! Next to that was an article about the horrors of living in a building with a doorman:
“If anything, you sort of feel obligated to engage in idle chitchat. And the whole tipping thing presents another moment of tension. Our doormen weren’t too helpful, but if you were carrying a bag you wanted to take yourself, and they’d come and take it, did you tip them?”
Boo hoo hoo!
Writer did not do homework. In staffed buildings, the staff generally gets tipped once at year at Christmas. Typically there is a collection. It is divided among staff according to tenure and full time vs part time. Real estate writers / reporters are often as clueless as brand new real estate agents.
The realtors are going to try to get a rally going between May-August
based on “Get in now before your priced out forever by rising interest rates.” . Much better for a buyer to get a lower price and a lower tax base by waiting even if one pays a little higher interest down the road .Some of the lower rate notes are also assumable also ,so sellers in the future might offer those notes. A way to get around the tighter down payment requirements in a bad market is to have the seller take back a second for part of the down payment . A buyer should wait until the market corrects fully ,but that is a hard call. At least in the meantime there should be alot of available rental out there to wait it out in .
Not that we’ll be there anytime soon, but a great time to buy can be when interest rates are through the roof. You buy the house at a far lower price and then refinance when the rates drop. We’re nowhere near this, but wouldn’t it be nice?
Yes that would be great . It’s also great to have cash when the interest rates are sky high.
The difference between a Realtor and a used car salesperson is that the Realtor is your agent. That means a Realtor has a fiduciary duty to you, a legal obligation of trust. Among the many obligations is that of full disclosure: If the Realtor has information the market is for the property is falling, this should be disclosed. How many Realtors do you think are doing that?
I’d be interested if any lawyers reading this blog think a Realtor’s failure to disclose the direction of this market could result in their liability for damages for the deciline in value of property they’ve sold.
That means a Realtor has a fiduciary duty to you, a legal obligation of trust. Among the many obligations is that of full disclosure.
Your innocence is touching.
Please read the post, “Sammy”. I’m referring to the existence of the legal duty, not whether that duty is ever actually performed
There is a legal duty and it is a fiduciary realtionship bulwark. Realtors are also not allowed to make predictions . They rules went down the tubes in the last 5 years .
Remember agents even “buyers” agents are paid by the seller.
I agree…I would love to hear a lawyer’s perspective on realtor’s obligations.
Realtors are fiduciaries. They have duties, including a duty of care, a duty not to engage in self-dealing, a duty to disclose, and a duty to use reasonable care.
Any failure to fully perform these duties can result in liability if there is causation and damages.
That’s in addition to potential liability for breach of contract and various forms of fraud.
There are problems of proof. When the market is going up, it’s unlikely the buyer or the seller will be unhappy, and thus, filing an action is unlikely, even if there is potential liability.
When the market goes down, I predict a lot of lawsuits against realtors.
***Not legal advice, no attorney-client relationship has been formed herein, merely answering a hypothetical.
Thanks, Bubbly.
I’m a buyer willing to wait. I’ve been waiting since 2001. Just signed 12 month lease in San Luis Obispo for $1675. Want to buy a home but everyone is asking $650K for a normal 1200 sq. ft. 3-bedroom, 30 yr old dump. Nothing is moving. There is about 200 RE’s listed. Although if you drive around there is a lot more RE’s for sale that aren’t listed. There may be twice as many homes for sale??? I’ve read that Santa Barbara is %50 overvalued. Is San Luis Obispo %50 overvalued??? Waiting to buy with a 30 yr morgage that is equal to my rent. That’s all I’m asking. I have the %20 down. Is that to much to ask?
SLO is a great place to live, but the area doesn’t have the wages (employers) needed to support the cost of living there with the exception of CalPoly, the Prison, or other government entities.
So when does SLO come back to reality?? The RE crowd insist that SLO is different. And everyone wants to live in SLO. If you take away the easy money and buyers have to rely on income to purchase a home - then what will happen to prices?? 50% reductions?? That is hard to fathom, but I’m willing to wait.
SLO is the second ripple zone. It will take a little longer but will follow its major market whichever way it goes. It will probably be alittle soon but if my kid goes to polly I’ll probably buy a house for her at the end of 2008. Room and board isn’t going to go down and that’s about the only good thing I can say about SLO housing support. Downsides are numerous, high speculation, lots of second/retirement investment, high growth area. This last is a general factor that gets overlooked. The places with the most explosive growth are going to be the messiest. For one infrastrucutre lags development and municipal revenues are going to crater. For another a disprortionate amount of housing is priced at the margin. Finally, value. SLO like we in VenCO and SB charge monster development fees that don’t represent an element of housing worth after the first sale.
No newspaper can be perfect. The NYTimes is a national-elvel newspaper on US politics and world affairs, but the Manhattan paper is much more parochial in its local coverage. That is why the Times has a separate Connecticut edition. I dont know how the different editions work in the online world.
“When she later presented her analysis to the owners, she suggested that the house ought to be priced lower than other homes with the same number of bedrooms and square footage to make up for the low site, wires and railroad tracks. The owners ultimately rejected her analysis in favor of the higher price recommended by another agent”.
What these people didn’t realize was they had a reasonably honest agent the first time. She had the fortitude to present them with a more realistic price knowing she could lose the listing. And she did - to a less scrupulous agent who “bought the listing” with a feelgood price, preying on the buyers’ basic human greed and tendency towards wishful thinking.
Both human greed and wishful thinking have driven the market up. And now that buyers are starting to take control, their greed and desire for lower prices will bring the market down.
My guess is that in two years, prices in Fairfield and Westchester will be down 20% from their 2004-2005 highs and they’ll stay flat for at least a couple years after that. All the while, inflation will take place outside of real estate and the real value will be only about 50% - 60% of today’s real value in five years.
“We have as many reductions every day as we have new listings,’ she said, referring to sellers who are lowering prices to entice buyers.””
This is welcome news. So even the stellar it can’t happen here areas are going to feel the impact.
I think the 20% figure is probably about right for that market.
Simmsays…
http://www.AmericanInventorSpot.com
AmericanInventorSpot.com
‘If we had no price appreciation, that wouldn’t be a bad thing.’”
LOL. It’s like the real estate code of omerta where if one dares to say that prices could (gasp) DECLINE, he will be swimming with the fishes by nightfall.
Or with the lobsters!
OT: Look at this Einstein - $2600 in monthly costs, and tenant pays $1200/month. How do you make this cash flow positive? Simple, give the buyer $30k cash at closing to burn through the first year. Clearly, this flipper is sweating bullets.
http://phoenix.craigslist.org/rfs/149350805.html
Kristin has definitely figured out that “new math” stuff.
It’s pretty surprising how she counts the tentant’s security deposit as “annual income.” Apparently, she’s planning on having one new tenant a year with no vacant period and she’s going to stiff each one for 100% of their security deposit.
Love this (presumed) flipper’s inducement to take on that $2600/mo. mortage:
Rental Income - $1200 / mo + $1200 security deposit = $15,600 per year
Difference = 31,200 - 15,600 = $15,600 or $1300 / mo
I’d love to contact her renter and enlighten him to the fact that his flipper landlady is counting his security deposit as part of her yearly income.
Wow, Just when you think you have seen it all. I don’t get it. How does that scenario make sense. People have lost their minds
Whoever falls for her “good deal” is a prime candidate for a court-ordered sterilization.
A foreclosure post on NY auctions.
Thanks much Ben! -great article. What will be interesting is how many of these foreclosure sharks decide to swim elsewhere when the buy, renovate (crappily) and flip option becomes unprofitable. A word to wise here too - these auctions often get rescheduled/canceled when buyers come up with cash at last minute. And due diligence is needed as far as finding out if your seller is really the guy holding the deed. (As soon as more homeowners get in on these auctions, you can bet scammers will be at the ready to prey on them).
Also a take heed with this article on how many foreclosures are in outer boros when investigating neighborhoods you want to live in.
It should be at least 2 yrs before someone considers even looking at a property in auction especially in California. Let the bank swallow the bubble
The one thing that I think may be making headway with my itchy-to-buy hubby is the idea that right now, with prices declining and the economy (locally surely…I still don’t get how things are allegedly looking up nationally…) tanking, if we put our down-payment money in and we have to move/sell, we could lose that equity.
That is the one argument that’s working, creating fear of losing equity. Hey, honey, especially if we put down just 5 or 10%, and housing could easily lose that much value in the next couple years, then you’ve lost the hard-earned cash and paid considerably more per month than renting costs on nothing but interest.
Which bet do you want to take…that you’d better buy now or lose out on the interest rates and the possibility of low-level appreciation and the tiny bit of principal you’d be knocking off in the next couple years, or do the ‘wait til the bubble bursts, see how bad the depreciation could get, risk the higher rates, and save more money toward buying a house you’d actually be happy to live in’ play.
It’s easier to sit out when the stupid sellers are still pricing their homes so high that there’s nothing we feel would be affordable that we’d want to live in for any length of time.
And people like me anyway don’t want to play the games of guessing how little the seller would be willing to take for his overpriced house. It gets old and it gets frustrating when you feel like all the sellers are pretending like its reasonable that their homes “deserve” 30% appreciation from 2 years ago just because they’ve lived in it for that long. Makes you wonder what else they’re lying or pretending about and how much more it’s gonna cost you, even if you *can* negotiate them down to a less ridiculous price. The psychology of it sends potential buyers to the sidelines for a number of reasons….
There’s just no way it seems to me that the ridiculous run-up can be “corrected” with anything but a crash…
cheers all!
Invenory is through the roof not just in Connecticut, but in northern Westchester also. Katonah’s inventory has doubled since January. Residents want out, now that prices are weakening. The radiation leak at the nearby Indian Point nuclear reactor is not exactly helping matters.
The Hamptons are starting to cool as inventory builds up there too. This is probably the last big summer, as many are getting fed up with the congestion and heading elsewhere. All of Long Island is grossly overvalued and will likely witness the largest decline in the whole tri-state area. The island could fall by 25%, with some areas such as the run down ranches in the blue collar neighborhoods dropping by as much as 50% from their current million dollar price tags.
It says exactly this at http://tinyurl.com/gkmvj.
“Most vacation home communities were clustered within a short drive of major cites. It’s what made the Catskills the weekend home of choice for New Yorkers, Cape Cod the vacation spot of choice for Bostonians and the Jersey Shore the pick of Philadelphians.
But it’s now possible for New Yorkers to fly to Burlington, Vermont quicker than they can drive to the Catskills. And fares as low as $45 make it eminently practical.
Leslie Gauff, a real estate broker with Carlson Real Estate in Stowe, Vermont, says that inexpensive air fares have had an impact on her business.
“The Bostoners drive up for the weekend,” says Gauff. “It’s about three hours. But many New Yorkers fly.” That’s in lieu of a five-hour drive. “I’ve had people say that it’s just as easy, in some ways easier, to fly up here than to drive to the Hamptons.”
Stowe home prices have increased about 18 percent a year for the past three years, according to Gauff.”
http://www.financialsense.com/fsu/editorials/mchugh/2006/0311.html TO ALL THOSE WHO ARE WONDERING WHAT IS GOING ON IN THE NATIONAL PHYSIC….LOOK AT WHAT THE FEDS IS DOING TO TELL YOU HOW DIFFICULT AND PROFOUND THE FUTURE IS…ONE NEEDS TO ONLY SEE THIS ARTICLE TO SEE WHAT THE BIG BRO IS GOING TO BE UP TO AGAIN ..THE SAME AS THE LATE 70′S WHEN IT ALL WENT TO LA LA LAND…
“‘You’ve got to be right on the button now with prices,’ said (broker) Rick Higgins in Fairfield. ‘People aren’t going to overpay, they’re afraid to overpay. Before, people felt, ‘Well, if we overpay, we’ll be O.K. in six months.’”
Sounds like even the brokers realize the inflation / spec premium is history. Next up: Deflation discounts…
In most of CT (I live in Fairfield County) property taxes have been increasing every single year as well (this is not CA!); about 7, 8 or 9% every year. As the bubble increased, municipalities are cashing in: my neighbors have seen their tax rate go up to 43 mil - they are now paying $ 8oo / month in property taxes alone to live in their 900 ft square home. Add to that 100$ a month insurance costs, that’s $900/ month without even talking about a mortgage payment. Yet, for only $1000 a month I rent a similar dwelling (in terms of square feet) just across the street. Now… why should I get a huge mortgage loan again? I’d rather invest the difference in muni bonds, tax free.
eric, what CT municipal bonds are you involved with?
Am planning get rid of my long term CD’s when they are due, and convert that money into muni-bonds (just renewed my lease for another year)… still weighing my options, have not decided yet. Am putting the real estate literature aside for another year, and now comparing best investment strategies. Looks like real estate is not one of them.
I’m renting in a very exclusive area in South Florida (moved here for the schools as Fla has terrible educational system also known as “no rich child left behind). Average homes prices stand at $578k. This season I am seeing “open house” signs, something I had not seen here in the last two years. The prices have also started to come down about 10%. A renting neighor has had a house on the market for three months and not one bite. The house is empty but he says he only owes 130k for it. He is asking 678k. We told him when he reduces the price in half, we will be waiting. A friend of my brother has had his house on the market for months now and not even the open house helped get a bite. He paid 280k and is asking 500k. I would not pay 200k for it. I don’t think anyone else will either.
We are renewing our lease for another 7 months.
Some said “Remember agents even “buyers” agents are paid by the seller.”
At what point does the seller pays the realtor.
Actually the buyer is paying both agents.
The realtors get commission off the top from the escrow account. Thats already built into the contract.