Posts Tagged real estate market


August Market Perspective

0 Comments By Chris Meyers on September 22nd, 2009
Tags: , , ,      Categories: Buying, Dutchess, Market Conditions, Putnam, Westchester

Chris Meyers, the Houlihan Lawrence COO, discusses current market trends.

Consistent with the overall economy, our local housing market continued to show signs of stabilizing in the month of August. Most of the market areas we serve experienced a slower rate of decline in both the number and price of homes selling in August compared to the first half of 2009 (see table below).

In Dutchess County, the number of homes sold in August actually increased on a year-over-year basis for the first time since late 2005. This “less bad” market environment is certainly welcome, but buyers continue to be very discerning in their search process. We see very few bids on properties that are not priced at levels that represent “good value.”

AugustMarketPerspectives2009 August Market Perspective

We’ll return with a more detailed discussion of current market trends when the 3rd Quarter is complete. In the meantime, we’d love to hear your perspective.

Are you currently active in this market as a buyer or a seller?

Please tell us about your experiences.

News from our London Marketing Office

0 Comments By Guest Contributor on August 18th, 2009
Tags: , , ,      Categories: Buying, Market Conditions, Selling

A Giant Leap

On the 40th Anniversary of the first moon landing, Nick Churton in our London marketing office reflects that the UK and US real estate markets are now remarkably similar and suggests that taking a “giant leap” in today’s market may be a very good step indeed.

astronauts tool bag 150x150 News from our London Marketing OfficeForty years ago three brave men risked their lives to make a giant leap for mankind.  The Apollo XI mission to put a man on the moon, and go where no man had gone before, held the planet in thrall. It was the end of the ‘60s and Britain had swung for almost a decade.  But, as a counterpoint to the successful moon landing, back on earth the wheels were coming off.  The decade-long free spending party had come to an end.

So, no change there then – particularly as none of us really knows now what is going to happen next, any more than we did in the early ‘70s.  But life and economics appear to have come full circle.

The real estate market is certainly going where it has never gone before.  We are in un-chartered territory with the market very finely balanced indeed.  On one hand it could remain on its present – albeit shallow – upward trajectory.  On the other we could experience the double bounce or ‘W’ shaped recession, about which some economists and media commentators seem keen to remind us.

From a real estate point of view there seems little doubt that, although there is a large question mark hanging over where the market may go next, now does seem a pivotal time for home movers.  If the recovery continues, the rate of increase in real estate values should ultimately rise.  So now would be a very good time to buy.  Were the market to slip back and values slide then it would be a smart move to sell.  Moving home always features profit and loss – the financial advantage of selling almost always cancels out the disadvantage of buying, or vice versa depending on the market.

The first six months of this year have defied most market predictions.  Activity has been high, and in some places demand has even exceeded supply.  That was not in the script, but is a welcome sign of tentative market recovery.  So too is the news from the house builders that they are seeing their best sales results in three years.

Buying real estate in this market may seem to some like a giant leap into the unknown: not quite like risking one’s life and flying to the moon for the first time, but a bold step nevertheless.  However, when weighed against some of the good signs of recovery then the bold move now may very well prove to be the shrewd one.

Nick Churton is Managing Director of  Houlihan Lawrence’s London Marketing Office based at Mayfair International Realty – Cashel House – 15 Thayer Street – London – W1U 3JT

Are We At The “Bottom” ?

0 Comments By Chris Meyers on August 7th, 2009
Tags: , , , , , ,      Categories: Buying, Dutchess, Market Conditions, Putnam, Selling, Westchester

Let’s suppose you are heavily invested in the stock market and your entire portfolio consists of thousands of shares in the stock of just one company. 

Now, imagine that the only information available to you about the value of your stock is the level of the Dow Jones Industrial Average.  That’s essentially the position we find ourselves in when it comes to valuing the investment in our homes. 

 The release of the Case-Schiller Price Index for May spurred a lot of discussion that the national housing downturn may be nearing “the bottom.” The New York Times writes that “Recovery Signs in Housing Market Stir Some Hope”. This is welcome news, of course, especially since housing woes are inextricably linked to the global recession that began in early 2008.  However, the only housing data point that really matters for most of us is the value of our own home.  While the national and major metropolitan statistics are indicative of broad trends that ultimately affect the value of all homes, they actually tell us very little about what our home is worth right now.

So that leaves the obvious question:  has our local housing market found a bottom? 

The short answer is not a very satisfying one:  it depends.  If we define the bottom in terms of the number of homes selling – or the liquidity of your real estate investment – the worst is probably behind us.  Between the first quarter of 2007 and the first quarter of 2009, sales of residential real estate in Westchester, Putnam, and Dutchess Counties dropped by more than 50%, to levels not seen since the late 1980s.  In the second quarter of 2009, the combination of lower home prices, tax incentives for entry-level homebuyers, and relative economic stability gave us a bounce in home sales, especially for homes priced at or below $750,000 in Westchester and $300,000 in Putnam and Dutchess.  The Poughkeepsie Journal recently reported on this trend. 

The price correction at the low end of our market began more than 2 years ago, when subprime lending dried up and the market was limited to buyers who could reasonably afford the homes they were purchasing.  As of today, the balance between supply and demand, which I discussed previously, would suggest that prices at the low end of the market should begin stabilizing near current levels in the second half of 2009. 

The high-end of our market (over $2 Million in Westchester; and over $800,000 in Putnam and Dutchess) did not begin to feel the effects of the housing downturn until about 1 year ago.  That’s when the credit crisis began to take its toll on the earnings of the broader Wall Street community, who generally set the tone for the high-end housing market in this area.  Our observations on this market are consistent with a recent report in the Wall Street Journal – the high end of the housing market probably has some catching up to do with the low end in terms of price correction.

Timing the real estate market is almost impossible, especially since real-time data is so hard to come by.  It is often said that by the time we can say definitively we have reached a market bottom, it will already have passed.

Market Perspectives July 2009

0 Comments By Chris Meyers on July 24th, 2009
Tags: , , ,      Categories: Dutchess, Market Conditions, Putnam, Westchester
Is the Sun Finally Peeking Through the Clouds?

After a long and wet late spring it seems we can finally look forward to fair weather in the days ahead.

Likewise, as we move into summer, we are also seeing a bit of improvement in our local real estate market.

After a very sluggish first quarter, housing is showing signs of stabilization. Data from the Westchester-Putnam and Mid-Hudson Multiple Listing Services reveal that a total of 1,913 single family homes sold throughout Westchester, Putnam, and Dutchess Counties in the first half of 2009. This represents a decline of about 30% in the number of homes sold and a decline of approximately 20% in average sales price vs. the first half of 2008. (For details by County and price range, please see the data tables below).

So why the optimism?

A look at quarterly results indicates that for the April-June period, the year-over-year decline in sales moderated significantly compared to the January-March period. For example, in Westchester County home sales were down about 29% in the second quarter of 2009 compared to 2008, a marked improvement over the decline of about 40%  experienced in the first quarter. Moreover, homes currently under contract and scheduled to close in Q3 reflect what has been a healthy late spring selling season.

In the short term, we expect to see continued modest improvement in market liquidity (i.e., the number of homes selling), particularly for homes priced under $1 Million, the segment of the market that has shown the highest activity.

However, homes priced over $1 Million continue to face challenging market conditions. This can be illustrated in the tables below by the column labeled “Active/In contract Ratio.” We sometimes look at this ratio to project the future direction of home prices, as it is indicative of the relative balance between supply and demand. When this ratio is at or below 8, demand is sufficient to absorb the homes available for sale within about 4-6 months.

While supply and demand are in balance at the low end of the market, note how the supply-demand ratio increases dramatically with home price. In Westchester, for example, there are 21 homes priced at $3 Million+ on the market for every similarly priced home that is under contract to sell, compared to a ratio of just 5:1 for homes priced under $700,000.

It is worth noting that the absolute number of homes for sale is not particularly large at any price level – in fact, overall inventory is flat or even down slightly compared to 1 year ago. However, the rate at which high-end homes are selling has dropped sharply, with year-to-date sales of $1 Million+ homes down 70% or more from 2008 levels across Westchester, Putnam, and Dutchess Counties.

With less competition to purchase the area’s more expensive homes, high-end buyers in particular have more relative bargaining power than they have had in many years. As a result, we are seeing deals go to contract at roughly 2002/03 price levels. As these homes pass title and the sale prices get reported to the MLS, they will likely create “market comps” that put pressure on other sellers to reduce their list prices accordingly. This cycle is likely to persist for the remainder of 2009.

It’s All About the Price

The old real estate mantra of “Location, location, location” may still hold true, but today’s market may be more aptly characterized by “Price, price, price.”

Homebuyers are seeking great values and homes priced for today’s new market realities are selling in a timely manner – sometimes within days. In fact, we’ve actually seen proper pricing result in multiple offers.  We recently listed a home in Chappaqua for $1,120,000, reflecting the original 2001 purchase price of $900,000, the $500,000 cost of extensive improvements made by the seller (renovations that are now 5+ years old) and the highly competitive market backdrop.  The seller understood that there are currently more $1 Million+ homes on the market than there are buyers, and was looking to differentiate his home from the rest. Realistic pricing created heightened interest and buyers reacted immediately. The seller received 6 offers within 3 days and the home is now under contract for more than the original asking price.

Not too bad for a reportedly “poor” real estate market. Or course, the flip side of this is that properties that are not priced to match the reality of today’s market will and do languish. In most cases, “wishful pricing” results in both a longer time on market, and a lower ultimate selling price as the seller chases a declining bid with subsequent price reductions.  This still happens too often and the degree to which it persists will be a key driver of market trends for the remainder of the year.

WestchesterMarketOverview Market Perspectives July 2009

Westchester County Overview July 2009

PutnamMarketOverview Market Perspectives July 2009

Putnam Market Overview July 2009

Dutchess Market Overview1 Market Perspectives July 2009

Dutchess Market Overview July 2009