Recently I attended a real estate seminar featuring a motivational speaker who advised attendees how best to respond to the question most frequently posed to realtors: “So, how’s the real estate market now?”
“Don’t respond in a meaningless or dishonest way by saying simply, ‘It’s gr-r-reat!’ as many do,” he said, “But at the same time, don’t be a real downer by saying ‘It’s worse than I’ve ever seen it.’”
Instead, we were told, say, “Well, that depends!”
And, indeed, especially in today’s market, that phrase is the best answer. But to mean anything, the response must be followed by a series of questions and suppositions. Are you a seller? Are you a buyer?
If you are a seller, do you have to move now? Are you able to accommodate a listing price that reflects market conditions? If you are a buyer, is your credit score good and is your job relatively secure? Do you have anything to sell before you buy?
In short, “that depends” is based on the individual circumstances of whoever is asking the question. It depends on where you live, where you want to live, and how you want to live.
For a couple who is retired and wants to move south, for instance, the picture can be rosy by selling in our market and buying where the cost of living and home prices are considerably lower. Or, even for those who want to stay in our area, what they lose on the sell side, they can more than make up on the buy side.
But, even with the current mortgage rates and bargains galore on the market, there are many potential buyers and sellers paralyzed by the housing news in the past couple of weeks that reported a kind of death knoll for the month of October.
The media reported that sales of previously owned homes fell in that one month to their lowest level in 13 years. The National Association of Realtors (NAR) reported that sales were down 2.2 percent nationally from just the month before, and compared with the same month last year, they fell 36 percent.
While sales had risen slightly in August and September, they had plunged to a 15-year low in July following the end of home buyer tax credits. And, Fannie Mae is estimating that the number of home sales for 2010 will total 4.78 million, down 7 percent from 2009.
Here in the lower Hudson Valley, the figures were alarming in the year-to-year comparison, but not nearly as bad as the national averages. In Westchester, the number of homes sold fell 15.2 percent when comparing sales from October, 2010 with the same month in 2009. In Putnam, sales fell 14.2 percent.
Foreclosures and other distressed sales accounted for 34 percent of all sales in October, compared with 35 percent in September, according to the NAR. On the horizon, with bank foreclosure errors causing delays, some buyers who have been under contract to purchase bank-owned properties may walk away.
Also, with banks de-emphasizing foreclosures, those sales have dropped by a third in October. This drop off may be temporary, as banks realize that loan modifications and short sales are better alternatives than foreclosures. But even before the banks backed off, the rush to foreclosure sales was dropping off.
So again, I ask, are we at the bottom of the market yet? In my opinion, yes, finally we are. We’re at the bottom of the “unreal” market that had been inflated by the government stimulus and the rash of foreclosures.
The major challenges to the housing market remain the high rate of unemployment, which is much worse in other parts of the country than here, and the belief that prices will continue to fall. This has proven not to be true in the lower Hudson Valley where prices have stabilized in most markets and in some upscale communities, they have actually improved.
For instance, in the Bedford/Katonah market, Alfie Rechichi, manager of the Coldwell Banker Residential Realty office there reports that 137 single family homes sold in 2010 to date, compared with 92 sold in the same period last year. “That means an increase of almost 49 percent,” she exclaimed.
At the same time, the median price of homes sold in this market has increased during this same period. In 2009, the median price was $704,000; in 2010, it rose to $812,000.
“But you also have to consider that from the height of the 2005-2006 market, sales prices have decreased 35 percent in our market!” she said.
Interestingly, Rechichi noted that the greatest impact becomes evident when comparing the cost per square foot for houses sold. “In 2009, houses here cost $425 per square foot compared with $330 this year. That means people are getting more house for their money than they did last year,” she said.
Communities north of Bedford have not fared as well this year because they don’t enjoy the same demographics and its proximity to the city and Wall Street, which is booming again. When that boom translates into more jobs, hopefully sooner rather than later, the housing market can start moving forward again.
Further, it is predicted that, as the number of low-priced properties declines over the next few years and as fewer foreclosures come on the market, prices will rise.
But for now, if you were to ask me, should you go ahead and buy or sell, my answer would be, “Well, that depends.”
Bill Primavera is a licensed Realtor® (PrimaveraHomes.com), affiliated with Coldwell Banker, and a marketing practitioner (PrimaveraPR.com). Anyone considering selling or buying a home can reach him directly at 914-522-2076.