The Hard Facts of 2009, The Crystal Ball for 2010

By Bill Primavera

The Home Guru

Are we there yet?  Are we at the bottom of the housing market?  All through 2009, observers of the real estate industry have been projecting with some hope that we may have reached the bottom and should be leveling out soon. But, hard statistics keep pushing that expectation away.

By the end of the fourth quarter of 2009, while we may have experienced a bump in the number of home sales we see in this region, the value of our homes has continued to diminish.

Stimulating increased unit sales in the past quarter is last year’s $8,000 tax credit to first time home buyers, now extended to April 30 as a deadline to be in contract. At the same time, owners are pricing their homes more realistically, reflecting the state of the economy. Another stimulus is the new $6,500 tax credit given to buyers who have owned a home for five years. And, this credit applies to the purchase of condos and coops as well as single family homes.

But after July 1, the deadline for closing to receive these tax credits, the stimulus programs will “sunset” and cannot be repeated without new legislation.

The bad news is that, while sales of units are up, home values in this area have suffered significantly more in 2009 than in 2008. While this is unpleasant to ponder, we have not fared as badly as other regions of the country.

For those of us who wonder how much value our homes have lost in the past year, the precise percentages are offered here. The calculations are done by taking the median price of all homes sold in a particular zone, as designated by the Multiple Listing Service, and comparing them with the median price from the year before.  The reason that the average price is not used to calculate these statistics is that results can be greatly skewed if either low priced homes or higher priced homes have sold in greater numbers during a certain period than normally expected.

For instance, in Zone 2 which includes our most upscale communities in Westchester, only one home sold for over $5,000,000 in 2009, while in 2008, a home sold for $17,500,000 along with an additional six homes that sold over $5,000,000.  These sales would greatly skew the average sales price. But by taking the selling price in the very middle of all homes sold, with equal numbers above and below, a more accurate statistic reflecting value is achieved.

Based on that formula, here is the bad news about 2009 in all three zones that are covered by Examiner newspapers. In Zone 2, representing such towns as Mount Kisco, Bedford, Chappaqua, Pleasantville, and Armonk, the median price for homes sold in 2009 was $725,000, down significantly from the median price in 2008 of $815,000, representing an 11 percent decline in home value. This comes on the heels of a whopping 14 percent decline the year before.

Zone 1, which includes the more moderately priced markets of Yorktown, Cortlandt and Peekskill, saw homes decrease in value by 12 percent in 2009, with the median price of homes sold falling from $437, 750 in 2008 to $385,000 in 2009. The year before, perhaps surprisingly, the median price had fallen only 3 percent.

In Zone 9, which covers all of Putnam County, the median price fell from $372,500 in 2008 to $335,000 in 2009, representing a 10 percent decline, compared with an 8 percent decline in 2008.

What does the crystal ball for home values foretell for 2010?  There are varying theories, probably based on whether you’re in the real estate business or have a home to sell, or if you are a buyer looking for a home.  Some signs are good about the number of units that will sell, based on the tax credits and right pricing. Also, investors are starting to come back into the market, looking for opportunities to renovate distressed properties and to flip them.

Unfortunately, there are still tremors of setbacks to come that could forestall turnaround further.  Foremost among them is the projection of higher interest rates on mortgages, based on the fact that the government is running out of the money it has used to buy mortgage-backed securities that have in turn freed up money for banks to continue lending with lower interest rates.

With higher interest rates on mortgages, home values would continue to be depressed, or not increase in value.  Also on the negative side of the equation is the forecast of more foreclosures, now focused on borrowers with interest-only loans and adjustable rate mortgages, rather than subprime mortgages. And, this unhealthy situation is further compounded by the increased level of unemployment.

So, while many are hoping that we’re at the absolute bottom of the market, that may not be the case.

What would a housing turnaround look like when released from the clutches of the Great Recession? It would probably be languorously slow. As homeowners, we may never again see the rapid double-digit increases in home values that we did in the middle of the last decade. Based on an historical perspective of the industry, the best we can hope for is a leveling out in the near future, followed by a period of sustained flatness before values start their arduous climb back.

The most basic dynamic needed to bolster the value of our homes is for jobs to come back.  When people have more money, demand for homes will be greater, and that will increase home values.

In the meantime, we can balance the disappointment of decreasing home values with the fact that we live and/or work in the vibrant communities of mid and upper Westchester and Putnam Counties, which enjoy enviable services, neighborhoods, business opportunities and schools.

Working within the landscape of balancing life choices with diminishing values on our homes, it is never the wrong time to consider getting on with our lives, even if that means selling our homes in a depressed market. We must keep reminding ourselves that what we lose on the seller’s end will be made up on the buyer’s end.

Bill Primavera is a licensed Realtor® (PrimaveraHomes.com), affiliated with Coldwell Banker, and a marketing practitioner (PrimaveraPR.com). He can be emailed at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or reached directly at 914-522-2076.

Follow him on Twitter for housing market updates at Twitter/HomeGuruNY.