How Long Will A Housing Turnaround Take?
By Bill Primavera
The Home Guru
As published in The Examiner, May, 2009
The headlines have said it all about the real estate market in Westchester this past quarter. It’s been an unprecedented slide in terms of home sales and value. Have we reached bottom and will the market now level out? And when will the situation turn around? Will it be three years, five years?
“Don’t count on a turnaround within five years,” says Mark Seiden, a second-generation realtor based in Briarcliff Manor. According to the Westchester/Putnam Multiple Listing Service, last year in Westchester, and as a self-proclaimed “trends analysis guy,” he would seem to be a good bet for seeking input on this subject.
In a recent meeting with this reporter, Seiden said that the real estate market is not based on the stock market or interest rates, but rather, follows two indicators line for line: consumer confidence and unemployment. “How long do you think it will take for unemployment to stop rising, turn around and start going down before consumers have the confidence to buy a house, knowing that they’ll have a job?” he asked rhetorically. Economic trends take a long time to adjust, he said, comparing market turnarounds to the Titanic. It wasn’t that the ship couldn’t turn to avoid hitting the iceberg,” he said, “it just couldn’t turn fast enough.”
According to Seiden, the current housing crisis is not an unexpected occurrence, but rather, a cyclical event that has shown a fairly steady pattern since the time of the Great Depression. “There has never been a truly bad real estate market since that time,” he said. “It’s just been a cyclical pattern every 17 to 20 years, and the main problem is that people keep forgetting it and don’t track it.”
Seiden cited market trends in more recent history, starting with the period of 1975 to 1984, when the market, buffeted by high unemployment and inflation, was very flat. “Remember the lines at the gas stations, where you could get gas only on days that corresponded to odd and even numbers on your license plate?” he asked.
In the period from 1984 to 1988, Seiden said that the real estate market was affected positively by the stimulus of Reagonomics. Prices went up until late in 1987 when the savings and loan crisis hit, “caused by banks giving loans they really shouldn’t have been giving. Gee, does that sound familiar?” Seiden commented sardonically. After this event, there was a downward trend, he pointed out, “because once you peak, the only place to go is down, and because, again, the market took its natural cyclical hit.”
From 1988 to 1992, the market rebounded and went up 45 percent. But, from 1992 until 2001, there was another flat period when home values went down about 15 to 18 percent. However, from that point until the beginning of 2001, it started rising again. Seiden said that the tragedy of 9/11 created a 90-day “hiccup” in the market and, immediately after that, it continued its wild ascent of about another 45 percent. “But it had taken another ten years, from 1992 to 2001, to get to that point,” he noted. And now, from 2004 to the present time, it has come down again.
“Since the Depression, we had five flat plateaus that have lasted between eight to 11 years,” Seiden said. “I don’t know if we’ve even hit the plateau this time, so if you ask me if things are going to turn around in the next five years, I doubt it. Anything can happen, but I don’t think so.”
Asked if homeowners should “hold on” until things get better, Seiden responded that it’s a quality of life issue. “If it’s time to move on, then homeowners should sell now. There may be a true loss of dollars, but it’s Monopoly money. If you’re going to sell a home for $600,000 and downsize to a $400,000 property, let’s say, and the market is down 10 percent, yes, you get $60,000 less on the sale of your home, but you’ll gain $40,000 on your buy. I’m not saying that you’re not losing anything, but you’re not losing it all. And, in this case,” he concludes, “is $20,000 going to stand between you and the next 10 to 15 years of your life?”
Seiden’s advice to buyers: “Both prices and interest rates are low, and this won’t be the case a year from now. With all the money the government is throwing into the mix, inflation will kick in and interest rates will rise. So right now, I say to home buyers: don’t walk, don’t run … sprint!”
Bill Primavera is a Westchester, NY-based realtor ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) and marketing practitioner ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) who can be reached for questions or comment directly at 914-522-2076.
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