Real Estate Update: The Good and Bad News
By Bill Primavera
The Home Guru
Published in The Examiner and The Putnam Examiner, November 2009
From time to time, besides feature articles on various aspects of home ownership, buying and selling, this column will be devoted to news affecting the housing market, as is the case this week. Following are some real estate matters in the media, starting with the good news first.
Credit Extension Signed by President
On Saturday, November 7, 2009, as this paper was preparing for print, the bill for the $8,000 tax credit extension was signed into law by President Obama. The law extends the credit to all new homebuyers who sign a contract by April 30, 2010 and who close by July 1, 2010. Further a $6,500 tax credit is being offered to homebuyers who have lived in their current home for at least five years and want to buy a new primary residence. Couples can earn as much as $225,000 a year to qualify and individuals can earn up to $125,000. The tax credit is not applicable for those buying homes priced at over $800,000. Those who sell their new home within three years would have to repay the tax credit. It is hoped that extension will lift buyer activity considerably over the next few months.
Prices Poised for Still Further Decline?
Just when it was reported a couple of issues ago that we may have arrived at the rock bottom of the real estate market, there is an alternate view among some financial observers that the current leveling off in prices may be just a plateau and that there will be another drop-off of eight to 10 percent in the coming months. The reason for the projection, according to Dr. Laurie Goodman, economist and senior managing director for Wall Street’s Amherst Securities, is that there is a seven million “shadow inventory” of delinquent and distressed properties in the banks’ foreclosure pipeline that haven’t hit the market and haven’t affected prices yet. Unless this prediction is moderated by the new tax credit extension, this new wave of short sales and foreclosed properties will have a wet blanket effect on the market when they are listed, with the result that prices will decline further. The same community of observers is predicting that it may be more than five years, perhaps even ten years, before real estate values grow to the heady levels we knew two years ago.
The Challenges of Buying Short Sales and Foreclosures
And speaking of short sales and foreclosures, it is amazing how our everyday language in the real estate business has changed in the past two years. The word foreclosure was a rarity in Westchester and Putnam when houses were receiving multiple bids over asking price.
Having just completed a short sale on behalf of a seller, I can assure you that it can be a nightmare for all concerned: the seller, the buyer, the client’s lawyer and certainly the realtor. Only the lender is in the catbird seat and holds all the cards. That said, if you can get past the hurdles posed by the complexities of convincing a lender to accept less money than is owed on a property, it can be a godsend to a distressed seller and a real deal for the buyer.
While statistics show that only 40 percent of short sale applications currently make it to closing, it can be well worth the wait and sweat involved. But two things are needed: patience and a realtor who knows the territory. As for patience, my short deal required four months over a traditional sale for the needed paperwork, emails, and countless phone calls in trying to keep the deal together.
And as for selecting the right realtor, make sure the one you choose has experience and a basic knowledge of the procedures required. The National Association of Realtors has even addressed this issue by offering a new certification in dealing with short sales, foreclosures and REOs (bank-owned properties).
News of Local Housing Sales
Taking the temperature of how the housing market is going, very locally and immediately, an analysis of sales prices of single family homes in Westchester and Putnam for the month of October would show that our region has held more steadily than most of us would believe listening to the news.
Comparing October sales, 2009, with October sales, 2008, Westchester fared better than Putnam and even inched up in both number of homes sold and selling price from the same month a year ago.
In October, 2008, Westchester saw 302 closings of single family homes with an average price of $751,729 and a median price of $575,000. (The average price in Westchester is somewhat skewed by some houses selling as high as $6 million.) In October, 2009, the number of sales increased year-to-year to 336, with the average price increasing to $763,208 and the median price remaining at $575,000.
In Putnam County, October, 2008 sales of single family homes totaled 57, with the average price of $394,639 and the median price, $335,000. In October, 2009, 56 single family homes were sold with the average price dropping to $359,399 and the median price increasing to $349,950.
While sales numbers and prices may have been sustained by the stimulus of the $8,000 tax credit, it would seem from this year-to-year snapshot of a month’s sales that the market has indeed leveled out.
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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