Long Island Rude Awakening

From the NY Times:

Taking the Measure of the Market

IN what may be a “rude awakening,” as one real estate agent put it, the number of Long Island homes being put up for sale, combined with those sitting on the market, is climbing skyward, according to a report from the Multiple Listing Service of Long Island last month.

Simultaneously, the prices paid for homes are still increasing, but at a much slower rate than last year, and the number of closed sales has fallen in many Long Island areas compared with June of last year, the listing service reported.

At midyear, there were 75 percent more homes on the market in Nassau County and 65 percent more in Suffolk County than a year earlier. Although median sale prices were 6.6 percent higher in Suffolk County and 6.4 percent in Nassau, median contract prices, which are more current, fell in Nassau last month.

Brokers report far fewer buyers in recent months. They also say sellers have not yet caught up with the trend by curbing their asking prices.

Georgianna Velardi, a broker at Century 21 Petrey Real Estate in Long Beach, said she had recently seen more sellers looking for a way out of high mortgage payments.

A couple in their late 30’s came in to price their three-bedroom ranch. The interest rate on their mortgage had risen to 9.5 percent, from 3.5 percent three years ago. They didn’t have the equity or good credit to qualify for refinancing at a lower rate. To make matters worse, on July 1 the City of Long Beach raised property taxes 25 percent. “They needed to get out because they were so overwhelmed,” Ms. Velardi said.

But back in the primary-home markets of western Suffolk and Nassau, Ms. Marten, the buyer’s broker, said she expected to see even more homes sitting on the market longer, and more foreclosures. “It’s not going to bottom out immediately,” Ms. Marten said. “We’re going to see, I believe, what we saw in 1988: a flattening, a gradual downturn and then down and down until it hits bottom.”

On the other hand, Professor Campbell of Hofstra said he did not expect to see double-digit decreases in percent change of median prices over a string of quarters, or huge numbers of defaults and foreclosures. Instead, there will be “a soft market and a gentle decline in prices over the next year at least, possibly much longer than that.”

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51 Responses to Long Island Rude Awakening

  1. Anonymous says:

    I never did like “wrong” island.

    SAS

  2. Anonymous says:

    “a soft market and a gentle decline in prices”

    no way. If I hear one more ‘soft landing’ explanation I’m going to be sick. LI prices will easily drop 40% or more, already are starting to come down.

    ‘experts’ promoting this are just making it worse for people (especially sellers) – it’s time to wake up and face reality. There will be nothing gentle about this, unfortunately.

  3. Richard says:

    prices either come down or transaction volume shrinks sizably. i can’t imagine those wishing to move will en masse be able to hold out for years waiting for their ‘price’. as soon as the panic sets in that home price appreciation days are long over and the decline picks up steam you’ll see some rushing for the exits. where we drop to is anyone’s guess.

  4. Anonymous says:

    Actually, I think the prediction was pretty plausible. Prices can drop 30-40% but not overnight but as a result of inflation (annually ~4%) and 5-7% price declines for the next few years. In 4-5 years the prices have declined about 35% in real terms.

    I think this is also the best way for everybody. Overnight 40% price drops kill the economy and you will lose your job.

  5. Daniel says:

    Soft landing, no way. LI prices insane. Crash coming. Gonna end real bad.

  6. Anonymous says:

    “A couple in their late 30’s came in to price their three-bedroom ranch. The interest rate on their mortgage had risen to 9.5 percent, from 3.5 percent three years ago. They didn’t have the equity or good credit to qualify for refinancing at a lower rate. To make matters worse, on July 1 the City of Long Beach raised property taxes 25 percent. “They needed to get out because they were so overwhelmed,” Ms. Velardi said.”

    Just speaking for Englewood, Englewood Cliffs, Tenafly and Alpine. The newbies that have shown up since 2000 remind me of these dummies…should get interesting.

  7. Anonymous says:

    ps: the builders in these towns are toast. Houses sitting empty and unsold for nearly 2 years!

  8. Anonymous says:

    “In 4-5 years”

    24 – 36 months real declines of 40%

  9. Mr. Oliver says:

    My parents had to sell their home in Port Jefferson in 1991. Ugleee.

  10. long island is just like jersey in respect to home prices and taxes both are out of control and many parts of li are overun with gang activity and illegals just like jersey

  11. UnRealtor says:

    When will the media parrots stop citing median sale price? If they do, they should at least explain that buyers completely priced out at the bottom end means more expensive homes still sell, which means a rise in median sale price.

    How about price per square foot?

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