From the NY Times:
Trapped in Their Own Homes
By MARY JO PATTERSON
Published: February 19, 2009
ON May 1, 2007, a very different economic era, Janet Faello put her former marital home on the market for $829,000. She and her husband were divorcing.
“It’s not the Taj Mahal, but it’s a nice, well-maintained home,” said Ms. Faello, a 53-year-old massage therapist with two daughters in college who remains in the house, which she and her ex-husband still jointly own. Her ex-husband lives elsewhere. “I haven’t been entertained once with an offer, and I’m still not getting any bites.”
With the house unsold, Ms. Faello said she and her ex-husband are struggling to meet expenses. Taxes alone are $13,860 a year.
Would-be sellers in New York City’s suburbs understand her pain, whether they are trying to sell a Cape Cod for $300,000 or a center hall Colonial for $1 million. In a housing market characterized by eroding home values, high inventory and tight credit for borrowers, many feel stuck in a place they don’t want or can’t afford. As the recession becomes more severe and unemployment mounts, they fret each week their properties remain unsold, and fear losing equity. While buyers hunt for exceptional values, sellers feel like hostages. And their pain is sometimes drawn out when deals that seem to be done blow up just before the closing.
Nevertheless, all the reporting agencies are concluding that the number of sales of single-family homes in 2008 was down from 2007 in the New York metropolitan area, and prices in general were down. The median price for a home sold in the metropolitan area was $458,600 in the fourth quarter of 2008, down 11.7 percent from a year earlier, according to the National Association of Realtors. Those figures reflect the agency’s tracking of sales in Bergen, Hudson and Passaic Counties in New Jersey; and the Bronx, Kings, Putnam and Westchester Counties in New York.
A seller’s anguish may not be as sharp as the pain of a homeowner facing foreclosure. But the situation can alter life plans and jettison hopes.
Some sellers are losing hope.
Consider Mary Beth Lang of Shelton, Conn. She is 62, with grown children and a husband who retired as a buyer for a technology company. Her dream went like this: sell the house and move to their new custom home in Kentucky.
Her five-bedroom, four-bath house went on the market for more than $1 million in 2006. The price has since slid to $875,000, but there are no takers. Repainted, with many personal effects removed to look less cluttered, it no longer feels like home. The Kentucky house? It’s for sale, too.
James Bednar, a real estate agent representing buyers at DRI Real Estate Company in Ridgewood, N.J., said many sellers overvalue their homes.
“The industry has nailed into people’s minds that their houses are worth a certain amount,” said Mr. Bednar, who blogs about the New Jersey market at njrereport.com. “Sellers remember what neighbors sold their houses for two years ago and hold on to those unrealistic comparables. They need to accept the current reality of the market.”
Mr. Bednar said he knows that sellers do not always have the leeway to drop their price. Others will be asked to pay a steep price for features buyers consider undesirable.
“In a boom time, buyers tend to overlook things like a high tension line that’s a little close to the house, a street that’s a little too busy or an odd layout,” Mr. Bednar said. “In a down market like this, those preferences are magnified.”
JONATHAN GREENBERG paid $792,000 for a lake house in Montville, N.J., in 2005, attracted by its unusual architecture and striking views. Then he invested nearly $100,000 in improvements. At the time he was single, but is now married and a father. With its steep slopes and 30-foot drop to the lake, the property is not “kid-friendly,” said Mr. Greenberg, who sells investment properties for a living. He listed the house a year ago for $930,000. The price is now $670,000.
“People say they love it, but it doesn’t have some of the fundamentals families are looking for,” said Mr. Greenberg, 41, whose wife, Malu, is expecting a second child. “It’d be perfect for New Yorkers who need some kind of getaway. It’s stressful. We do feel stuck.”