In a Message from the President posted by Staten Island Board of Realtors (SIBOR) President Dawn Carpenter to the SIBOR Realtor Website:
"Year to year comparisons reveal that we are down between 27 and 33% from this time a year ago in units sold. Prices have also begun to recede more rapidly in 2008. Some continue to call this a housing bubble burst. We believe that the more realistic interpretation is that we are undergoing a credit bubble burst."
She goes on to explain:
"The difference being that in a housing burst supply would exceed demand typically resulting in lower sales followed by falling prices. This is usually precipitated by rising interest rates and/or rising unemployment. In this credit burst there is still significant demand (although there are signs of employment issues to come), along with supply, but the ability to fund purchases has been curtailed due to the tightened mortgage market."
The message, published in mid-june but not dated, goes on to explain how local realtors can better themselves while continuing to give great service.
Not mentioned are other local pressures, such as that foreclosures are up on Staten Island from 34 in Q1 2007 to 174 in Q1 2008, per an article in the Post published June 12th, after recording a record increase in foreclosures late last year as well. this will also wind up contributing to the supply of houses on market, as well as price pressures as banks look to unload these homes as the hottest part of the summer selling season begins to wind down.
The lack of ready credit for buyers on the island may be due in part to the somewhat un-remarkable drop in prices. Year over Year prices in the region are down 7.4%, according to the Case-Shiller Price Index, after posting a record run of increases to the tune of 130+% over the last 10 years.
It is possible the banks believe that prices will need to decline further here to come more in line with the purchasing power of the population, especially as the days of the 100% mortgage and the no-doc loans fade further in the rearview mirror.
Message To President: http://sibor.frogpond.com/DispArticle.cfm?ARTICLE_ID=23201
Monday, June 16, 2008
Tuesday, May 20, 2008
Like we didn't already know...
Reported today by CNN, the latest Housing Opportunity Index has been released by the NAHB and Wells Fargo. This index tracks the percentage of homes sold in a given market against the median income in that market. In short, for the New York City area, only 12.5% of the homes sold last year had a monthly payment of less than 28% of the average NY'ers salary.
Like we didn't already know that. Anyone want to bet how many of that 12% were condo's or in neighborhoods most of us would refuse to live in? I'd say 95+%.
Like we didn't already know that. Anyone want to bet how many of that 12% were condo's or in neighborhoods most of us would refuse to live in? I'd say 95+%.
The least affordable big city outside California was the New York metro area. There, nearly flat prices - $490,000 this year compared with $500,000 last, led to an increase in affordability to 12.5% this year. Still, that's better than a year ago, when only 6% of homes sold were affordable. New York is the second least affordable area according to this survey.Link to the CNN Article
Friday, May 16, 2008
SIBOR Sales figures, exposed
I've been trying to find current sales data for staten island, which has been hard to come by - SIBOR produces most of, it not all, the local market data and what I can find does not seem intended to be viewed by the public at large. They don't publish their methodology, so I was hoping someone could shed some light on it. It would help me immensely in my amateur analysis if I understood the methodology behind these charts.
If I'm reading this right, In 2007, Island-Wide 3,594 units were closed on at an average price of 420k after sitting an average of 133 days on the market. Thats 300 homes a month (I understand seasonal trends factor into this, but I dont have any hard data to compare against)
http://sibor.frogpond.com/graphics/photos/February%202008%20stats.JPG
As a quick comparison, here is the same chart for 2005, arguably the housing frenzy peak on the island:
http://sibor.frogpond.com/graphics/photos/Chart%2012.jpg
4,815 units sold, 399k average price, 97 days on the market. So 400 homes a month, or an average of 100 more than last year.
Now, looking at the year to date numbers, ending in march (I'm guessing you SIBOR members have the next chart in the series on this, I can't find it)
http://sibor.frogpond.com/graphics/photos/May%20Stats.GIF
We see 596 units sold 415k average price, 144 days on the market - 893 sold in the same period last year, which helps my average sales per month figure.
So, in short, it seems we went from 400 home sales a month peak to 200 home sales a month currently, but the price basically stayed spot on or rose. This could be skewed by the reduction in sales numbers, too.
Now, lacking inventory statics, its hard to make an ironclad conclusion - however, combining what is known from published foreclosure reports and the trusty vision-o-meter that sees lots of for sale signs, it would seem rather high.
This data seems to support a supposition that although prices have stayed consistent, sales have dropped off rather drastically, which is and will be further compounded by the mounting foreclosures- leading to a potential situation where there may be, or already are, significant inventory glut in our local market.
Thoughts?
If I'm reading this right, In 2007, Island-Wide 3,594 units were closed on at an average price of 420k after sitting an average of 133 days on the market. Thats 300 homes a month (I understand seasonal trends factor into this, but I dont have any hard data to compare against)
http://sibor.frogpond.com/graphics/photos/February%202008%20stats.JPG
As a quick comparison, here is the same chart for 2005, arguably the housing frenzy peak on the island:
http://sibor.frogpond.com/graphics/photos/Chart%2012.jpg
4,815 units sold, 399k average price, 97 days on the market. So 400 homes a month, or an average of 100 more than last year.
Now, looking at the year to date numbers, ending in march (I'm guessing you SIBOR members have the next chart in the series on this, I can't find it)
http://sibor.frogpond.com/graphics/photos/May%20Stats.GIF
We see 596 units sold 415k average price, 144 days on the market - 893 sold in the same period last year, which helps my average sales per month figure.
So, in short, it seems we went from 400 home sales a month peak to 200 home sales a month currently, but the price basically stayed spot on or rose. This could be skewed by the reduction in sales numbers, too.
Now, lacking inventory statics, its hard to make an ironclad conclusion - however, combining what is known from published foreclosure reports and the trusty vision-o-meter that sees lots of for sale signs, it would seem rather high.
This data seems to support a supposition that although prices have stayed consistent, sales have dropped off rather drastically, which is and will be further compounded by the mounting foreclosures- leading to a potential situation where there may be, or already are, significant inventory glut in our local market.
Thoughts?
Wednesday, May 14, 2008
Its the Fundamentals, Stupid
I think that if you surveyed all of the "bitter renter" demographic, of which I am one, you would find that the largest percentage of them live in cities where median home prices are *still* in the 300-400k range even after market correction
To those people, its not about the price and catching a falling knife, loosing value, or being able to buy something nicer next year - its that even with a decent paying job and a good down payment (by today's standards) they are still having a hard time finding a home. Its very depressing to be told by everyone that prices are low and its never been better to buy, and that everyone's out looking, why aren't you - and you still can't afford 90% of whats available.
For example, In my neck of the woods, 350k townhomes are labeled as "starter homes" consistently. Lets say you've got the 20% down (70k) and 3% for closing costs / NY tax stamp (~9k) - and 3 months worth of reserve (6k) - that leaves you with a P+I payment of about $1650 at todays rates, +200 in taxes/insurance a month and +150 for association fee so a PITI of $2000.
Average salary in NYC in 2006 was $49,000. So lets say we've got a couple both making 50k, 100k total a year. If They've saved their 85,000, Their DTI would be about 23%. Great, but I'm doubting many couples have that much.
I dont have any numbers on what the average savings are, but lets work with a number thats fairly obtainable - 30,000. In this same scenario, if you have 30k saved, everything changes. You can only put down about 15k - Mortgage payment is now $2000, +200 tax/insurance +150 association ****+150 for PMI*** now we're at $2500 a month PITI.
Thats 30% DTI, and that doesn't include any other costs of living, like car payments - add in $500 a month for that and credit card minimums, and you've just hit the 36% OH NO barrier. Not to mention, I'm not so sure many loan companies are going to be happy making the loan at these numbers - 5% or less downpayment seems a little dicey, one has to hope our couple has EXCELLENT credit, right?
The coup de grace? - Oh yeah, and we can go out and rent that same townhouse for about $1600-1800 a month. So, no, its not just about NEEDING the home, its about having your options for a financially sound purchasing decision to be limited to the bottom of the barrel in terms of home choices. If you want to upgrade from that 350k condo to a small detached ranch, what was the "starter" home for your parents - you'll have to come up with another 100k+ - and that TOTALLY blows the numbers away on affordability.
To those people, its not about the price and catching a falling knife, loosing value, or being able to buy something nicer next year - its that even with a decent paying job and a good down payment (by today's standards) they are still having a hard time finding a home. Its very depressing to be told by everyone that prices are low and its never been better to buy, and that everyone's out looking, why aren't you - and you still can't afford 90% of whats available.
For example, In my neck of the woods, 350k townhomes are labeled as "starter homes" consistently. Lets say you've got the 20% down (70k) and 3% for closing costs / NY tax stamp (~9k) - and 3 months worth of reserve (6k) - that leaves you with a P+I payment of about $1650 at todays rates, +200 in taxes/insurance a month and +150 for association fee so a PITI of $2000.
Average salary in NYC in 2006 was $49,000. So lets say we've got a couple both making 50k, 100k total a year. If They've saved their 85,000, Their DTI would be about 23%. Great, but I'm doubting many couples have that much.
I dont have any numbers on what the average savings are, but lets work with a number thats fairly obtainable - 30,000. In this same scenario, if you have 30k saved, everything changes. You can only put down about 15k - Mortgage payment is now $2000, +200 tax/insurance +150 association ****+150 for PMI*** now we're at $2500 a month PITI.
Thats 30% DTI, and that doesn't include any other costs of living, like car payments - add in $500 a month for that and credit card minimums, and you've just hit the 36% OH NO barrier. Not to mention, I'm not so sure many loan companies are going to be happy making the loan at these numbers - 5% or less downpayment seems a little dicey, one has to hope our couple has EXCELLENT credit, right?
The coup de grace? - Oh yeah, and we can go out and rent that same townhouse for about $1600-1800 a month. So, no, its not just about NEEDING the home, its about having your options for a financially sound purchasing decision to be limited to the bottom of the barrel in terms of home choices. If you want to upgrade from that 350k condo to a small detached ranch, what was the "starter" home for your parents - you'll have to come up with another 100k+ - and that TOTALLY blows the numbers away on affordability.
Thursday, May 1, 2008
Why don't people get it?
I should feel vindicated...but I just feel bad. And I can't quite figure out why. I know this is a long story, but I think its kind of worth reading. Why do I feel bad? This is what I've WANTED to have happen for years.
Late In the summer of 2006, I finally decided I couldn't wait any longer, and it was time to start looking at houses in earnest. I'd been looking casually - open houses, occasional phone calls to realtors, etc.
After the first couple of months of REAL searching, pre-approval in hand - My options in my price range were clear - Small, high maintenance fee 2 bedroom condominiums, or "handyman specials". And when I say handyman, I mean "piping for kitchen/bathrooms exists" It became obvious that unless I got very lucky, or shut my eyes and ignored the 10's of thousands of dollars worth of obvious repairs that were required, I was going to have to downgrade my selection criteria.
Summer of 2007 rolled around, and a new employee was installed in the cubicle directly across from me. This woman is a whip smart developer, mother of 2, with a husband who had in the past owned some small companies, but was currently was a high-payed developer as well.
As I began to despair of finding my "dream" home (hah!) she weighed in with advice. "Buy more than you can afford. Real estate always goes UP!" She said, and more than once. I said, over and over "I know, I know...but it just doesn't FEEL right" - it didn't help that the gulf between condos and even small detached homes was/is nearly $100,000.
So I backed off. I rented a condo that I had considered as a potential purchase option. I am now very sure I can't live in a condo. Its not buying - its renting with an investment component, to me. I pay a rent that is roughly
equal to what the mortgage amount would be if I bought it today. When we started renting, it was valued at 275. Now it is valued at roughly 245.
Fast forward to today. My lease is up in july, and i'm in the final stages of the decision to rent another year and save more of a down-payment. My cubicle-mate mentioned to me yesterday that now is a GREAT time to buy! Prices are SO low! Seems she'd been perusing larger homes for her family, and had found a bargain - 450,000 for a beautiful home. She had the realtor coming by last night to get her the appraisal on her existing townhome, which she was sure would sell quick. Besides, she had a family member that was going to help with the transition if needed.
This morning, her eternal optimism seems to have finally taken a hit. It seems the realtor informed her that the maximum she could probably get for her condo is less than what they owe. At some point during her "real estate always goes up" speeches to me, she refinanced and cashed out, and the mortgage amount she owes is just about dead-even with the purchase price of the new home. Why this didnt dawn on her immediately as a potential issue, I have no idea. But wait - theres more. The 450k bargain? Turns out the guy payed just under 600 for it a couple years back, and refinanced it multiple times - resulting in a total lean of 700,000. The chances that her 450,000 short sale will get accepted by countrywide, the company that owns the mortgage on the new home, seem slimmer and dimmer with each passing moment. Not to mention, the realtor last night told her she expects another 10% drop over the next year in her neighborhood.
I should be dancing around, telling her I told her so, but I just can't. Its sad, sad that people who are so smart can do so many dumb things. Its sad that 6+ months into the correction, with housing being in the news everywhere that the crux of the problem has only hit home now - and even still, she acts confidant that her house will sell at market value quickly. How can I sit there and tell her that even at the reduced price, I wouldn't be willing to touch it. Hell, for nearly 100,000 less I still wouldn't want to touch it, the ridiculous taxes and the fact that its an attached townhome just make it a totally unappealing option, even if it is a huge townhouse, and beautiful - according to her.
Late In the summer of 2006, I finally decided I couldn't wait any longer, and it was time to start looking at houses in earnest. I'd been looking casually - open houses, occasional phone calls to realtors, etc.
After the first couple of months of REAL searching, pre-approval in hand - My options in my price range were clear - Small, high maintenance fee 2 bedroom condominiums, or "handyman specials". And when I say handyman, I mean "piping for kitchen/bathrooms exists" It became obvious that unless I got very lucky, or shut my eyes and ignored the 10's of thousands of dollars worth of obvious repairs that were required, I was going to have to downgrade my selection criteria.
Summer of 2007 rolled around, and a new employee was installed in the cubicle directly across from me. This woman is a whip smart developer, mother of 2, with a husband who had in the past owned some small companies, but was currently was a high-payed developer as well.
As I began to despair of finding my "dream" home (hah!) she weighed in with advice. "Buy more than you can afford. Real estate always goes UP!" She said, and more than once. I said, over and over "I know, I know...but it just doesn't FEEL right" - it didn't help that the gulf between condos and even small detached homes was/is nearly $100,000.
So I backed off. I rented a condo that I had considered as a potential purchase option. I am now very sure I can't live in a condo. Its not buying - its renting with an investment component, to me. I pay a rent that is roughly
equal to what the mortgage amount would be if I bought it today. When we started renting, it was valued at 275. Now it is valued at roughly 245.
Fast forward to today. My lease is up in july, and i'm in the final stages of the decision to rent another year and save more of a down-payment. My cubicle-mate mentioned to me yesterday that now is a GREAT time to buy! Prices are SO low! Seems she'd been perusing larger homes for her family, and had found a bargain - 450,000 for a beautiful home. She had the realtor coming by last night to get her the appraisal on her existing townhome, which she was sure would sell quick. Besides, she had a family member that was going to help with the transition if needed.
This morning, her eternal optimism seems to have finally taken a hit. It seems the realtor informed her that the maximum she could probably get for her condo is less than what they owe. At some point during her "real estate always goes up" speeches to me, she refinanced and cashed out, and the mortgage amount she owes is just about dead-even with the purchase price of the new home. Why this didnt dawn on her immediately as a potential issue, I have no idea. But wait - theres more. The 450k bargain? Turns out the guy payed just under 600 for it a couple years back, and refinanced it multiple times - resulting in a total lean of 700,000. The chances that her 450,000 short sale will get accepted by countrywide, the company that owns the mortgage on the new home, seem slimmer and dimmer with each passing moment. Not to mention, the realtor last night told her she expects another 10% drop over the next year in her neighborhood.
I should be dancing around, telling her I told her so, but I just can't. Its sad, sad that people who are so smart can do so many dumb things. Its sad that 6+ months into the correction, with housing being in the news everywhere that the crux of the problem has only hit home now - and even still, she acts confidant that her house will sell at market value quickly. How can I sit there and tell her that even at the reduced price, I wouldn't be willing to touch it. Hell, for nearly 100,000 less I still wouldn't want to touch it, the ridiculous taxes and the fact that its an attached townhome just make it a totally unappealing option, even if it is a huge townhouse, and beautiful - according to her.
Tuesday, April 29, 2008
Always a silver lining...But for who?
There is a dirty little secret, when it comes to real estate and your local newspaper, wherever local is for you. That secret is simple - real estate advertising dollars helps pay the bills. Because of this simple truth, and the way your local real estate office tends to remind the papers of this whenever they read something they don't like - it should be no surprise that the writer of this article did her absolute very best to spin bad news as positively as possible - like so:
"Maybe the poorhouse isn't beckoning after all.
"Maybe the poorhouse isn't beckoning after all.
In sharp contrast to nationwide declines, Staten Island single-family home sales ticked upward and purchase prices remained steady in March, compared to the previous month."
Now, you don't need a masters in finance, or a Realtor's license to know the answer to this one - prices are always up from february to march - february is COLD march - not so much. This helps lure those who NEED to purchase from their winter slumber, in search of new digs. But its ok, it gave her a positive stepping off point. Then came some actual eye-opening news:
"On the Island, the total number of homes sold in the borough in March was 200, down from 316 in March of last year but up from 160 last month. That figure includes one- and two- family homes, attached houses, condominiums and co-ops.
The average price for that broad category of homes was $432,896 in March, compared to $446,000 in February and $455,452 in March of last year."
Add that to some information tucked away in a quote by a local politician, information that for some reason doesn't get its own headline:
"He[Rep. Vito Fossella] pointed to a 40 percent drop in home sales over the past seven months and a 400 percent spike here in foreclosures during the first quarter." (Published 04/2008)
A new day is dawning. One where the important people in our lives understand that putting ourselves into debt isn't always the right thing to do. One where we aren't subjected to the indignity of living in a shoebox with neighbors banging on the walls. One where we're not subjected to the indignity of ads for the ever so popular 350,000 "starter homes' - "perfect for the handyman or investor, as is - will not last!"
Subscribe to:
Comments (Atom)