Mixed messages in LI housing market
It was like fate wanted to prove the real estate agent wrong at the New Hyde Park open house. Almost every time agent Barbara Strugala started to talk about the iffy state of the home sales market, she stopped to answer the doorbell being rung yet again by house hunters. But three visitors in five minutes doesn't quite ring recovery: "We don't know if these people are buyers," said Strugala, of Fanny Soisson Real Estate in New Hyde Park. Two years after the subprime mortgage collapse set off a global financial decline, the Long Island market is in what one appraiser called "discovery" mode on whether the slump is starting to end.
The answer is not clear, but it would affect asking and closing prices or fuel a domino chain of sales and more. Industry veterans have pored over the mixed messages in data, some pointing to an uptick in offers and others predicting that the tsunami wave of foreclosures has yet to drown the Island.
"None of us can be absolutely certain whether this is an event or a trend," said broker-owner Georgianna Finn of Coach Realtors in Northport. One of the most tantalizing predictors of better times, the number of sales contracts, has generated one of the most tantalizing questions: Are signs of recovery artificial? For April, May and June, the number of contracts was higher than the same time last year, ending a two-year spell in which monthly housing numbers rarely trumped activity from a year ago, according to analysis of data from Multiple Listing Service of Long Island. But some industry experts said gains may be temporary, driven by the federal first-time home buyers' tax credit, which expires at November's end; the release of pent-up buying demand; spring as the prime house-hunting season; and various tactics that have stalled some inevitable foreclosures.
"Am I in recovery," asked Farmingdale mortgage broker Rich Biondi, "or have I gotten a short-term boost? I do not rest easy." Reality sinking in It's on the ground that the case for recovery might be the strongest. Reality has sunk in for sellers, who have lowered prices, agents said, and buyers have been making more offers. At one point, luxury-end broker Shawn Elliott found deals being thwarted by buyers, sellers and their lawyers because of bickering over small stuff. But as median closing prices rose slightly this spring, the Woodbury-based businessman said, buyers no longer saw homes as if they were cars that depreciated the second they're driven off the lot: "The thought process was like, 'What if I jump in and buy the $3 million house that a month from now could be worth [$2.4 million]? That's over. The thinking is, 'We've bottomed out and next year this time my house might be worth $3.2 [million].' " Other brokers used to high-end listings now live on sales of lower-priced homes, more affordable to first-time buyers.
In the second quarter of this year, more than 47 percent of Long Island closings were on homes priced at $350,000 and less, up from 23 percent a year ago, said Manhattan-based appraiser Jonathan Miller, who tracks local sales. The lowest monthly median closing price this year has been $350,000, according to MLS. For Coach, lower-end homes are hot. Calls, foot traffic, appointments and transactions are up this year, Finn said, and its 7-year-old office in Garden City set a sales volume record in June, the agency's best month in sales contracts since 2007.
Although Finn said she would prefer to forget the real estate slumps of the early '80s and '90s, what's happening now feels a bit like what happened in the past when recovery started. Gradually, over three years or so, she recalled, price declines slowed, more deals were signed and the balance between supply and demand was restored: "It was a very steady climb out," she said. Others think a true recovery is still at least a year away. In part because the fate of the housing market is tied more than ever to unemployment, which at the current rate of 9.4 percent is close to a 26-year high of 9.5 percent, and to the lending world, no longer giving easy credit.
Lenders underwrite like the Energizer Bunny, said Biondi, and they ask over the months for the same verifications, including proof of employment two days before the closing.
At Bethpage Federal Credit Union, mortgage applications have doubled since last year and more borrowers are defaulting. Delinquent loans up So far this year, .53 percent of loans are delinquent, compared to .42 percent a year ago, said Brian Clarke, Bethpage's chief financial officer. That excludes $4.5 million in delinquent loans "charged off" for the first six months this year, meaning written off as unpaid, he said, up from $4.2 million a year ago. "I started [at Bethpage] in April 2002, and we did not charge off a single real estate loan for six years," said Clarke. Until foreclosures run their course, some experts said, the housing landscape won't bounce back soon.
Shoreham-based appraiser Steve Sikorski sees a tale of two cities on Long Island. Property values dropped about 5 percent a year in places with fewer foreclosures, like Rockville Centre, and 25 percent in hard-hit pockets, like Mastic-Shirley, he said. "My God, it's such a shocking thing to see '1' in front of a house - 150, 180, 170," Sikorski, said of some asking prices. "They're . . . average at best, not in the ruined state."
The deepest hits in prices and property values may be over, several industry experts said, but that doesn't mean the Island has reached bottom.
That's why Oceanside renter and nurse Raghu Ninan, 32, has toured about 100 homes in two years without buying.
"It is worth waiting," he said. "Nothing's stabilized as of now. Why should I buy now if prices go down?"
August 10, 2009 By ELLEN YAN
