Long Island Housing Market Bubble Never Burst
As Long Island home prices continued to drop or stabilize, buyers snapped up homes last month, Newsday reports this morning.
In Nassau, Suffolk and Queens counties, buyers signed contracts on almost 2,600 pieces of Long Island real estate in January, a 25 percent jump from a year earlier.
Home prices fell in Nassau and remained stable in Suffolk and Queens.
In Nassau, the median home price fell to $450,000 in January from $470,000 in December - down 6.3 percent from a year earlier.
In Suffolk, the median closing price fell from $398,600 in December to $397,500 last month, but it was up 1.9 percent from a year earlier.
In Queens, the median price rose to $485,500 from 477,500 in December, and was up 0.1 percent from a year earlier.
People put off purchases a year ago in hopes of a price decline, but have since decided to pursue New York mortgage deals, said Donald Scanlon, president of the local multiple listing service.
“A year ago, I think there was a doom and gloom that may have been painted by some of the media saying, ‘Prices are coming down. Prices are going to come down. There’s a bubble. It’s going to burst. The bubble is going to burst.’ And I don’t think there was any bubble to burst,” Scanlon said.
He said good signs abound: The number of contracts signed has increased, prices are steady, inventory has declined a bit during the past six months and attendance at open houses is up.
“With those four factors, all the signs are that we’re going to have a very, very strong market,” Scanlon said.
Pearl Kamer, chief economist for the Long Island Association, also said the figures show better news than expected, noting that the Long Island housing market price declines were modest and were confined to Nassau, far from big declines some housing market watchers had predicted.
“There was a lot of concern that there might be a sharp break in the market and that we might see a substantial and abrupt decline in New York home prices, and we haven’t seen it,” Kamer said.
Nevertheless, Kamer foresees price declines - not in the lower- and mid-priced homes, but in some high-priced homes where there’s more leeway to drop, and where mortgage loan costs aren’t a factor.
“I think we’re still at the beginning of the down market,” she said. “And I think we’ll see gradual declines this year and possibly even into next year before the market stabilizes.”
Dianne Clark, owner-broker of Clark Realty Corp. of New York, based in Freeport, said it’s increasingly common to sell homes at prices prevalent two years ago.
“That’s what you have to do,” Clark said. “You have to do that. If people price them unreasonably, nothing’s going to happen.”
A Freeport homeowner eager to move lowered the asking price every two weeks when it wasn’t luring interested buyers. The small two-bedroom home in Freeport sold last month for $315,000 - $50,000 less than the original listing price in 2006.
The 2,500 home closings last month - up 6.7 percent from a year earlier - didn’t reach 2,588, the number of contract signings. But the number of contracts signed represents a more recent gauge of the market, as closings could have gone into contract months earlier.
The median contract price for the three counties was $440,000, the same as a year earlier. Queens experienced an increase, hitting a price of $490,000, up 7.5 percent from a year earlier. Suffolk’s median closing price of $390,000 and Nassau’s $469,000 both fell from a year earlier, down 2.5 percent and 1.3 percent, respectively.
The number of available listings hit 25,000, up 6.6 percent from one year earlier. Meanwhile, inventory in Queens dropped to 6,465, down 7.1 percent from a year ago. Suffolk’s listings rose to 11,112, up 13.1 percent from a year earlier, while Nassau’s listings rose 8.3 percent to 7,440.
MEDIAN PRICES - JANUARY 2007
Queens County: $485,500
Nassau County: $450,000
Suffolk County: $397,600
SOURCE: Newsday
March 9th, 2007 at 6:54 pm
First of all, the median doesn’t mean anything as far as what direction prices are heading. The median is just the midpoint of what all houses are selling for; if there are more higher priced houses selling than starter houses, it will certainly raise the median. Does this mean that the price of all individual houses are rising? No. In fact, the median can rise as house prices are actually falling.
Just another 2 weeks after this article was published we had a surge of foreclosures:
http://www.nypost.com/seven/01282007/news/regionalnews/foreclosures_soaring_regionalnews_elizabeth_wolff.htm
This is just the beginning! Inventories are very high as it is and come spring time there will be so many more houses due to the buildup of sellers who over the years were waiting to see how high the prices will go; now that the market has turned, they will be all trying very hard to cash out this spring time.
Due to the limited amount of buyers out there; many of whom cannot get the mortgages required to purchase at the insane prices that sellers are asking because lenders are going under en mass:
http://ml-implode.com
and the ones that aren’t are tightening their standards. The sellers will have to compete with each other by lowering their prices or risk not selling their house.
The fact is that there are many more houses than there are buyers.
“There was a lot of concern that there might be a sharp break in the market and that we might see a substantial and abrupt decline in New York home prices, and we haven’t seen it,” Kamer said.
Kamar states that “we haven’t seen it”. Give it some time; we will see come spring.