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January 26, 2007

News on Home Sales Worse Than Expected

forsale07aa.jpgThe results are in and it's official: 2006 was indeed a sucky year for the national housing market. According to the National Association of Realtors, existing homes sales fell 8.4 percent last year, the worst annual drop since 1989. The decreasing number of transactions, though, was somewhat mitigated by the fact that prices managed to hold up, with the median price of an existing home edging up about 1 percent. And we can put all our worries aside: David "No Conflict Here" Lereah says that the worst is behind us. "With fingers and toes crossed, it appears that we have hit bottom in the existing home market," he said.
Existing Home Sales Plummet in 2006 [Yahoo]




Posted by Brownstoner at 8:57 AM | Comments (21)
Categories: Market

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Comments

I like his confidence.

Posted by: Anonymous at January 26, 2007 9:07 AM

Prices will drop 25% over the next two years, as we start having to pay for that little project over on the beach in the middle east.

Interest rates will rise 1.5% and it will be felt.

Posted by: chuckdwawa at January 26, 2007 9:07 AM

>>>The decreasing number of transaction, though, was somewhat mitigated by the fact that prices managed to hold up<<<

Let the prices drop. I want to buy an apt...

www.forgotten-ny.com

Posted by: Kevin Walsh at January 26, 2007 9:15 AM

Let the prices bottom out. I want to buy an apt.

www.forgotten-ny.com

Posted by: Kevin Walsh at January 26, 2007 9:16 AM

Kevin,

Did prices manage to hold up from '89 to '95?

www.youdovoodoo.com/80sbubble.htm

Posted by: Anonymous at January 26, 2007 9:21 AM

This should be an interesting year for real estate. I would expect any new sellers coming into the market this spring to be a bit more realistic in their expectations.

Posted by: Anonymous at January 26, 2007 9:24 AM

existing home sale 1999 - 5,210K
2000 - 5,119K
2001 - 5,250K
2002 - 5,940K
2003 - 6,100K
2004 - 6,675K
2005 - 7,080K
2006 - 6,480K

So 2006 was 3rd highest year for sales and we are calling it terrible slump. Are we perhaps not keeping things in perspective?

Posted by: Anonymous at January 26, 2007 10:07 AM

"So 2006 was 3rd highest year for sales and we are calling it terrible slump. Are we perhaps not keeping things in perspective?"

Well, also keep in perspective that the population has increased...so necessarily, wouldn't you expect even normal numbers of home sales to be higher as the years go on?

It may not be a slump per se, but it's certainly a huge drop in sales activity, and if that continues, which it likely will (after all, who's really left to buy?), that means lost commissions, and lost jobs, for folks in the industry. You may not be affected, but many brokers who are will think differently.

Posted by: Anonymous at January 26, 2007 10:24 AM

Here here. Let the brokers start exiting the system

Posted by: anon at January 26, 2007 10:27 AM

On the Forum last week, one poster was fretting over a broker's handling of multiple bid situation. I don't see many bargain brownstones out there....

Posted by: donatella at January 26, 2007 10:53 AM

"I would expect any new sellers coming into the market this spring to be a bit more realistic in their expectations."

Don't count on it?

"Here here. Let the brokers start exiting the system"

You are evil.

Posted by: anon in bklyn at January 26, 2007 11:02 AM

It's articles like this that do your readers, whom I suspect are buyers interested in brownstone Brooklyn properties, a total injustice. This market is nothing like the vast and totally different markets around the rest of the country. The article above looks to be describing an overall type picture of the entire country. Also - stuff like this just serves to make people who want to buy something much more angry and anxious when they get to the open houses here and see that they cannot possibly expect to buy anything with an attitude of "I'll wait another 2 years until the prices drop". Wake up everyone - has the market in NY or Brooklyn dropped in the last 2 years? No - and it doesn't look likely to happen in the next 2 either. I suggest that you all take a course in Economics and revisit the law of supply & demand. That is what drives this market - not what is going on in the rest of the country.

Posted by: anon at January 26, 2007 2:10 PM

"Wake up everyone - has the market in NY or Brooklyn dropped in the last 2 years? No - and it doesn't look likely to happen in the next 2 either. I suggest that you all take a course in Economics and revisit the law of supply & demand."

Didn't realize that since prices haven't fallen in two years that means they won't. I'm not saying that Brooklyn isn't unique to Brooklyn, but give me a break with the broker-speak. Supply is going up, demand is going down - after all supposedly 70% of people already own a home, and inventory is increasing (and although many may argue that they aren't building any more brownstones, they're working their butt off to oversupply with condos, and there are people who will buy them over a brownstone). So when that happens, prices drop.

Why do (brokers and homeowners) get offended if people want to wait it out? If you're confident in your decision, why does theirs seem to bug you so much?

Posted by: Anonymous at January 26, 2007 3:04 PM

Of course, just because prices haven't really fallen in 2 years doesn't mean they can't or won't in next 2. And there is potential of condo glut coming on in NYC. Which is one factor that COULD lower prices.
What I object to is title of entry here 'News on Home Sales Worse than Expected' - which easily interpreted as we are in bad housing market (from sellers prospective).
Yet further looking at stats (rather than just a sensational headline) indicates that 2006 is 3rd best year ever for # sales. Far above average (even if you want to include a larger population). So all the talk of doom and gloom isn't justified.
Could market go bad - sure... a glut,
job market in NYC going bad, big drop in stock market, sharp hike in interest rates.

Posted by: Anonymous at January 26, 2007 3:44 PM

Shorter anon @ 2:10:

"It's different here!"

The market moves of the past several years are unsustainable by any measure (income growth, e.g.).

At BEST you are looking below inflation appreciation for the foreseeable future. Personally, I believe it will be significant decreases in selling prices over the next 2-4 years.

Is anyone old enough to remember 1987-1995? Jesus Christ, sometimes I wonder if people have minds like an etch-a-sketch.

Posted by: Brooklynite at January 26, 2007 4:17 PM

anon 2:10 is absolutely right--this article and this trend concerns the endless sprawl of suburban US neighborhoods, from tract housing to McMansions, and has nothing to do with anything near NYC, or Santa Barbara, or urban Chicago. Yeah, it's supply and demand. Supply of historic Brooklyn brownstones: scarce. Demand: ever-growing. Supply of interesting condos (NOT the overbuilt, cookie-cutter Billyburg lofts) in great BKLYN neighborhoods: Scarce. Demand: surging. A million people are moving to this rock in the next 20 years. Buy a piece of it while you can...

Posted by: anon at January 26, 2007 11:04 PM

4:17 and all the wishful non-owner posters here, consider this:

I happen to know for a fact that Brown Harris Stevens posted a 50% increase in profits on commissions in 2006. (I'm not employed there, I know an agent there). Quite obviously, this article does not apply to NYC. Get real, look at the real facts. Do you think all these condos would be built for millions and millions of dollars if the banks whose asses (and assets) are on the line loaning the money, thought NYC and Brooklyn were bad investments?

Posted by: Anonymous at January 27, 2007 8:03 AM

Brown Harris Steven posts higher commissions. And what's your point? Below I have provided an excerpt from Business Week that focuses on NY real estate. NY is not immune from market correction, a simple lesson on supply and demand. If prices are too high, the demand will decrease until price are at the optimal level. This nonsense about how unique NY is realtor propanganda. NY WILL experience a decrease before prices are stabilized. It really is that simple.

Is banks financing risky projects so unusual? The high foreclosure rate suggests not. The market is saturated, and it is only natural buyers will exit the market (i.e. the great exodus to NC), or not buy anytime soon. Prices will soon decrease after this.


Business Week Online

New York City
2006 Median Home Price: $456,000
2007 Median Home Price: $442,000
1-yr Change: -3.1%

Home Price Index 1-yr Change: -4.2%
Housing Starts 1-yr Change: -11%

Posted by: Anon Esq. at January 27, 2007 4:54 PM

To Kevin Walsh who wants to buy an apartment -- hang in there! In 12-24 months, the numerous condo projects all over NYC will be finished and for sale. The relationship between supply & demand -- the single law of economics -- will once again be affirmed. As supply dramatically increases, demand (in the form of price) will decrease.

Posted by: Anonymous at January 28, 2007 2:12 PM

14 townhouses on State Street. On market for over one year only 4 sold out of 14.

You think the prices will come down?

You think the condos on Grand Army Plaza will sell for over 1000 per sq. ft.?

These are both examples of what is currently holding back the floodgate on brooklyn Real estate prices. Once these developers blink and begin to drop the prices to move this supply, it will reverberate through the Brooklyn real estate market.

Much like the $8.5MM sale 3 years ago on Columbi place in Bheights inflated the offers on all brownstones in brooklyn and really set off the crazy listing prices that you see today.

Posted by: Anonymous at January 28, 2007 4:24 PM

My feelings are buy now. Like a poster earlier said we have etch and sketch brain functions. Buying in low markets make great investments for the next etch and sketch period. Pretty soon your friends in high school will flood the next market. They did for me :)

Posted by: anon at January 30, 2007 7:50 AM

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