Forum Archive: Posts by: hannible

Thurday’s new reports cited business reports that call for still another 25 percent rate drop in home prices. Can it be possible for such places as Carroll Gardens and Brooklyn Heights? Shouldn’t the government be stepping in to help these poor homeowners hold on to their properties?

NEW YORK (CNNMoney.com) — For real estate appraisers, determining what a house is worth has become increasingly difficult, which is making it even harder for buyers to purchase homes or for homeowners to refinance.

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The main tool in the appraiser’s kit is the sale prices of homes in the area. If they can find similar houses nearby in similar condition that sold recently for, say, $300,000, they can assume that the home they are appraising is worth a comparable amount.

But with sales volume falling, there are fewer homes with which to compare. In fact, sales of new homes crashed in January to the lowest level in 45 years, and existing home sales fell to a 12-year low.

And even when there are recent sales figures, they often don’t hold up as a reliable baseline. Appraisals are estimates of market value at a given time, and with prices in free fall, values “age” quickly.

“We just don’t have a flow of transactions to be able to come up with credible values,” said Jonathan Miller, president of Miller Samuel, a noted New York appraisal firm. “Closed sales are now largely irrelevant because they’re so far behind the market.”

In fact, Marc Savitt, president of the National Association of Mortgage Brokers, recently had a bank underwriter object that none of the appraiser’s comparable homes were near enough.

“They told him they wanted comps within a mile,” said Savitt. “But, the market the way it is, there haven’t been many sales and there were no recent comps within a mile.”

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So in lieu of good sales figures, appraisers often consider contract prices, the ones first agreed to between buyers and sellers. But those are not much better because many sales don’t close.

And listing prices are “hit or miss,” Miller said, because most sellers overestimate the value of their homes. Columbia business professor Eric Johnson calls that the “endowment effect,” which causes people to place higher values on properties once they own them.

Sellers set their listing prices far too high, as a result, and that leads to a big chasm between list and sale price. In the New York region, for example, there’s a 16% gap, on average.

During the boom, pressure was put on appraisers to inflate values so that sales would go through. Sellers, buyers, real estate agents, loan officers and mortgage brokers all had a vested interest in getting the sale completed. So if appraisers weren’t cooperative and raise their values, they often got frozen out of deals.

“Median home price: $455,000
Median income: $63,000
Affordability score: 13.9%

In the nation’s largest metropolis, New York, home prices took a steep dive during the quarter, to $455,000 from $500,000 three months earlier.

That was not enough to dislodge the city from its rank as the least affordable metro area in the land. Only 13.9% of the homes sold there during the quarter were affordable for median income families, who earned $63,000. That was still a major improvement from two years ago when only 5.1% of homes sold during the fourth quarter of 2006 were affordable.

The good news is that New York households have been barely brushed by the foreclosure crisis so far with only 0.71% receiving some kind of foreclosure filing during 2008.

Housing markets in the New York metro area had held up comparatively well, even after declines started to hit other boom markets hard, but with the financial services industry recording huge losses and shedding jobs, home prices may be in for some steep declines.” Taken from a CNN webpage. Do we need anymore proof that home prices are falling in Brooklyn?

I would like to know if anyone has any confirmation that there are alot of Brooklyn real estate agencey’s involved with the Madoff scandle. If that were true hundreds if not thousands of homes will be hitting the market soon,

I wanted to ask how much longer do we have to wait for rents to come down to affordable levels for families? There are alot of families that would like to move back into Carroll Gardens but can not afford to compete with landlords that rent to 5 or 6 adults that work and pay 500 dollars each a month making the joy of the homeowners wallet but destroying the happiness of many families