Real Estate New York

The Capital Region and The Bailout

Though the national market is still struggling we have just had a month where the number of sales and the average sale price are actually up from last September before the subprime and credit issues raised their ugly heads.

When I was first licensed in 1972 all we as Realtors needed to know about mortgages was the address of the bank. There was essentially one loan. If a buyer didn't qualify they didn't get the loan. We rarely had foreclosures.

Now I am often asked what is going to happen to the value of our homes. Is this a good time to buy or sell? Will there be a depression?

On the vast scale of national and international finance I must largely plead ignorance. I don't think anyone can predict what will eventually happen. However, I can provide insight into our local market.

First, the facts: though the national market is still struggling we have just had a month where the number of sales and the average sale price are actually up from last September before the subprime and credit issues raised their ugly heads. Prices too are holding nicely, though buyers are picking up some excellent bargains.

This is because every real estate market is unique. Here we have never seen extended double-digit run-ups seen in other areas of the country. We have avoided these traps by avoiding subprime lenders and urging our clients to do so, as well. Here at Real Estate New York we have never allowed a buyer to get caught in a subprime loan. In addition, or highest and best offer policy has made bidding wars a thing of the past.

Nor is the Capital Region subject to precarious employment issues. Our main employers, the universities, the hospitals and the government do not generally rely on credit to meet payroll.

Fannie Mae and Freddie Mac have already been bailed out. This will mean more money available for low cost mortgages. Already we've seen a resurgence in FHA and VA mortgages.

Second, the prognosis: A bailout bill will likely be passed—hopefully with more provision to directly help borrowers and those who are having trouble meeting their mortgage obligations. In addition, the FBI has opened investigations into the actions of those who perpetrated this crisis.

Whatever happens, it seems clear that both the Whitehouse and the Congress on both sides of the aisle are committed to fixing the current crisis and returning the housing industry to its place as a central pillar of the economy. As a nation, we cannot afford to do otherwise.

Additionally, mortgage rates are generally tied to the rate for Treasury Bills. When the stock market is down or uncertain investors turn to the Bond Market and equity vehicles like the T-Bill which should bring down their rates as well as the mortgage rates in general. The Treasury Department and the Federal Reserve will likely see this as a trend to be encouraged.

As a result, housing values should hold nicely but with more room for negotiating than we have seen in the past. This is because in the short term there will be fewer buyers in the market due to uncertainty on the part of the banks and the buyers. So . . . .

Will there be a depression? No. Will area home prices tumble? No. Is this a good time to sell? Only if you must. Is this a good time to buy? Yes—providing, as always, you can find the right home at the right price. Your Real Estate New York broker can help you with that.

In the end, isn't it nice to live in an area that seems almost crash proof?

By Dennis Maier, Principal Realtor Broker, Real Estate New York

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Market Statistics as of October 1, 2008

This graph represents average sale versus list prices

So much for dire predictions of doom and disaster. Both the average sold and list prices are significantly above levels for both 2006 and 2007--plus the number of sales is higher then last year before the subprime crisis hit the markets.

In a balanced market such as the one we now have, homes are affordable and the threat of a declining market is aliviated.This can provide an excellent buying opportunity due to reduced competition and increased willingness on the part of sellers to negotiate.

The average asking price to sale price has dropped again from 97.27% in August to 96.54% for September. This means that sellers are getting less than they bargained for when last year they were getting more.

Mortgage Rates and Trends

The link to up to the minute New York State mortgage information seems to work better than presenting the actual graph.

Click for up to the minute mortgage rate information

Buyers' versus Sellers' Market Report

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The graph above shows the number of sales in a given month divided by the number of homes on the market in the four main counties of the Capital Region. After a brief dip into seller territory in July the market has once again returned to favor buyers.

As you can see, in October we were in a balanced market. As of December 1, the market turned back toward favoring the buyer. This upturn in buyer fortunes continued unchanged as of February 1, 2008 but since then the market has been descending toward seller territory. But now has turned back toward buyer territory.

*This ratio can be used to determine whether we are in a buyers' or sellers' market as indicated in Dennis Maier's article on Market Timing featured in eZine Real Estate. In general, if it would (theoretically) take less than 6 1/2 months to sell the current inventory it's a sellers' market. If it would take more than 9 months to sell all the homes on the market it's a buyers' market.

Architectural Coach: Tudor

The Capital Region has many fine examples of the classic Tudor. This architecture style was popular in the 1920s and 1930s and continues to be a mainstay in suburbs across the United States. The defining characteristics are half-timbering on bay windows and upper floors, and facades that are dominated by one or more steeply pitched cross gables. Patterned brick or stone walls are common, as are rounded doorways, multi-paned casement windows, and large stone chimneys. A subtype of the Tudor Revival style is the Cotswold Cottage. With a sloping roof and a massive chimney at the front, a Cotswold Cottage may remind you of a picturesque storybook home.

Read More by Barbara Ballinger

Archives

We've been asked to again include links to past market updates. But since our stories link to other web sites over which we have no control we only want to link to our most recent issues. Otherwise, the article links may fail to work as they once did.