Listing price versus market price in Westchester (New York, Mount Vernon: comparable sales, sales)

[halfoffpeak]

Originally Posted by dma1250

I have no idea how far prices will drop or how long it will take, but I think your arguments are really simplistic and naive. The bottom line will be what happens to the broader economy. Like many people, I'm crossing my fingers until my company approves the new budgets for the fiscal year starting in April. And like many, I'm not buying much until then.

Why do you call my argument simplistic and naive? It is, in fact, based on hard data. House prices follow patterns just as shares do. Houses have fair valuations, and they tend to stick around those values. The last ten years, we experienced a bubble nobody has seen in the past. Here is the associated graph of the well regarded Case-shiller index from NYtimes


As you see, prices at the peak were double the historical mean. It is reasonable that house prices drop LOWER than that in periods of recession, and, as you might have heard, we might be in the worst recession since depression. Also, observe that housing prices take years to rebound.

Next time you call someone's arguments simplistic and naive, be prepared to justify your position, and argue using data not hear-say.

[havoc315]

Your data is flawed.. You used data that corrected for inflation. Yet, you are arguing that nominal values will return to 1999 values. Simply based with inflation, a $350K home in 1999, would be consistent with a 450K home in 2009. That would represent a zero-increase, outside of inflation.

Further, your stats are purely speculative. You may as well suggest that prices will return to 1945 pricing or 1972 pricing. You have arbitrarily picked 1999.

Most importantly, you don't understand the ramifications of what you are suggesting. If a home that was purchased for 700K dropped in value to 350K, it would leave the homeowners effectively bankrupt. They wouldn't be able to sell necessarily, because of the loss involved. Not to mention the effect on collateralized securities, etc.

Finally, your numbers are quite imaginary. The median income, in Westchester's expensive towns, is significantly above 100K (or else nobody would have been buying homes the last 10 years!) For example, the median income is Chappaqua was recently estimated at 198K. (www.nytimes.com/2008/11/02/nyregion/westchester/02streetwe.html?_r=1&em)

And remember with medians -- That includes families just starting out, who might own a small apartment or townhouse. It includes singles. It includes retirees, living in homes with mortgages already paid off.
Typically, the medium income is significantly above the median income.

Seems you believe that Westchester real estate should simply be priced the same as the rest of the country. The reality is, Westchester real estate has always been more expensive than elsewhere (at least for the last 50 years), because of the value of the proximity to Manhattan.

[msamoyedny]

I appreciate the previous posts, but I think the bottom line is that most of Westchester is acting like they are above the failing housing market. From what I am seeing, people are actually trying to make a profit on their homes! For example, I am seeing last sale prices in the $500s from 2005/2006 and people are listing their homes for $600 now. These are homes that obviously have not been updated recently. I understand that some people might be under water in their mortgages, but come on..trying to make a profit!?

I am moving back to Westchester from Maryland and we built my beautiful home in 2007 for $432K. I'm not expecting to buy anything close to this house in westchester, but I would think that in this economy, I should at least be able to buy a decent 3 bedroom house in a good school district for that amount and that just doesn't exist in most of westchester.

[havoc315]

A 3 bedroom single family house in a "good" school district in Westchester for $375k? Around 2000-20001, 3 bedroom townhouses, and very tiny single family homes were going in the low 400's. To get to a point where a fairly nice 3-bedroom single family home, in a "good" school district in southern of central Westchester, was going for $375k in nominal terms, you have to go back to around 1995 or so. If you account for inflation, then you would have to go back to the late 1970s.

Westchester is not immunte to the fall in prices. In fact, Westchester is being hit hard. But ultimately, the prices will remain significantly above the national averages. Ultimately, homes are selling for prices similar to their market price in 2004/2005. For people who haven't realistically priced their homes, they will sit on the market. If they do sell it, it means they actually priced it correctly.

But beware accusing people of selfishness in pricing their homes-- How dare they seek a "profit." Remember, if you factor in realtor fees and closing costs, they may be taking a loss on their home, even if they price is above their original asking price.

[Viralmd]

[quote=msamoyedny;7520872] These are homes that obviously have not been updated recently. I understand that some people might be under water in their mortgages, but come on..trying to make a profit!?

QUOTE]

And you don't want to make a profit on the house you sell? REALLY?

[msamoyedny]

[quote=Viralmd;7521840]

Originally Posted by msamoyedny

These are homes that obviously have not been updated recently. I understand that some people might be under water in their mortgages, but come on..trying to make a profit!?

QUOTE]

And you don't want to make a profit on the house you sell? REALLY?

Of course I want to make a profit on my home, but I'm being realistic and priced my home for the market. I will be losing a lot of money on my home, but I realize that is just a condition of the current market. I really just find it amazing that a lot of homes in westchester are still being priced at peak levels.

[halfoffpeak]

Originally Posted by havoc315

Your data is flawed..

Data is never flawed. They are what they are. It is their interpretation that can be flawed.

Here is the case shiller index for the period 1987-2007. Please visit it again to realize the size of the bubble.

The New York Times > Week in Review > Image > As Prices Soared, Warnings of a Bust ... But Reassuring Words, Too

Originally Posted by havoc315

Further, your stats are purely speculative. You may as well suggest that prices will return to 1945 pricing or 1972 pricing. You have arbitrarily picked 1999.

Actually 1999 is quite generous. Here's how the case-shiller index looks like for the period 1890-2006. The bubble is even bigger when you look back to the beginning of the century

The New York Times > Week in Review > Image > Graphic: A History of Home Values

Originally Posted by havoc315

Most importantly, you don't understand the ramifications of what you are suggesting. If a home that was purchased for 700K dropped in value to 350K, it would leave the homeowners effectively bankrupt. They wouldn't be able to sell necessarily, because of the loss involved. Not to mention the effect on collateralized securities, etc.

No you don't understand. S&P and therefore 401Ks have reached 1995 levels. We are effectively bankrupt. Americans lost 50% of their value. That's why those bailouts are huge. That's why we are sinking into recession.

Originally Posted by havoc315

Finally, your numbers are quite imaginary. The median income, in Westchester's expensive towns, is significantly above 100K (or else nobody would have been buying homes the last 10 years!) For example, the median income is Chappaqua was recently estimated at 198K.

Correct me if I am wrong but this is the Westchester county forum. According to wikipedia the Westchester median is $98K. The Chappaqua forum does not exist yet so it can safely be called imaginary.

Originally Posted by havoc315

Seems you believe that Westchester real estate should simply be priced the same as the rest of the country. The reality is, Westchester real estate has always been more expensive than elsewhere (at least for the last 50 years), because of the value of the proximity to Manhattan.

The Case-shiller index tracks local markets including the New York region one. Please look at the S&P website

S&P | Indices > Alternative Indices - S&P/Case-Shiller® Home Price Indices - U.S. National Values

You will see that the situation is no different. Prices doubled including the premium one pays to live close to New York.

The current value of Case-shiller for New York is 187 which means that a house valued 100K in 2000 now costs 187K. Adjusted for inflation the 2000 price is 125K which means that current prices are 30% higher than what they should be compare to 2000.

Unfortunately 30% lower from current prices is quite optimistic. The premium for living close to New York should be drastically cut for three reasons:
1. Unemployment in Wall street
2. NYC lost its clobal status so it does not attract foreign interest as before.
3. Salaries in Wall street will be drastically lower the next few years. There was a bubble since 1992 in these salaries that fueled RE prices around NYC. This bubble is described here.

The New York Times > Business > Image > Financial Sector Wages Relative to Other Industries

I have no interest in explaining the situation to anyone who is a realtor or bought in the bubble. My concern is that first time buyers who have the money to buy a house do not bailout irresponsible parties who try to inflate house prices. Those sellers and agents will not budge for a while. If you study the above graphs you will see it takes quite a long time to reach bottom. So the best strategy is wait, rent and look for a house in a couple of years. This economy does not turn any time soon.

[havoc315]

The Chappaqua median income is imaginary? It is quite real.
There are plenty of homes you can buy in Westchester for 350k. Go grab an apartment in White Plains or Mt Vernon. Or a townhouse up in Somers. But you are not going to see your typical single family homes in places like Chappaqua, Scarsdale, Bronxville, Larchmont, etc. dropping to 350k.

Such changes would bankrupt every financial institution in the USA, leaving us as nothing but a debtor to countries holding our debt. Effectively, China would own every American company.

[fyrisle]

For those that are interested, this link shows the change in real estate prices for the fourth quarter. After going to the link you can zoom in on the map and see how prices have changed in different Westchester communities. Larchmont and Harrison are the only areas I see that have gained value. Most of the other arease are down 5-12% with a few areas including Valhalla, Chappaqua, Briarcliffe Manor and Bronxville down 19-31%

Home Values, Real Estate Market Reports - Zillow

[bmwguydc]

Originally Posted by fyrisle

For those that are interested, this link shows the change in real estate prices for the fourth quarter. After going to the link you can zoom in on the map and see how prices have changed in different Westchester communities. Larchmont and Harrison are the only areas I see that have gained value. Most of the other arease are down 5-12% with a few areas including Valhalla, Chappaqua, Briarcliffe Manor and Bronxville down 19-31%

Home Values, Real Estate Market Reports - Zillow

Zillow is not reliable information, however, especially since their reporting seems to be on their own estimates, which are generally way off the mark. Plus, the information is rife with errors of schools and taxes, even house features.

I checked a location in Katonah and it claimed the schools were Katonah Elementary, Fox Lane Middle, and Somers High, which is impossible. It's the Katonah-Lewisboro district and has been forever, well at least as long as this house has been standing, and it's Katonah Elementary, John Jay Middle, and John Jay HS. Fox Lane is Bedford Central District and Somers High is Somers, absolutely nothing to do with Katonah-Lewisboro, save that Katonah is part of the Town of Bedford and part of Somers has a Katonah zip code. This is just one example of erroneous information put forth as being an authoritative.

Plus, the taxes were way off the mark, and the estimated value was laughable on the houses that I checked, some inordinately high and others abysmally low. I checked a house that Zillow estimated for $1.4M, and if I could buy it at that price, I'd sign the papers tomorrow, since they're only off about a million, even in this market. That's a house that I know very well as a friend grew up in it, and it's not small, and it's on a decent amount of land. And, then there's one that's estimated in the high $800s that's currently on the market for close to $3M, with taxes approaching $60k. While this house might not sell at $3M, it's certainly not going to sell in the high $800s, not for 6000 square feet in excellent condition on nearly ten acres of land.

In the past, I have looked at family properties and other properties that I know intimately, and have had some good laughs on Zillow. A sibling was excited to hear that Zillow thought they should be able to get about $500k more than they were asking when they sold, in a good market, but it wasn't reality. And, then my friend's house was estimated way below market when she sold a couple of years ago.

I'd not trust their stats at all, since it's coming from their own charted data, which makes for interesting trend lines on the 1, 5, and 10 year data graphs, but is not at all close to accurate.