Long Island Rude Awakening

From the NY Times:

Taking the Measure of the Market

IN what may be a “rude awakening,” as one real estate agent put it, the number of Long Island homes being put up for sale, combined with those sitting on the market, is climbing skyward, according to a report from the Multiple Listing Service of Long Island last month.

Simultaneously, the prices paid for homes are still increasing, but at a much slower rate than last year, and the number of closed sales has fallen in many Long Island areas compared with June of last year, the listing service reported.

At midyear, there were 75 percent more homes on the market in Nassau County and 65 percent more in Suffolk County than a year earlier. Although median sale prices were 6.6 percent higher in Suffolk County and 6.4 percent in Nassau, median contract prices, which are more current, fell in Nassau last month.

Brokers report far fewer buyers in recent months. They also say sellers have not yet caught up with the trend by curbing their asking prices.
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Georgianna Velardi, a broker at Century 21 Petrey Real Estate in Long Beach, said she had recently seen more sellers looking for a way out of high mortgage payments.

A couple in their late 30’s came in to price their three-bedroom ranch. The interest rate on their mortgage had risen to 9.5 percent, from 3.5 percent three years ago. They didn’t have the equity or good credit to qualify for refinancing at a lower rate. To make matters worse, on July 1 the City of Long Beach raised property taxes 25 percent. “They needed to get out because they were so overwhelmed,” Ms. Velardi said.
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But back in the primary-home markets of western Suffolk and Nassau, Ms. Marten, the buyer’s broker, said she expected to see even more homes sitting on the market longer, and more foreclosures. “It’s not going to bottom out immediately,” Ms. Marten said. “We’re going to see, I believe, what we saw in 1988: a flattening, a gradual downturn and then down and down until it hits bottom.”

On the other hand, Professor Campbell of Hofstra said he did not expect to see double-digit decreases in percent change of median prices over a string of quarters, or huge numbers of defaults and foreclosures. Instead, there will be “a soft market and a gentle decline in prices over the next year at least, possibly much longer than that.”