Recent Increases in Real Estate Sales Activity, Foreclosures, Unemployment: What’s going on in our Market?

Loretta Nastasi, Licensed Real Estate Associate Broker, Associate Manager, Bay Ridge Branch, Fillmore Real Estate, Brooklyn NY. October 26, 2009

Homeowners and potential buyers have received conflicting signals about the state of the market in recent months. This past week reports indicate that existing home sales have been steadily increasing for the past 6 months with sales surging nationwide in September jumping 9.4% from that of the prior month. So what does this mean for the housing market?

Real estate sales activity in Brooklyn for the months of July through September increased more than 29 percent from the prior quarter resulting in the second consecutive quarter of increased sales activity. First time home buyers wanting to take advantage of the $8,000 tax credit set to expire on November 30^th has accounted for much of that momentum. However, the number of sales is down nearly 20 percent compared to this same period last year and home prices are down on average nearly 7 percent from this time last year with declines ranging from 3 to 13 percent across the borough. In southern Brooklyn, including the neighborhoods of Bath Beach, Bay Ridge, Bensonhurst, Borough Park, Dyker Heights, Gravesend, Homecrest, Madison, Marine Park, Midwood, Sheepshead Bay, and Sunset Park, while sales spiked 25.3 percent from the second quarter, prices slipped 4.2 percent and sales fell 14.4 percent from this time last year.

After more than 2 years of straight declines, this increase in sales activity is indeed positive news however, it doesn’t necessarily imply we are on an upward swing. With existing inventory still above normal levels and unemployment and foreclosure activity still rising, homeowners should not conclude that this recent activity indicates price appreciation. On the other hand, much of what is reported in the media is national data, so it is important to consult your local real estate professional for advice on what is happening in your particular market. Moreover, for those considering buying or selling a home at this time, the decision should go beyond global and local market conditions to include personal factors such as the amount of equity in the home for a seller or future income potential for a buyer. For homeowners who are considering selling, be sure to consult your local Realtor who knows how to properly price and strategically market your home for a timely sale in this market keeping in mind that there are different marketing strategies for different markets. For those thinking of buying a home, consider the following: according to Freddie Mac, a 30-year, conventional, fixed-rate mortgage fell to 5.06 percent in September from 5.19 percent in August; the rate was 6.04 percent in September 2008. As inventory returns to normal levels and unemployment eases, we will begin to see some modest price appreciation. One final note to help us keep this all in perspective: this is New York folks and New York Real Estate owners have typically enjoyed greater price appreciation than the rest of the country. As the old Real Estate adage says: Location, Location, Location! So consider your local market and personal motives when making sell/buy decisions and don’t get too caught up in all of this media frenzy.

Sources: Bay Ridge Courier October 22, 2009

Associated Press, October 23, 2009

Wall Street Journal, October 22, 2009

National Association of Realtors, October 23, 2009