Brace yourself - this market is dropping sharply lower and will not turn the corner for several years. Low interest rates may make this a time of opportunity for buyers with good credit, but if you plan to sell within a few years, be careful! Today's low interest rates may more than offset tomorrow's lower prices, but low payments are not the only consideration - you may suffer a loss of equity. Therefore, if you are likely to be selling in the next several years, do not buy in this market.
Given the current absorption, or sales, rate, the number of listings for sale represents about a one and one-half to two year's supply in the single family sector and the oversupply is drastically worse for multi-family, commercial and vacant land properties. Look for prices to continue drifting downward as more sellers are forced to adjust their expectations in a market characterized by over-supply, tight credit and a challenging economy. If you are a cash buyer, the best opportunities are still to come. Back to the numbers ...
According to data available through the Ulster County Multiple Listing Service, Inc., which data would represent a subset of total market activity in the county, the number of closings (sales) of single family residences for the third quarter of 2011 was 271. This number is up 10% from the 247 closed sales for the third quarter of 2010. In the City of Kingston, the 20 single family sales for the third quarter of this year are down 13% from the 23 sales for the third quarter of 2010. County-wide, the median sales price of $201,000 is down 7% from the $216,000 median sales price for the third quarter of 2010. The current supply of 1,668 homes for sale in Ulster County represents about a one and one-half to two years' supply.
Please note: The median price paid is more a function of buyers' purchasing power and NOT home values. The median price has declined (that is, the active buyers can afford to pay somewhat less) but it's a different house. Last year's $200,000 house may have been a smaller, lesser house than this year's $200,000 house!
In terms of gross sales revenue, or dollar volume of gross sales, the third quarter of 2011 had county-wide volume of about 62 million dollars, equal to the same three month period of 2010. For the same periods of 2010 and 2011, gross revenue from single family home sales in the City of Kingston dropped 25%. The city of Kingston, lagging the remainder of the county, has a three to four year supply of single family homes on the market "for sale".
Sales prices are likely to continue declining right through 2012 and probably 2013. Over-pricing in this market continues to be a dangerous, yet common, strategy, as many stubborn sellers continue to chase the market downward. The median asking price is currently $255,000, in a market where the median sales price is $201,000! The marketplace is rife with listings that would have sold long ago had they been properly priced. Instead, the combination of reluctant sellers and unrealistic brokers willing to sing the high price song sellers want to hear has resulted in current asking prices that are still too high, yet lower than sales prices the properties would have enjoyed last year. If your listing does not enjoy brisk activity in the first 30 days on the market, check your asking price. You are over-priced and will be chasing the market downward! No amount of promotion can offset over-pricing. The concept that the buyers can always make an offer does not work. The buyers will make an offer on the lower priced competitors. If you are a seller forced to sell and facing a problem with home value less than mortgage balance plus closing costs, you need a true professional in your corner, with the knowledge and experience to negotiate a "short sale" (where the bank takes less than the mortgage balance as a pay-off). Also, if you purchase a house at a price below the assessed value, you probably have a strong argument for an assessment (and, therefore, property tax) reduction. Call me!
Continuing the trends ... For multi-family residences in all of Ulster County, the third quarter of 2011 enjoyed 16 sales, up 78% from the same three month period of 2010. The median price of $102,000 was up 68% compared to the $61,000 median price for the same period one year earlier. In Kingston, for the third quarter of 2011, the multi-family median price of $73,000 was up 20% from the same three month period last year. The current number of county-wide multi-family residential listings, 179, will require about four years to be absorbed at current sales and revenue rates.
The commercial-industrial sector shows sales volume and revenue about even compared to last year, while the median price is down 21%, at $227,500. However, with only a small number of sales, the statistical analysis loses validity. The over-supply in the commercial-industrial sector represents over a 7 year supply at the current sales and gross revenue rates. Look for the commercial market to continue an overall downward trend over the next year, especially in municipalities such as Kingston, with a split tax rate. In Kingston non-residential properties pay about twice the tax rate of residential properties. If you own non-homestead property in the City of Kingston, it is very likely you are over-assessed and should call me for direction.
Land Ho! The third quarter of 2011 enjoyed 21 land sales countywide, about even with the third quarter of 2010. The median sales price was up 6% from $71,000 last year to $75,000 this year. Gross sales revenue is down 8%. The 620 active land listings represent about a 10 to 20 year supply, depending upon how you measure absorption.
Continued recommendation: Drop your price if your property is not getting the desired activity. This market is not rebounding to former levels. If you expect activity on your listing, it should be priced ten to twenty percent below recent sales of similar properties.
On the buyers' side, its simple: cash is king! Continue saving investment capital and don't invest in depreciable assets. Talk to your accountant. I would not be inclined to wait too much longer if the purchase required a mortgage over 60% of the purchase price and the buyer was planning on living in the residence for several to many years. For cash buyers, however, the best opportunities (lowest prices) are yet to come. The split decision is based upon current, versus projected, interest rates. And remember: if you're planning on moving into a more expensive (larger) home, the time to "move up" is in a down market. Conversely, downsize in an "up" market. Hint: If you believe market values are going lower over the next one to several years, this is actually an "up" market.
Also remember: Real estate is one of the few fields where the professional with the best education, credentials, experience and knowledge is no more expensive than the least qualified participant. In fact, the least qualified may end up being vastly more expensive than the superior advice available from a more qualified agent! Now more than ever, as market competition increases and transactions become vastly more complicated, it pays to have the best professional talent on your side! If you're having problems, or have questions, you may e-mail me at jonhoytlaw@aol.com.
About Jon Hoyt Realty, Ltd.:
Founded in 1978 by Jonathan Hoyt, Jon Hoyt Realty, Ltd. has made every effort to provide the best real estate service available. In this pursuit, Jon has aquired a master's degree in business administration, as well as a law degree. Specialized education and experience in the real estate field have resulted in a real estate broker's license, general real estate appraiser certification and certification to teach all levels of salesperson's broker's amd appraiser's qualifying and continuing education courses, in addition to memership in the New York State Bar Association. Continuing this effort, the entire staff of Jon Hoyt Realty, Ltd. strives to bring you knowledgeable assistance incorporated with the highest level of integrity and service. Call us - you deserve the best!
These reports reflect the views and opinions of their authors and are not necessarily the views and opinions of Realty Times.
