Real Estate Market Data in the News

We saw two articles today in local papers about the recent housing stats.  As we expected, home prices fell significantly in the fourth quarter in both Rockland and Orange Counties (Westchester and Putnam numbers should be out next week).  I thought the Rockland article was more moderate, the Orange article a little scarier in tone.

When you look at these numbers, keep this in mind:

First, home prices always fall in the fourth and first quarters, just from seasonality.  So the fact that the average sales price fell from the third quarter to the fourth is no big deal -- it happened even in the boom years.

Second, the better measure is the difference between the year-on-year stats: that is, how far did prices fall from the fourth quarter of 2007 to the fourth quarter of 2008.  That controls for seasonality.  In this case, Rockland prices fell 10% at the median and 15% at the average, a considerable fall.  And Orange prices fell 9% at the median.  Those are both pretty big drops in a relatively short time.

Third, remember that these numbers are based on closed transactions, so there's already a lag.  That is, a transaction that closed in mid-December, which counted in the 4th quarter stats, went into conract probably at least 60 days earlier.  And the buyer who bought that house was probably looking in the summer.  So by the time these stats come out, brokers in the business already know what they're going to say.  And what I'll tell you right now is the first quarter is going to be WORSE than this. 

How do I know?  Because I know how much real estate has gone into contract in the last few months, and what's going to close in the first quarter.  And although it's tough to measure exactly what the prices are going to do, because brokers don't report the actual selling price until the property sells, we have a pretty good sense of how many sales there are going to be in the first quarter.  Not many.

Obviously, this is a tough time if you're a seller in this market (or a professional Realtor).  But it's actually better for the market to go through this kind of shock, rather than have a slow leak over a longer period of time.  We've really looked at this market, and we honestly feel that prices are going to bottom out this year, probably hit a level for a while, and then eventually go up.

That's why we started this "Make Your Move" program, where if you buy a home with us before the end of March, and it goes down in value, we'll re-list it for free.  Check it out on our homepage.