Crain's New York Business has reported that the prices of single-family homes in the New York metropolitan area fell 4% in the year endng July 2007.
All I can say is, I hope that two, three and four-family houses follow suit, and soon. The same goes for condos and co-ops. Sellers throughout the city have long had unrealistically high expectations for the value of their property.
Nowhere has this been more evident than in Brooklyn. Recently some fool paid $1.2 million for a small, crappy two-story house behind a highway in my own neighborhood. I went to see that house over the summer. I remember how the listing agent at the open house could possibly keep a straight face while reciting the asking price.
Sellers living in economic fantasy worlds don't do themselves, or their brokers, any favors by not listening to the market. The residential market is well due for a correction, and the retreat of single-family prices might be start of that correction.
It's inevitable, really. All markets have corrections. All markets are driven by the emotions of the crowd. Euphoria and greed eventually give way to fear and desperation.
Meanwhile, there is at least one positive effect of the ridiculous and unsustainable rise in home prices. It makes for a booming practice for those of us (hint) who have the skill to negotiate and bring about short sales for homeowners whose logic and prudence were overwhelmed by the noise emanating from unscrupulous brokers and lenders.
Regards,
Roger Levy
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