Rye Real Estate Update – February 2009 – The Rye Mortgage Market

-On the Market – 101

-In Contract – 4

Rye real estate inventory continues to rise with 101 active listings compared to 88 in last month's post. Forty one homes have sold in the past six months versus 63 during the same time frame last year. Thirty of these homes or 73% have been over $1,000,000 for an average sales price of $2,266,517 and eleven homes or nearly 27% have sold for less than $1,000,000 for an average price of $746,136.

From what I am seeing the bulk of the transactions seem to be moving away from the high end for this area, say $1,500,000 and under. The listing prices of the four homes currently in contract range from a high of $1,695,000 to a low of $635,000. That is not to say that the the higher end is not selling: four of the nine houses sold since December 1st sold for over $1,500,000 but at reasonably competitive prices. Buyers are looking but are choosy, held back by an uncertain job market and credit restrictions.

*Information per WPMLS, Zip 10580, RCSD & RNSD, as of 2/1/09.

The Rye Mortgage Market

To get a clearer picture of what is happening in the local market, I asked Pat MacCarthy and Stephanie Thompson, seasoned mortgage brokers who both live and work in Rye, for some advice on the mortgage market. OK, Stephanie's business just recently moved a stone's throw down the road to Halstead Avenue in Harrison. 

Stephanie has had a loyal following in Rye for over 16 years on Milton Road as President of Nantucket Equities.  Her company name was recently changed to Narrangansett Group along with the address change. Pat has been servicing the Sound Shore area for over 20 years as a mortgage professional and represents the Rye branch of the well known Manhattan Mortgage Company. My co-worker and an agent in the Rye Coldwell Banker office, local resident Melissa Weston Margiotti is also an appraiser for Valuation Plus Inc. in Mamaroneck, and she graciously offered her opinion on recent appraisals.

Judy: What issues are you seeing in the mortgage market as particularly affecting Rye residents?

Stephanie:  Firstly, loans are available; however, jumbo money is much tighter than conforming money…Loan-to-values are crucial- last year we got an approval on a $4,000,000 purchase with only 10% down- and were consistently doing 10% down deals on $2,000,000- $3,000,0000 deals. When sellers were not able to sell their homes immediately, we were could use a temporary debt to income ratio which enabled us to not to count the debt on their current home if it was listed on MLS (not sold). None of these rules still apply.

Pat: Given the price of an average purchase price of a Rye home, the Rye mortgage market has been impacted significantly by the changes affecting the jumbo market nationally. Perhaps the most significant change has been the abandonment of jumbo mortgages by the major banks. Since the secondary market for jumbo mortgages has disappeared, all the major banks in Rye – Citibank, Chase, HSBC, Webster, and Capital One have pulled out of the market.  Although they still technically offer jumbo products, these rates are so high (i.e. 7%) that their jumbo originations have vanished. This void has been largely filled by portfolio lenders - Hudson City Savings Bank, which has branches in Rye Brook and Harrison, is the most prominent one in our area.

Judy: What is the definition of a jumbo or conforming loan in this area? How have the changes in limits affected areas like Rye?

Stephanie: Conforming: $417,000 limit. Temporary Conforming a/k/a high loan balance conforming: $625,000 limit (in Westchester, done by area). Jumbo loans: Over $625,000.

Pat:  The disappearance of jumbo mortgages from the major banks has been mitigated, to some extent by the temporary raising of government mortgage maximum in "high cost areas", such as Rye, from $417,000 to $625,500. Since banks are limited to writing no more than 10% of their mortgages in "high cost" areas, borrowers need to be diligent in searching a number of banks fo rates if they are focused on obtaining a mortgage in the "high cost" slice.

Judy:  How about Wall Street bonuses?

Stephanie:  Bonuses are highly scrutinized- I surveyed lenders and they are being treated differently at different institutions but one replied that they are qualifying on base salary + not  more than 25% of most recent year's bonus qualifying at a tighter ratio.

Judy: What about appraisals? 

Stephanie: There are a lot of jitters locally regarding appraisals yet I have not seen any significant dip in appraisals in Rye, Harrison, Purchase, which is really important because of the loan to value ratios.

Melissa: The changes in Rye are similar to the surrounding communities. The buyers are now determining the market, not the sellers anymore.

Judy: It must be difficult to appraise with so few recent sales…

Melissa: Yes, the banks are requiring that we give them not only sold properties but pending sales and even active listings to justify property sales. There is the expectation that because of interest rates coming down, refinancing demands are going to increase and sales too.           

For further information on these Rye/Harrison professionals:

Pat MacCarthy, Manhattan Mortgage Company, PH: 967-1010, Email: [email protected].

Melissa Weston Margiotti, Valuation Plus Appraisals and Coldwell Banker Rye, PH: 262-1298, Email: [email protected].

Stephanie Thompson, Narragansett Group, PH: 921-2077/ 315-6555, Email: [email protected].

February 2009 Market Update and Article written by Judy Croughan, Licensed Realtor,  Coldwell Banker Rye.