-On the Market- 121
-In Contract- 3
Twenty five houses have sold in the past six months in Rye with an average sales price of $1,400,400 compared to fifty one houses during the same time period last year with an average selling price of $1,933,069! Thirteen or 52% of the past six months sales have been under $1,000,000 with an average sales price of $704,808, where as 12 or 48% of the sales have been over $1,000,000 with an average sales price of $2,153,958. This is the first time in the 1 1/2 years that I have doing this column that the under $1,000,000 sales have been (ever so slightly) higher than the over $1,000,000. However, I would not call this the start of a new trend – the 3 homes currently in contract range in listed price from $2,475,000 to $1,675,000 so the over $1,000,000 market is still holding.
*As of 3/10/09, Rye City, zip 10580, RCSD & RNSD only.
Rye Real Estate Outlook
An out of town client sent me a recent Barron's article suggesting that New York City luxury real estate is poised for a further 30% decline as Wall Street aims to cut 46,000 jobs by summer 2010. Whether that is true for the top tier of Manhattan real estate I don't know, but I am not yet convinced of that sort of across the board decline here in Rye.
What I do see is this:
- There is traffic and buyers are looking, especially at the $1,500,000 and under price point.
- Buyers are putting in initial bids 20% or even 30% under the listing price in some cases.
- There have been a couple of recent competitive bidding situations, so demand is still there if a property is deemed to be aggressively priced.
- Nearly every offer has a mortgage contingency, which used to be more the exception than the rule in Rye.
Established areas like Rye have been the last to feel the effects of the real estate fallout and may be among the first to recover. There may be a silver lining here – while the loss of Wall Street jobs certainly has an impact, other realtors and I have heard rumors of Manhattan Wall Streeters paying $100,000 for three kids in private school considering a move to sophisticated suburbs like Rye with good school systems now that they may not be able to count on the large bonuses of the past few years. Forbes recently called the N.Y. Metro area one of America's best long term real estate bets - "New York…has the lowest level of construction relative to its population, which constrains supply and vacancy, allowing the market to correct more quickly."
John Gardner, Esq., is an established attorney in Rye who handles mostly local real esate transactions. His office is conveniently located at 14 Elm Place in Rye. I spoke to John recently about current market conditions:
JC: It seems like mortgage contingencies are (understandably) now the norm, as opposed to the exception, in Rye.
JG: Yes, everyone is asking for mortgage contingencies. I had a contract recently where the buyer asked for a mortgage contingency and a contingency that the bank would actually fund at closing. The buyers were concerned with two things: one was that the bank went out of business/changed their guidelines, etc. and the other was that they (the buyers) would get laid off after getting the commitment.
Judy: Are buyers using different mortgage products than in the past?
John: Home Equity loans and jumbo mortgages (over $625,000) are much more difficult to get. You basically never see the traditional 80/10/10 (80% first mortgage, 10% Home Equity, 10% down payment/equity). Rates are so low right now that most people are taking the fixed products.
Judy: I've heard of some buyers trying to renegotiate at the closing. Have you seen any of that?
John: I haven't seen too much of that. The buyer's down payment is at risk if they don't close. But some are actually walking away from deals, and fighting with the sellers over the 10% (down payment).
Judy: Foreclosure, short sales?
John: Not a big problem, yet, in our area. We may see some, though, as we are an area filled with financial people, who frequently took adjustable rate mortgages, and who relied on bonuses that they may not be getting.
I tend to currently agree that how far the local market falls will, to a large degree, depends on "how soon and how generously the banks resume lending than on the recovery of Wall Street or the end of the recession" as outlined in a March 8th N.Y. Times article, "Looking for the Bottom in N.Y. Real Estate".In that scenario, price levels may adjust but the sales activity would significantly pick up.