|The New York
By Tina Traster
October 30, 2008 -- On their way home from house-hunting in Westchester during weekends in 2006 and 2007, Mark Wancier had to dole out lots of tissues to his wife, Romina.
"We would drive up from the city to look at homes in affluent towns like Scarsdale and Briarcliff, but prices were obscene," says Wancier, a real estate debt investor for JP Morgan Chase.
"Three- and four-bedroom houses on postage-size lots were listed for $1.3 million. My wife would cry the whole way back home to our one-bedroom Murray Hill apartment. We decided to shelve our suburban plans."
The recent housing market shakeout in the suburbs has been bad news for many, but not, it turns out, for the Wanciers.
With prices being lowered, the couple was able to shop in ZIP codes they once deemed off-limits. And this past August, they bought their dream home in Briarcliff Manor - a four-bedroom, 3½-bathroom, 3,700-square-foot Colonial on an acre of land overlooking a signature golf course - for $885,000.
Now that sellers are reducing their asking prices by 5 to 25 percent in Westchester and Rockland Counties, buyers are taking a second look at communities they were priced out of a year ago.
Greg Rand, a managing partner at Prudential Rand Realty, spins it this way: A Westchester house listed for $800,000 a year ago was falsely inflated by sellers' expectations by roughly 10 percent to 15 percent. It was actually worth about $720,000, but sellers were holding out for their asking price.
Fast forward six months: Add in depreciation fueled by low demand and high inventory, and that same house is likely to sell for $675,000.
"Sellers are finally saying 'You win, I give,' " says Rand. "A $75,000 to $100,000 cut in an asking price makes a once untouchable community accessible."
And many brokers say the worst is yet to come. They don't expect the housing market to bounce back until late 2009 - and even that could be optimistic. Brokers say we will know the market has bottomed out when prices return to 2004 levels, which, for a typical single-family Westchester home, was $685,000. Contrast that to the third quarter of this year, when the median sales price was $710,000 - down from $729,350 in 2007 - but consistent with levels in 2005 and 2006.
Mounting inventory is also an issue in the lowering of prices. In 2004, 2,110 single-family Westchester houses were sold, but in 2007 the number dropped to 1,698. And totals for 2008 are expected to be even lower.
And, of course, financing issues are dragging prices down.
Brokers say houses priced at over $1 million are languishing on the market longer because jumbo loans - those over $729,000 - are harder to get. Plus, the few banks that are still giving out jumbos are demanding 20 percent down rather than the 10 percent of a year ago, as well as higher interest rates. And even financially sound buyers are understandably jittery about job security, accessible credit overall and the crashing stock market.
Facing all these new hurdles, sellers are now lowering $1 million houses to the mid-$800,000s.
All this adds up to an opportunity for qualified buyers, especially given that the temporary conforming (non-jumbo) loan limits created last March expire at the end of the year.
"If you're looking to buy that $810,000 house for 10 percent down, now's the time to do it," says Mark Seiden of Mark Seiden Real Estate.
He cites a Westchester house in Chappaqua that's on the market for $810,000. A buyer who wants to put down 10 percent on $810,000 can borrow up to $729,000, and banks will also finance the closing costs. That same house, which a year ago cost $875,000, would have required that the buyer come up with 20 percent financing, plus 3 percent for closing costs.
Brokers also say potential buyers should not necessarily be put off by high taxes. Buyers are in a unique position to fight for lower tax assessments because home values have dropped across the board.
All these changes are what got Brad Farkas to take another look at Piermont, a riverfront town in Rockland County that looks and feels like a resort. For years, the 41-year-old Manhattan resident, an avid biker who runs a venture capital firm, has been cycling through the area.
"I feel like I've been window shopping for the past 18 months," says Farkas. "I've been making bids, but sellers weren't willing to budge."
In May, he saw a house he loved for $769,000, but it was out of his price range. When he found out the sellers lowered the price to $615,000 over the summer, he jumped.
The two-family house is steps from Piermont's quaint main street, and it sits on nearly half an acre - an unusual feature for a village house. Farkas, who had been planning on buying a house for cash, said he decided to take a mortgage because the terms were favorable: 20 percent down, with a 5.75 percent interest rate. It's a sweet deal because both units have renters.
"The rental prices on both units exceed the cost of my mortgage and property tax," says Farkas, who does plan on eventually living in the house. "I'm glad I held out. The whole world has gone down in value. I feel as though I've made a smart purchase."
Baer & McIntosh in Piermont recently listed a 1923 two-bedroom stone house on the river in Nyack for $629,000. Eighteen months ago, the home would have listed for $800,000, says Baer & McIntosh broker/owner Debbie Blankfort.
"The glass ceiling has broken for buyers who are solvent," Blankfort says.
Best of Boat Worlds
Tom Lawton says his wife, Sarah Hatsell, was not going to move out of Manhattan unless they could find something in Nyack.
His wife wanted a suburb with a real downtown filled with restaurants, shops and pubs. In addition, the couple loves to sail, and the Rockland County town has a great sailing club. They started looking for a house in 2005 with a $400,000 budget, but they got nothing but frustration.
"My wife said either it is Nyack or we're staying put in our rental," says Lawton. "We decided to be patient and wait."
It was a smart move. This past August, the couple bought an 1884 three-bedroom, two-bedroom Colonial for $410,000. The house came on the market last November for $475,000, and the sellers lowered the asking price to $435,000.
When Lawton and his wife made an even lower offer, it was accepted. A comparable house in January 2007 would have sold for $525,000, brokers say.
"Our patience paid off," says Lawton. "We are loving it here in Nyack."
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