'THE 2008 REAL ESTATE REPORT'

A commentary by Roderic H. Blackburn on the state of real estate, always interesting. HMH

Since all markets have been in turmoil these last months I
have emphasized real estate trends more than usual. This
Report is a year-end summary for 2008 with comparisons
to prior years.

As I have always cautioned, what you read or hear in the
media about real estate sales and prices can be misleading
because national, state and regional performance figures
often differ widely, partly from issues having to do with
reporting (see attached Report on statistics) and partly because
of real differences from place to place.

The following figures are for sales numbers and median
sale prices of existing single-family houses. It does not
reflect the trends in new home sales, commercial, multifamily
or other classes of real estate. The data is publicly
available online from the National Association of Realtors
(NAR) at http://www.realtor.org and from the New York
State Association of Realtors at http://www.nysar.com.

National

The number of sales of single family existing homes during
the last year was off nationally –3.5% while median
prices were down 15.3%. Despite the torrent of bad housing
news, national sales were off only 3.5%. How can that
be? The answer is in the averaging: the western region’s
sales numbers were up 31.6% while prices were off
31.5%, read this as distress selling - a lot of it.

The Northeast

Northeast sale numbers were off -14.3% in the last 12
months, but median prices were off only -7.8%. Relative
to other parts of the country our region has had the slowest
sales but prices have held up quite well.

New York State trends

One year through December 2008 New York State sales
were off 16.2%, prices down 8.5%. That is pretty close to
what the Northeast as a whole did.

Hudson Valley trends

For the same year Columbia County sale numbers were
down –22.9% (down –25.7% over two years). On the
other hand the median price was off only –3.2% (off just
only –1% over two years).

In Dutchess County the number of sales was down –
8.1% in the last 12 months, and down –25.3% over two
years. Median prices were down -7.6% in the last 12
months, and off –11.6% over two years. Dutchess
County’s median price is now $309,450; Columbia
County’s is now $230,000.

Compare the above trends with median price changes
over the last year in other Hudson Valley counties: Westchester
(-5.1%), Putnam County (-6.8%)

Summary

In our region we have experienced at least three real
estate market cycles of about ten years each in which
prices have advanced (usually doubling) for about five
years and then stayed the same or decreased a little in the
next five years, this cycle then repeating itself. Early in
the present real estate cycle, median prices doubled (2000-
2005) - as they had in the prior two cycles - while in the
latter half of this cycle prices have stayed quite steady.
As prices advanced in each cycle, so did the number of
sales; when prices subsequently stayed level for five
years, the number of sales dropped about 30%.

If the pattern of the present cycle continues to follow that of the
prior two cycles (it has so far), 2009 should be the end of
the present cycle before a new cycle of increasing prices
and sales begins. That, of course, presupposes an average
recession which is not what we have. So when will the
real estate market turn around? Obviously we don’t know.
Ironically, that level of uncertainty allows for a more orderly
balance of sales and purchases. No one is yelling
fire!, crowds are not running for the exist.
What to do?

The lesson for sellers? Fewer buyers and longer periods
of time to get a sale, although if you are patient, you will
likely get near the same price as a year ago. Even in these
difficult financial times there are quite a number of buyers,
if not as many as before.

For buyers? If you have been anticipating that the market
would go down, or at least down further, and you
could get a real bargain, such a bargain is not likely. Indeed,
in some counties you may pay more than a year ago.
Also, if you have been thinking there is no mortgage
money available, you are wrong again. For qualified buyers
there is funding available at historically low rates.

A monthly column on the real estate market and related issues in the upper Hudson River Valley by Roderic H. Blackburn, principal of R. H. Blackburn & Associates, Inc.