A real estate
slowdown that began in a handful of cities this summer has spread to almost
every hot housing market in the country, including New York. More sellers
are putting their homes on the market, houses are selling less quickly and
prices are no longer increasing as rapidly as they were in the spring, according
to local data and interviews with brokers.
In Manhattan,
the average sales price fell almost 13 percent in the third quarter
from the second quarter, according to a widely followed report to be released
today by Miller Samuel, an appraisal firm, and Prudential Douglas Elliman,
a real estate firm. The amount of time it took to sell a home was also up
30.4 percent over the same period.
In another sign
that the housing market might have reached a peak, executives at big home
builders have sold almost $1 billion worth of company stock this year. (Executives
and directors at many of the nation's largest development companies sold stock
at a record pace this summer. Insiders at the 10 largest home builders by
market value, including D. R. Horton, KB Home, Toll Brothers and M.D.C. Holdings,
have sold nearly 11 million shares, worth $952 million, so far this
year. That is a huge jump from the 6.8 million shares, worth $658 million,
that insiders sold during all of last year, according to data compiled by
Thomson Financial.)
 |
| A
builder recently paid $70 million for Casa Apava in Palm Beach, Florida,
according to the New York Times. |
Outside Washington,
in Fairfax County, Va., the number of homes on the market in August rose nearly
50 percent from August 2004. In the Boston suburb of Brookline, Mass.,
where many three-bedroom houses cost $1 million or more, the inventory of
homes for sale has increased in just the last few weeks, said Chobee Hoy,
a broker there.
For-sale listings
have also swelled throughout California, according to the California Association
of Realtors. In the San Francisco Bay area, they have increased 16 percent
in the last year, Coldwell Banker Residential Brokerage said. ...
Brokers said
that some houses seemed to be on the market longer because sellers priced
them too high, assuming that their value was still rising sharply. In other
cases, people who otherwise would have waited a year or two to sell their
homes -- like empty nesters ready to move into smaller quarters -- had listed
them now out of fear that prices would soon fall.
The question
remains whether all of this represents a momentary cooling off of some overheated
housing markets, or it presages a more pronounced downturn that would end
a decade-long boom. Some economists and commentators have for years predicted
the bursting of a real estate bubble, and previous slowdowns have turned out
to be relatively brief pauses before prices started accelerating again. But
with mortgage rates now rising, the cost of gasoline hovering at or near $3
a gallon and house prices in some areas out of reach for many families, brokers
and analysts said they thought that this slowdown could be the real thing.
For now, the
change remains a far cry from the bursting bubble that some have predicted.
In Massachusetts, for example, the median house price remained flat from July
to August, and the median condominium price fell only slightly, according
to the Realtors' association there. At the start of the year, prices had been
rising at an annual rate of more than 15 percent.
If anything,
some brokers said, the recent slowdown meant a return to a healthier, more
sustainable market. "What we had was abnormal," said Dottie Herman,
chief executive of Prudential Douglas Elliman. "People get used to abnormal
times and then when they're normal, they think there's something wrong."
Alexander Shakhov,
47, listed his two-bedroom house in Frederick, Md., an outer suburb of Washington,
for $529,000 in July, and it remained unsold for the rest of the summer. A
month ago, he reduced the price to $499,000 at the suggestion of a broker.
A week ago, Mr. Shakhov accepted an offer at the lower price.
The market "is
not as hot as the last two years," Mr. Shakhov, a scientist at a biotechnology
company, said, "but I'm pretty happy." He bought the house three
years ago for $230,000. He now lives in Cleveland, where he has bought a home
that is nearly twice as large as his Frederick house for less money. ...
In Manhattan,
the average sales price of co-op and condominium apartments fell 12.7 percent,
to $1.15 million, in the three months that ended on Sept. 30 compared
with the second quarter, according to the Prudential Douglas Elliman report.
The median sales price - which means half of homes sold for more and half
for less -- fell 3.2 percent, to $750,000. ...
"What will
slow this market down, and has slowed certain segments of the market down,
is overpricing," said Pamela Liebman, chief executive of the Corcoran
Group, a large real estate firm in New York. "Back in the spring, there
was such a frenzy that very pedestrian product was drawing multiple bids."
Some of today's sellers appear to be pricing their homes as if the frenzy
were continuing. ...
Indications
of a slowdown have appeared before. Jonathan Miller, president of Miller Samuel,
said the last time that average and median sales prices dropped below those
the previous quarter at the same time that inventories and sales duration
rose in Manhattan was in the fourth quarter of 2002. But by the end of 2003,
the market had come back.
An important
difference now, though, is that mortgage rates are creeping up, whereas previous
comebacks have been fueled by ever-lower rates.
On five-year
adjustable-rate mortgages -- a popular loan with a fixed interest rate for
the first five years -- the initial rate has risen to 5.59 percent
on average, from 5.14 percent in June, according to BankRate.com.
What is more,
some mortgage lenders have started to tighten credit standards, making it
harder for buyers to get loans.
"Low interest
rates and easy credit standards are just about over," said Kenneth Rosen,
chairman of the Fisher Center for Real Estate and Urban Economics at the University
of California, Berkeley.
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