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As Home Sales Rise, Foreclosure Filings Keep Recovery Elusive
January 18, 2010 By RANDI F. MARSHALL randi.marshall@newsday.com
Quick Summary
A Newsday analysis found that new foreclosures are outpacing new sales in many LI neighborhoods.
Photo credit: Getty Images | Overall, experts say, home sales across the Island are increasing and the steep price declines of the last year are slowing. (April 29, 2008)
For the first nine months of last year, the residential market on Long Island looked like this: For every 10 homeowners who were able to sell their houses, another eight slid into default at the beginning of the foreclosure process.
An example of the region’s deeply troubled housing market is Windsor Parkway in Hempstead, which is like so many dozens of streets and neighborhoods across Long Island, where residential sales appear to be making a modest comeback – but that positive news isn’t really the full story.
On this street, eight homes were sold in the first nine months of 2009. A closer look at these eight sales shows that four were foreclosures – properties sold at auction, where, records show, the banks themselves bought the homes back. That meant a new owner was not moving into an empty house on Windsor Parkway and perhaps spending money to improve the property with repairs and landscaping. And, in addition, there were 10 lis pendens filings – the first step in the foreclosure process – on this street during the same period.
Many communities on Long Island have fared far worse, where the ratio between homeowners heading into foreclosure and those able to sell during the first nine months of 2009 was more than 3 to 1, according to a Newsday analysis of data on home sales and lis pendens filings. Across the Island, the average during the same period was nearly 1 to 1.
“Certain places have just been so hard-hit, that they’ll take much longer to come back,” said Beth Marten, a buyers’ agent and real estate investor in Baldwin.
The data Newsday examined were provided by the Long Island Real Estate Report in West Islip.
No recovery – yet
Overall, experts say, home sales across the Island are increasing and the steep price declines of the last year are slowing. While real estate sources say one of the reasons home sales increased last year was because falling prices made more houses affordable, the numbers of foreclosures in many communities are also a significant factor.
Newsday reported last week that home sales on Long Island fell in 2009 by more than $1 billion, a 9.3 percent drop from 2008, but the number of homes sold from the previous year went up 2.8 percent.
“We’re seeing improvement but let’s not mistake it for a recovery,” said Jonathan Miller, who heads the appraisal firm Miller Samuel in Manhattan. “There’s some good news and we’ll take it, but very little has been resolved.”
Foreclosure sales rise
Even as home sales rose last year, an increasing number of them were foreclosure sales, which take place at auction and, in many cases, simply send the property back to the bank, with virtually no positive economic impact on the street on which the house sits. Across Long Island for the first nine months of last year, 9 percent of all home sales were foreclosure sales. In some communities, that number was 33 percent.
Newsday’s analysis showed that the trends worsened in many of the Island’s low-income and minority communities, making a real estate comeback there – and the dream of home ownership – even more elusive.
“The higher the [lis pendens- to-sales] ratio, the higher probability that housing prices will fall,” Miller said.
While many of those communities always had some foreclosures, home sales used to far outpace them, according to Long Island Real Estate Report president Pat Ammirati.
The number of foreclosures in a community affects far more than just the homeowners in trouble. As foreclosures rise and prices fall, it’s particularly tough for homeowners who are not in default to sell – especially if they bought at high prices.
“There’s someone who has paid for a house and is sitting in that house and has watched it go down in value,” said John Fitzgerald, a foreclosure and bank-owned property specialist with RealtyConnect USA, a new real estate agency in Hauppauge. “Now, they can’t refinance, they can’t sell and they can’t get out.”
And in communities with fast-rising lis pendens notices, the number of eventual foreclosures could rise even more, imperiling more homeowners who are keeping up with their mortgages. For the first nine months of last year, for example, just to name two communities, Brentwood had more than three lis pendens filings for every house sale; East Moriches had nearly two.
Blame it on the recession
To experts, the reasons for the rise sit squarely on the recession.
“The majority of people we’re counseling now have prime mortgages and their primary reason for default was a loss of job or loss of income,” said Eileen Anderson, a senior vice president at the Community Development Corp. of Long Island.
There’s little sign of a letup to come, especially if the two keys to the region’s economic growth – jobs and credit – remain unstable.
“It’s unlikely that we are going to see a significant improvement in unemployment and an easing of credit in 2010,” Miller said.
Indeed, it could take three to five years before foreclosures abate and the market makes a real recovery, said Island Advantage Realty broker Todd Yovino, whose Huntington firm specializes in bank-owned foreclosed properties.
Nonetheless, there are some bright spots. Kisha Wright, an assistant vice president with the Long Island Housing Partnership, said she has had more success in modifying the terms of mortgage loans recently.
“I think the government and the lenders and the banks and the investors are making strides in the hopes of a recovery,” Wright said. “I don’t think we’re quite there yet.”
Gordon M. Grant for The New York Times
‘A DREAM’ Donna Santoro’s Center Moriches home, which she bought in a short sale.
MARCELLE S. FISCHLER Published: June 5, 2009
TWO years ago, when Donna Santoro first noticed the listing for the two-bedroom carriage house in Center Moriches on a canal with a view of Moriches Bay, the price was above $600,000.
“That was a dream,” said Ms. Santoro, a Teamster official. She couldn’t afford it, and eventually the house was taken off the market.
But last October, she noticed that it was back. At $429,900, it was extremely tempting.
It was now a short sale — which ended up meaning the deal took a very long time, a fact that Ms. Santoro described as “the epitome of an oxymoron.” Yet that is the tendency, when houses are worth less than what their owners owe the bank.
She was able to put more than 20 percent down, was prequalified for a mortgage and had a good credit score. But she still had to wait for the seller’s two mortgage holders to approve the offer and let her close, a process that took until April.
“I hung in there,” she said, drawn by an “absolute great buy” and daunted by the idea that if the deal didn’t go through, the home could be boarded up and go into foreclosure.
“It’s a great opportunity to afford something that you otherwise may not have ventured into” was her summation. Beyond getting a house she loved, she was “taking it off the seller’s hands and giving them the opportunity to repair their credit more quickly and giving something to the bank other than zero.”
Across the Island, short sales are up. Brokers say that banks are increasingly amenable to approving them, though expediting the paperwork is not always a cinch.
From January to April, there were 2,520 lis pendens — or notifications of foreclosure — in Suffolk County and 1,888 in Nassau, according to propertyshark.com. Some carry mortgages as high as $2.8 million, in Southampton, and $1.94 million, in Old Westbury.
Nationwide last month, 45 percent of transactions were distress sales — whether short sales or foreclosures, according to the National Association of Realtors.
Michael Morris, owner of Coldwell Banker M&D Goodlife, whose Moriches-based firm handled Ms. Santoro’s purchase, says short sales represent 11 percent of its transactions. Among its 343 listings, 36 are short sales. Of 120 transactions in contract, 17 are short sales.
Phil Tesoriero, owner of Dynamic Real Estate Services in Garden City, primarily deals with distress sales on properties ranging from $180,000 to $750,000; he sees tremendous growth in the short-sale market.
“A lot of people are over their head and underwater,” Mr. Tesoriero said.
It used to be that short sales became possible only after a mortgage payment had been missed and after the bank had filed a lis pendens. Lately, however, the bar has lowered: homeowners need only prove hardship, or a looming deficit, to proceed with a short sale, Mr. Tesoriero said.
Mr. Morris said hardships include divorce, job loss and family illness. In such situations, he said, owners “have to sell it and they are talking to the bank to try to work it out.” He added: “Nobody wants to foreclose. Foreclosure hits your credit score pretty hard.”
Rick Simon, a spokesman for Bank of America Home Loans, said that even though the bank’s first priority was to help owners keep their homes through loan modifications, short sales had soared in the last year and a half. The bank is now looking to speed up the approval process, which can take up to 90 days, he added.
One pilot program, to be rolled out nationwide in a few months, would preapprove a short-sale price at the start of the process rather than at the time an offer is made. This would knock 30 days off the wait.
The bank assesses whether “the loss to the investor is mitigated by doing the short sale more than it would be mitigated” by foreclosure.
Then the home must be appraised, as a basis for ascertaining that any offers reflect market value. “Low-ball offers are not being accepted,” Mr. Simon said.
Short sales face competition in a market glutted with regular sales and foreclosed homes owned by banks, Mr. Morris said. Yet they tend to find takers more quickly, because their sellers “are more apt to price it at market value and not be in denial.” The difficulty comes later — with the heightened risk that the bank may not approve the sale and the buyer will have lost time.
Wendy Funk, a Merrick-based real estate lawyer, says banks “are so inundated with foreclosures they are agreeing to settle for less money” to avoid the full foreclosure process, which in New York can take years.
But, she said, “the bank may not make a deal if a homeowner was totally irresponsible.”
In March, after a year spent looking at homes upstate, in New Jersey and in Levittown, Sandy Acosta, a bank comptroller, found a short sale in East Meadow, a three-bedroom for $488,000, through Janie Davis, an associate broker with Re/Max Hearthstone in Bellmore.
“I was looking for the house that I liked, not a short sale,” Mr. Acosta said. Still, he figured that the home’s status would ensure a good price, and decided it was worth the three months’ wait for bank approval to close. Besides, his wife, Clara Canio, loved the house.
“If this is the style of the house that you want,” Mr. Acosta said, “you can wait.”
9.2 acre equestrian property that went to contract February 2009
Their are five pending sale of homes in Manorville for the month of January 2009 . Of the five, two were condominiums in Greenwood Village, a fifty five and over community, one was a condominium in the Greens, one was a condominium in Silver Ponds and the fifth was a 9.2 acre equestrian property.
What is important to realize from this is that no “traditional” single family homes sold in January last month in Manorville.
The numbers are not very different from the same time last year. In 2008, six properties sold in January in Manorville. Of the six, five were single family homes ranging in price from $425,000 to $625,000 and the sixth was a condo in the high $400,000′s. A far cry from this years spread of $90,00 to $310,000.
In February of 2009 we have nine sales. Three are condos in Greenwood Village from $90,000 to $145,000. One is a condo in Silver Ponds that was asking $309,000, and five are single family homes ranging from $389,000 to $499,000.
- Clancy Road ~ Sold Feb 2009
In February of 2008 we had twelve sales (homes that went to contract in that month). Two were Greenwood Village condos under $100,000 and eight were single family homes ranging in price from $385,000 to $615,000.
What we see from this trend is that the upper end of the market is “missing”. Homes are selling but mostly in the lower price brackets. We will continue to track these sales for the comming months and I will also compare all of 2008 to 2007.
In January of 2009 Center Moriches had five home sales ranging in price (asking) from $225,000 to $549,000 with an average 290 days on the market. In 2008 we had four sales ranging from $300,000 to $560,000 with an average 120 days on the market. February of 2009 showes six sales. Two homes are new construction asking $399,000 and $539,000 and four are resales ranging from $199,000 to $469,000. In February of 2008 we had three sales ranging from $250,000 to $449,000. Center moriches had a very good 2009.
East Moriches had only one sale for the month of January 2009, a $280,000 ranch with 3 bedrooms and 2 baths. In 2008 we had five sales ranging in price from $379,000 to $414,000. For February 2009 we had only one sale, a contemporary home in Baywood that had an original price of $699,000 and sold for below $500,000. In February of 2008 we had three sales ranging from $330,000 to $524,000. Check back for a more detailed report on this town in the next week or so.
Lilly Pond Lane Eastport sold February 2008
Eastport had two contracts for the month of January 2009. One was a $499,000 condo in Encore, a fifty five and over community with large luxury homes and a clubhouse. The other was a single family home that was for sale for several years and was asking $599,000 at the time of the sale. In 2008 we had no contracts for January in Eastport. February shows the reverse of January with no contracts in 2009 and only one in 2008 for a single family home asking $699,000 and selling for $560,000 after 144 days on the market.
Changes in the market are the source of many articles and newscasts as well as this blog. I will be compiling a chart to compare 2009 to the last few years. Clearly homes are still selling but changes are evident. It will be interesting to track the months ahead.
Source: Multiple Listing Service of Long Island
