Articles Posted in Real Estate Issues

Zombie properties results when residential properties are vacated or abandoned by an owner in default on their mortgages. In an article in the Westchester Business Journal on June 1, 2015 by John Golden, he points out that Gov. Andrew Cuomo recently announced New York State’s agreement with 11 banks, mortgage companies and credit unions that represent 70% of the New York mortgage market. The agreement is to eliminate neighborhood blight of vacant properties where owners face foreclosure. There are about 16,700 zombie properties statewide in 2014. Lenders met to address the zombie property problem. New York State is expected to implement by August, 2015 that lenders agreed to conduct an exterior inspection of the property within 60 days of delinquency to determine vacancy and abandoned properties and every thirty days thereafter.

If the property is found to be vacant and abandoned, the lender will secure each unit by changing the locks, replacing or boarding up windows, posting the property with contact information and eliminate safety hazards. Lenders will also notify New York State’s Department of Financial Services of any new property to be added to the State’s reporting of vacant and abandoned properties. The Financial Services Department will accept complaints from neighbors or local officials about vacant properties.

Under existing law property owners are responsible for the maintenance of their properties. Bank and mortgage companies are not required to maintain vacant and abandoned properties until they receive a judgment in foreclosure. The Abandoned Property Neighborhood Relief Act has been introduced in the New York Legislature. New York Attorney General, Eric T. Schneiderman called the agreement “a welcome step forward to stop the epidemic of vacant zombie homes”.

In an article in The Journal News on Sunday, June 28, 2015, Bill Cary published an article entitled “Real Estate Market Takes Off”. He points out experts are saying that the multiyear real estate slump is finally over. According to Houlihan Lawrence in the Pelham’s “It’s the best market we’ve had since 2007, both in price and velocity of sales”. In Rockland County the number of home sales is up 16% for the Spring, 2015 vs. 2014. In Putnam County, sales shot up 23% compared to last Spring. Westchester County lags behind with an increase of 6% in sales in 2015.

Nationally, sales of existing homes rose 5.1% late 2015. The fastest pace since late 2009. According to the National Association of Realtors, this year is on track to be the best home sales since 2007 when the U.S. entered a recession. Accordingly to Brian Levine, Manager of Houlihan Lawrence in Irvington, “We’re seeing bidding wars and all cash offers”. The endless winters put a big damper on early Spring sales. But for parts of the lower Hudson Valley, the market has come roaring back to life in the last couple of months. Some realtors feel it’s a sellers’ market. At least 30 of 59 houses sold in Pelham had multiple bids.

Buyers demand remains strong locally and a shortage of homes on the market continue to be a problem in Yonkers. Houlihan Lawrence has seen a low inventory shortage. At the beginning 0f 2015, there were only 199 houses on the market in Yonkers. 45% of the sales in Westchester has been in the $700,000 price. In Rockland, 54% of the sales were for $300,000 or less. The people who are selling the smaller homes now have liquidity to step up to their next house. Fluid with cash, they can now buy a $600,000 – $700,000 home. In most years by June, you are at the end of the Spring market but in 2015, sales are still in the thick of it.

Since the recession of 2007 – 2010 the area of the U.S. economy that has suffered the greatest has been the construction industry. When the bottom fell out of the real estate market, construction came to a near standstill. All the larger projects in Westchester County were put on hold. The construction industry is the last industry to make a recovery.

In an article by Ross Pepe, President of both The Construction Industry Council of Westchester and Hudson Valley, Inc. and Building Contractors Association of Westchester and Mid-Hudson Region, Inc. in the Westchester Business Journal, he stated the long suffering recovery for the construction industry is finally taking hold 5 years after the official end of the great recession of 2008 – 2010. Mr. Pepe keeps track of the recovery through total number employed by the unions. For example, The International Union of Operating Engineers, Local 137 hit the highest number of man hours worked in 2007 when it reported total number of hours worked at 1.5 million hours that year. Since then, Local 137 saw the total number of hours worked each year dwindle by a 1/3 down to 978,000 hours, a third reduction. After several years of slow recovery, the numbers are climbing back but still 20% of what its high was in 2007.

The comeback in the construction and building market place is because of the comeback of the overall economy. Mr. Pepe points out state and municipal funds have grown by increased tax revenue from taxes, home sales (mortgage & recording taxes) and a rise in travel and entertainment. Low gas prices are also having a favorable effect on household budgets.

We have been following all the reports since January, 2015 concerning real estate sales of single family homes, condominiums and cooperatives. In an article in The Westchester County Business Journal by John Golden on January 26, 2015, he reports increased demand for co-op apartments which drove an 8% increase in sale in the fourth quarter of 2014. Sales of single family homes in Westchester County dropped 1% from 2013 and the median price rose 4.1% to $635,000. Overall, house sales in Westchester County totaled 8609 unit in 2014, a 0.6% increase from 2013. Condominium sales totaled 100 units for 2014, a 5.2% drop from 2013 and 1709 co-ops sold in Westchester County in 2014, an 11.3% increase from 2013. The fourth quarter medical sale price of co-ops rose from $145,000 in 2013 to $146,000 in 2014. For all of 2014, the median price of co-ops was $147,500, down 1.7% from 2013. Sales of condominiums surged in the fourth quarter of 2014, a 13.7% increase from the fourth quarter of 2013. The median price of a condo rose 2.8% to $335,000.

In an article in The Journal News on Wednesday, January 14, 2015 by Bill Cary entitled “Soaring Condo, Soaring Sales” where he discussed the luxury real estate market in the lower Hudson Valley was back. A 41st floor condo at the Ritz-Carlton in downtown White Plains sold for $10.5 million. This was a 10,700 square foot full floor elevator penthouse. The largest condo ever sold in Westchester County. The last penthouse in Tower I of the Ritz-Carlton was a 5200 square foot condo sold on the 41st floor for $5 million.

The Journal News reported the luxury market in Westchester $2 million and up had a hugh surge at the end of 2014, shooting up 28% and for the entire year of 2014. Luxury markets were up 16%. The median sale price of condos in Westchester County went up 2% from 2014 – $343,000 to $350,000. In Rockland County, the number of condo sales in the fourth quarter was up 6.5% for a median of 200,000 in 2013 to $213,000 in 2014. In Putnam County, 34 condos were sold in the fourth quarter, up from 28% in the last quarter of 2013. The median sale price rose 5.7% from $211,500 to $223,000.

The months of January & February, 2015 were full of ice storms causing havoc on the roads and a nightmare for pedestrians. The property owner is responsible for cleaning snow and ice off their premises. When a pedestrian falls on snow and ice on a property, the property owner may be liable. The property owner is not automatically responsible to pedestrians. There is no duty of the property owner to keep their premises free of snow and ice during a storm. The property owner must have reasonable time to clear the snow and ice after the storm has stopped. Many municipalities actually have statutes that gives the property owner a set number of hours to clean their property after a storm (i.e. 4 hours, 6 hours, even as much as 12 hours.)

In an article in The Journal News on Tuesday, February 3, 2015 by Bill Cary sets forth “tips for homeowners” listing the kind of salt for icy driveways, sidewalks or decks. The article states many homeowners use rock salt which is terrible for lawns, gardens and trees. Rock salt also eventually makes its way into reservoirs, streams and lakes as storm water runs off. Instead of using rock salt, homeowners should use calcium chloride or “safe salt”. It does not create poisons and it does not eat away at bricks or concrete. The use of sand is also necessary (especially when the temperatures are in the single digits) as other salts do not causing melting but sand can create a coarse surface to make the ice less slippery. A property owner can be held liable to an injured party if they clean the area but do not use sand or salt. This would be considered an incomplete clearing of ice and snow and the injured party can have a successful recovery against the property owner.

This especially applies to commercial properties in parking lots of stores or malls. In most of these cases, the commercial property owner can be held liable along with the snow plowing company if they attempt to clean the area but fail to salt and sand the area. The snowplower can also be held liable for improper removal of snow and ice by making large piles of snow which later melt and refreeze causing icy conditions.

Starting in September, 2014, a series of articles have been written about the real estate market in the Hudson Valley. In the Journal News on September 23, 2014, an article written by Joseph Spector reports realtors note a 9.5% drop in sales compared to the same period in 2013. The median price of homes has been flat. The State Associations of Realtors cautioned against viewing the numbers as significant through the first 8 months of 2014 shaping up to be a strong market despite declines from 2013. Closed sales in August, 2014 reached the third highest total for the month in 7 years.

Nearly 11,000 homes were sold in New York State, a drop of 9/5% compared to 12,127 homes sold in August, 2013. The year to date sales total of 66,635 was a 4.4% drop compared to 2013. The State median sale price was $225,000 unchanged from 2013. The August supply of homes inventory dropped 4.6 to 10/4 months supply. The group said a 6 months’ supply is considered a balanced market.

In Westchester, Putnam & Orange Counties, 3195 closing during the period, a 9.2% decline from 2013. From January through August, 2014, the number of homes for sale in Dutchess County increased 16% from 1815 to 2104 while the median sale price rose 6% from $245,000 to $260,000.

In an article by Leif Skodnick in The Westchester County Business Journal, he points out that even with an increase in inventory, home sales were down for the second quarter of 2014. Westchester is one of the four counties for which Hudson Gateway tracks data. They conclude that there has been a 12% overall drop in home sales in the second quarter of 2014 as compared to 2013, and a 13.5% drop in sales of single family homes. Home prices stayed relatively stable in Westchester with a median sale price of $651,250 in 2014, just a 0.2% increase over 2013.

Douglas Elliman in Katonah states they are selling homes, but they have to be aggressively priced. The number of home sales were down but, the number of residential properties listed for sale was up 3%, with single family homes showing a 5.7% growth in inventory and condominium inventory went up 6%. In the Northern part of the County, sales are slow because there is more inventory closer to the City. People buy closer to the City to have a shorter commute for a similar price as the real estate market in the Southern part of the County sped up. Realtors expect to see more action up North. South of Interstate 287, closer to the City the market is still getting sellers closer to their asking prices.

Statewide, home sales declined for July compared to July, 2013. Duncan Mackenzie, CEO of The New York State Association of Realtors states “employment numbers are rising but wages remain stagnant creating a counterbalance to moderating home prices and low interest rates that continue to drive improving affordability conditions”. Statewide, New York State saw 10,545 closed sales, down 10.3% from July, 2013, a total of 11,754. From January 1, 2014 through July 31, 2014, the sales total of 55,217 represents a 4.5% decrease from 2013. Statewide median sales price was $239,900, a .4% decrease from July, 2013 of $239,900. The State median sales price of $225,000 remained the same as last year. The realtors state that they felt people went away on vacation this summer for the first time in a long time. People had more disposable income and were spending it on vacations. Realtors hope September will see the resurgence of home sales.

In an article in USA Today, The Journal News on Friday, August 22, 2014 by Paul Davidson stated existing home sales climbed last month to their fastest pace since September 2013, which is evidence that the housing markets is bouncing back after a sluggish first half of the year.

Sales rose 2.4% to a seasonally adjusted annual rate of 5.15 million and has increased for four straight months, according to the National Association of Realtors. The total beat analysts’ estimates although sales remain 4.3% below 2013.

The Chief Economist, Lawrence Yun attributed the solid sales to growing housing inventory and moderately price increases. Single family home sales increased 2.7% in July which condominium and co-op sales were unchanged. Housing starts also increased in July. The homes for sale inventory rose 3.5% to 2.4 million which represents a 5.5 month supply. Economist Patrick Newport and Stephanie Karol of HIS Global Insight states “a virtuous inventory entices buyers into the market”.

We wrote about the real estate market on July 14, 2014 noting the news was mixed. We have now received the results of the second quarter, April through June, 2014 and the news is not good.

In an article in the Westchester Business Journal by John Golden, he writes “winter costs chill on regions house sales”. The second quarter housing sales in Westchester and the lower Hudson Valley showed a double digit decline from the second quarter of 2013. The Hudson Gateway Multiple Listing Service reported 3195 closing on residential properties in the second quarter across Westchester, Putnam, Rockland and Orange Counties, a 9.2% decline in sales from the same quarter in 2013. Westchester and Orange Counties showed the deepest declines at 12% & 12.2% respectively. Only Rockland County had a second quarter increase in property sales with 463 sales of single family homes, coops and two – four family homes, a 6.2% increase in sales from 2013.

In Westchester, the region’s largest residential market, sales of single family homes dropped 13.5% from 201 with 1232 homes sold from April through June, 2014. Douglas Elliman Real Estate chartered 1194 closings on single family homes in Westchester, a 16.7% decline from 2103. Various realtors noted winter weather pushed first quarter pending sales into the second quarter which should have pushed the sales figures for the second quarter up, but it did not. Contracts on single family homes rose 3.9% from the second quarter of the last year and nearly 52% from this year’s first quarter. Well above the 35.5% average increase from the first to second quarters of 2012 & 2013.

We have been following the real estate market the last 3 months. Many articles have been written, some contradicting each other. In the April 23, 2014 article in USA Today for the Journal News, reported that the housing market continued to sputter because of adverse weather, low supplies of houses and higher costs. In March, 2014, existing home sales declined .2% to an annual rate of 4.59 million, the lowest rate since July, 2012. The article points out that a brutal winter continued to play a role in weak sales. The March statistics reflected closing on purchase agreements sign in January & February, 2014. Another factor holding down sales is the rise in mortgage rates to 4.27% , up from 3.4% a year ago. Also, higher prices and tight inventory of homes discouraged buyers. Distressed homes including foreclosures and short sales accounted for 14% of sales in March, 2014, down from 21% a year ago. Tight supplies limit selection and push up prices. The median price of a single family home was $198,200 in the USA in March, up from 7.4% from March, 2013.

First time buyers are making up unusually low shares of purchases, 30% down from 40% traditionally because of strict credit standards. The article ends stating brighter days are ahead “there are indications the stringent mortgage underwriting are beginning to ease”. Also, new home construction will attract current homeowners creating a bigger supply of existing homes for the first time buyers.

On April 30, 2014, the same newspaper published an article “prices keep housing stagnant”. The article like the prior article, blames sharp increased home prices along with higher mortgage rates have discouraged home buyers. Home inventories are a historically low level. First time home buyers traditionally drive home sales. However, they remain saddled with student debt and face stringent lending standards. The first time home buyer declined from 40% to 30%. Student loans topping 1 trillion and wages are stagnant for many adults in their 20’s & 30’s live with parents or roommates. Only 423,000 households were formed in the last 12 months, less than half the typical 1,000,000. The article points out that economist still expect the housing market to gain momentum this year as job and wage growth lead to more new housing. Pending home sales increased in March, 2014, for the first time in 9 months. Many analysts expect houses to finally reach 1,000,000 in 2014 for the first time since 2007. 4.9 million existing homes are expected to be sold this year, 3% less than last year. One of the big reason is rising prices in 20 large cities were up an average of 13% from a year earlier.

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