asked the industry questions as to local market impacts from the current financial morass. Judi Desiderio CEO, Town & Country
Real Estate, responded in full (and flattered the columnist) so we will start with her comprehensive reply. She began, "Thank you, for keeping the real in real estate. Only someone with your history can do this, Lona - brings back memories of 1989 after the 1987 crash."
Have the Wall Street events affected your area? How?
Property listed with Town & Country Eeal Estate.
Last week took everyone's breath away. It has calmed down; collateral damage seems identifiable. First, buyers not directly connected to Wall Street continued with their plans, taking a moment before signing contracts. Fortunately, we didn't lose one deal due to the Wall Street meltdown. As to sellers, if they didn't need to sell, they took [their] listing off the market. Others are reducing prices and increasing broker incentives. East End real estate and realtors will be fine in the long run. There will be fewer realtors by next year. Only career professionals will know how to bring clients and customers through this.
Credit market impact?
Must be addressed quickly on a national level for the housing market to recover. Americans need the ability to buy a mortgage. The last time I brokered in this climate, the wisest people picked up distressed properties and made a fortune in the following market swing. That problem was largely due to buyers borrowing 80 to 90 percent during the bull market then moving into a crash. In the 1960s seminars hailed "How to buy real estate with no money down." I hated this kind of advice, buying with as little down as possible. It caused, last time, financial events such as this. Folks that got caught last time, older and wiser now, did not maximally finance. They have liquidity knowing the value of cash.
Sellers: If you can, hold on until 2010. If not, adjust your price hard and fast. Buyers: Happy Shopping! People are at all price levels. There are plenty of bottom fishermen though some think we're in Iowa. They're not going to buy 50 cents on the dollar
Are deals being renegotiated?
Some, here's where professional brokers are closers.
Her final thoughts, "Real estate is the best long-term investment. A stock can go from $89 per share to $7 per share. But you'll never buy a house at $8.9 million and see it plunge to $700,000. And, unlike the banks having $100,000 or $200,000 of insurance protection, your homes and real estate investments are safe long term. We are seeing a healthy market correction of 20 to 25 percent on high flying prices that doubled and tripled in just a few years; appreciation like that cannot be sustained long term. In the end giving 20 to 25 percent back is better than what we are seeing in other investment vehicles. Real estate should never be looked at as a flip or short term investment."
From The Corcoran
Group's Rick Hoffman, Regional Senior Vice President, East End: "May you live in interesting times" - well we do! The Wall Street debacle has yet to shake out. I think all of us on the East End are seeing quite a bit of market hesitation. This is a tough one to predict, but I know that many of us in the industry are witnessing uncertainty with buyers and sellers. It's no secret that financial markets have people a bit fearful, but with fear for one comes opportunity for others. Some people wishing to sell may be more negotiable now the buyers have an advantage. We're still seeing deals getting done. With hesitation in the markets, real estate may be looking like the best long-term investment right now.
From Paul Brennan
, Executive VP Prudential at Douglas Elliman
Real Estate in Bridgehampton - "$17,000,000 sold and closed, 120 Beach Lane in Wainscott, Sept. 16, 2008 by Paul Brennan. If your real estate broker is acting like your stockbroker perhaps it's time to call upon 29 years of experience. If you are willing to listen, PDE can achieve the highest price the market will achieve. We have been here, we are here now and we plan to be here long after this crisis is over. Real Estate is what we do!"
From Corcoran Senior VP and extraordinary broker, Gioia DiPaolo of Sag Harbor - "What I'm seeing? Increased interest in rentals; year-round and winter, as well as early rental activity for summer 2009. Buyers are excited at the thought that there might be an opportunity now that many sellers have pared prices and listings are more realistically priced to sell. A waiting game: some potential buyers are going to wait and see what happens. I think that once the election is behind us and, hopefully, the financial markets fallout has settled, January will bring a spurt of activity from buyers who want to be in the Hamptons for summer 2009."
As to health of local banks, we read in a local weekly that the start-up for a new bank is slower than expected, all were reassuring. However, according to a Southampton Town Board member, the Community Preservation Fund stream has plummeted with last year's reduction in home sales.
Yes, well, East End real estate is a very strange business, but realtors survive as long as there is action.