As average sales prices fall in Long
Island, the number of member offices of the Long Island Board of
Realtors, which includes Queens, has fallen by nearly 5 percent since last quarter.
Although the absolute number of brokers’ licenses is slightly up in Suffolk County, sources say the fallout from the subprime crisis and economic woes is taking its toll.
Joseph Mottola, CEO of the Long Island Board of Realtors, said local membership was down 6 to 7 percent and that he knew of several brokerage offices that had closed or consolidated in the past year.
A broker who spoke off the record said that the Remax Summit and the Gateway Realty office in Greenlawn had closed or been absorbed by another realtor.
As in other real estate down cycles, Mottola said brokers are working flexibly. “What they are saying is, ‘I am reducing my expenses at this time; I have been through this cycle before, and I am going to work for someone else until it all blows over,” he said.
Even seasoned agents are facing a tough slog, as houses spend more days on market and buyers negotiate every penny. While the number of brokers’ licenses has been flat in Nassau County, some say agents leaving the business are holding on to their licenses “just in case.”
The Long Island Board of Realtors bylaws require that licensed brokers retain their membership in the organization as long as they still have their licenses, even if they are not working as brokers, which might inflate the membership numbers.
Katy Anastasio, principal at Anastasio Realtors in Huntington and a National Association of Realtors committee leader, said the numbers mask a grimmer reality because real estate brokers are likely to hold onto their $400-per-year memberships and licenses in the event they can sell the house down the street while working in another field.
“I have noticed some of the offices closing down in the area,” said Anastasio, who would not name the businesses, though in most cases the offices closing are branches of brokerage chains.
Some brokers are leaving the business because they have no choice.
“We absolutely have had brokers leave the business,” said Terry Sciubba, owner of Sherlock Homes on Long Island, which covers six Nassau County North Shore communities including Sea Cliff and Glen Cove. In her own office, four out of 45 brokers have left for regularly paying jobs at hospitals, doctor’s offices and other businesses. “Some of them needed to get benefits, and some of them just needed money,” Sciubba said.
Nationwide, membership in the National Association of Realtors has fallen by 6 percent since March of 2007, according to an organization spokesperson.
Lauren Rivera, a spokesperson for the New York Department of State, said a breakdown of how many new salespeople were entering the industry was not available.
Slowly adjusting market
The ailing state of the Long Island market, which is seeing a significant slowdown for mid-priced properties, is driving people away from the business, brokers said.
Average contract prices in Long Island were down by 5.7 percent and 4.0 percent, respectively, for Suffolk and Nassau counties in March 2008 compared to a year ago, according to the Long Island Board of Realtors. The number of units sold showed bigger percentage declines, however, at 22 percent and 43 percent in Suffolk and Nassau.
Sciubba said there was significant weakness in the mid-priced market ($400,000 to $600,000) in Glen Cove. In her higher-end market in Sea Cliff, houses were staying on market much longer than last year.
For her part, Prudential Douglas Elliman broker Joyce Coletti estimated sales volume in Long Beach was down 20 percent.
The crunch requires more hard work, said brokers. The 80/20 rule, where 20 percent of the brokers typically bring in 80 percent of the business, becomes wider during a downturn and becomes more like 90/10, said Coletti.
“Now you really have to work hard to sell, you have to negotiate and you have be a psychiatrist to make it work,” added Sciubba.
Stuart Epstein, a principal at Devlin McNiff brokers in East Hampton, confirmed that the number of real estate transactions on Long Island had been halved since their high-water mark in 2005 and 2006.
Despite the fact that Long Island has continued to gain jobs overall in 2008, the real estate business is suffering due to a large number of subprime loans and foreclosures, noted Pearl Kamer, chief economist at the Long Island Association, one of the region’s largest business groups.
She said 3,200 financial jobs had been lost in the region from February 2007 to February 2008, and that the rental and leasing category — the closest category that New York State tracks to brokers, but that includes other workers related to real estate — had shed 500 positions in the same time period.
She noted that potential homebuyers are sitting on the sidelines. “They think housing prices will continue to go down way into 2010, so if that is the case, they are thinking, ‘Why buy now; why not wait?'” she said.
Because of the buyer unwillingness to commit, the real estate industry is contracting on Long Island, and “rising food and energy prices have put a toll on spending, and discretionary spending has been cut back,” said Kamer. She expects to see more of the same through late 2009 and early 2010.
After that, the economy may improve 2 to 3 percent, she predicted. Until then, she said, “it will be tough.”