Home prices have fallen, banks are tightening lending criteria, the number of foreclosures is growing and so is the inventory of unsold homes in New York City’s suburbs. What’s more, the unraveling of the credit markets has yet to play itself out.
New York’s suburbs haven’t fared quite as well as Manhattan and the rest of the city in the national slowdown and the more recent fallout in the mortgage markets.
For The Real Deal’s first Suburban Market Report, we’ve pulled together snapshots of four markets surrounding New York City — Long Island, Westchester, New Jersey and southern Connecticut. The supplement presents an even greater focus on areas surrounding New York City than the magazine usually provides as a means for real estate professionals to grasp local hazards and opportunities.
Experts say that what’s happening at the top of the residential market in the suburbs is in some ways the opposite of the trend in the city, where the high-end is seen as holding fairly strong so far (see Q & A: Sounding off on the health of the market).
In Connecticut’s Fairfield County, where Wall Street bonuses are a big part of what drives home buying, real estate brokers are concerned about projected lower bonuses this year, which may negatively affect activity. High inventory in posh Greenwich continues to be an issue, and many sellers looking to unload their homes before Thanksgiving are lowering their prices, brokers report.
In Chappaqua, the upscale community in Westchester that Bill and Hillary Clinton call home, sellers have also been bringing their prices down to meet buyers’ expectations in a changed market. Median prices throughout the county are down 2 percent from a year ago, according to the Westchester-Putnam Multiple Listing Service.
And on Long Island, while mid-priced homes under $500,000 appear to be preserving their value best, it’s the higher-end segment of the market, above $750,000, that has seen prices come down 10 percent in the last year. The same dynamic has generally held true in some of New Jersey’s close-in suburbs.
While foreclosures haven’t affected New York and its suburbs in the same way as Florida and California, to name two examples, their effects are still being felt — but not just by homeowners. The many mortgage companies doing business on Long Island have been affected by the subprime fallout. Long Island’s sixth-largest employer, American Home Mortgage, went out of business this summer, and the approximately 2,500 job cuts in the mortgage sector overall could be followed by more.
What’s true for residential real estate is not necessarily true for commercial, of course, and some office markets surrounding New York are showing impressive performances. Fairfield County has led the suburban pack, with 22 percent growth
in average asking rents, from around $27 a square foot in the second quarter of last year to nearly $33 a square foot in the second quarter of this year. Areas like Greenwich and downtown Stamford have led the charge.
And despite the uncertain housing market, developers continue to build.
One prominent example is Martin Ginsburg, who is pushing forward with plans to add new condo units in towns up and down the Hudson River in Westchester County, significantly recasting waterfront cities into places that are slightly more urban and dense. A developer of more than 10,000 units in Westchester over four decades, Ginsburg has seen more market twists and turns than most, and remains sanguine about his prospects in the current market. Given his experience, maybe it’s a good lesson to take away in an uncertain time.
Enjoy.
Long Island
Long Island mortgage brokers hit hard by downturn
Long Island homes offer shelter from the storm
Go to charts: Long Island residentiaal and office statistics
Fairfield
Rents in downtown Stamford roar upwards
Feeling the pinch in Fairfield
Go to charts: Fairfield residential and office statistics
Northern New Jersey
Poor prognosis for N.J. office market
New Jersey housing market skirts razor’s edge
Go to charts: Northern New Jersey residential and office statistics
Westchester
Valhalla developer reigns in Westchester