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Trading up slows down

<i>Inability to unload starter homes in suburbs prevents sellers from moving on<br></i>

A survey of the market across the tri-state area shows that trading up is getting hard to do in some parts of the suburbs.

Sellers in the ‘burbs who are looking to move into a trade-up property (homes priced roughly in the high six- and low
seven-figure range) are finding that they’re unable to sell their starter homes. These perfectly qualified buyers are like climbers with gum on their shoes — unable to move up the housing ladder because they can’t get their equity out of their existing “starter” homes. They blame the starter buyers, who are finding it tough to get mortgages, deepening the slump from one segment of the market to the next, making trade-up homes perhaps the most recent sector to be impacted by the current economic crisis.

Elaine Demyen, a sales agent with Burgdorff Realtors in Westfield, NJ, said a slump is gripping trade-up homes in the Garden State because of the trouble buyers for starter homes are having obtaining mortgages. But in addition, she said, sellers of starter homes are pricing them too high and the properties are languishing on the market. Further complicating deals:
Buyers are putting more contingencies into contracts for high six- and low seven-figure homes.

Wall Street job losses and jobs migrating out of New Jersey are contributing to the “sluggish sales pace” for trade-up homes in that state, said Jeff Otteau, president of the Otteau Valuation Group and author of a New Jersey market report. Still, he said that the entire trade-up market has not slumped and that homes in the $600,000 to $800,000 range are selling in New Jersey.

Elizabeth Boscaino, a sales agent with Country Living Associates in Wilton, Conn., said homes in the high six- and low seven-figure range there, however, have been selling slower because her clients can’t unload their own homes fast enough. Buyers are having trouble scraping together down payments, leaving Bosciano’s clients unable to trade up to a higher-priced home.

On Long Island, Katy Anastasio of Anastasio Realtors in Huntingon said many buyers have been holding off on moving up to larger digs because they are having trouble selling their starter homes. Anastasio said homes from $600,000 to $800,000 are slow to sell, while homes priced from $1 to $2 million are selling easier on Long Island.

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The difference here? Anastasio said buyers who are looking to spend over $1 million don’t necessarily have to wait to sell another home first.

In Westchester, Gil Mercurio, president of the Westchester County Board of Realtors, said that the county has seen a 28 percent decrease in sales in recent months, with the slump hitting all price ranges. Homes in the high six- and low seven-figure range have been the last to be hurt because this is “a stronger market,” he said. “The people with economic means are the last to be affected by the economy.”

Matt Vanacoro, a broker with Coldwell Banker in Croton-on-Hudson, said sales are going well in Westchester for high six-figure homes. He’s seen buyers who have been able to easily trade up to these homes or purchase from outside the region, thanks in part to some price reductions, making them easier to move.

Despite the anecdotal Fairfield County example above, in general, communities like the leafy Westchester ‘burbs, where the trade-up price range is considered closer to the median than the high end, are doing better.

According to Miller Samuel’s second-quarter report on Long Island for brokerage Prudential Douglas Elliman, which included data for Queens, sales were down 5.3 percent compared to the year-ago quarter. Suffolk’s median price decreased 0.6 percent, to $396,550. Prices, meanwhile, were flat in Nassau, with a second-quarter median price of $485,000, the same as last year.

However, Mark Laffey, the principal of Century 21 Laffey Associates on Long Island, said the tony North Shore has not seen a slump. While some properties have sold slower than expected, he has seen several properties come in over the asking price, including a Great Neck Estates home that sold for 2 percent over the $1.99 million asking price. He also noted that a home in Oyster Bay priced in the mid-$900,000 range sold quickly.

Demyen said there’s a trend in buyers looking to trade up to older homes and benefit from lower property taxes. She said a Victorian home in the high six-figure price range in Cranford sold quickly. That house sits around the corner from another listing, a 1980s home priced at $979,500, which has been on the market for over a year, despite several price cuts over that period.

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