In mid-2007 the median home sale price in Nassau County was $510,000. Today it is $395,000, a decrease in median value of 23 percent. Include inflation and the median sale price is down 33 percent in less than four years – the largest price decline in the history of suburban Nassau County. Currently, there is no end to this inflation adjusted price decline on the horizon.
The housing picture remains distressed due to the large number of homes for sale, the shadow inventory of homes previously on the market and withdrawn or not put on the market because of negative equity situations, and the thousands of homes in foreclosure or soon to be in foreclosure due to government moratoriums and ill-conceived stop gap measures. The commercial real estate market is no better.
There are a near record number of homes for sale in Nassau County. Demographic pressures of the retiring baby boom generation are fostering a need to “down-size.” At the same time younger generation family formation and their ability to obtain mortgages is under great pressure as the unemployment rate rises to levels in Nassau County not seen in twenty-years. It could take several years to clear the inventory that is on the market right now. This will put continued downward pressure on home prices.
The shadow inventory of homes continues to grow as homeowners are unable to price their homes to cover paying off what they owe on them. This is also the case in the commercial real estate market. Many in this situation will be forced into “short sales” by accepting a price lower than what they owe and realize their “negative equity” paper losses. Most of these homeowners will become renters putting further downward pressure on home sale prices as another segment of potential buyers is sidelined indefinitely.
The record number of homes in foreclosure, homes near foreclosure, and homeowners substantially behind in mortgage payments has been exacerbated by government moratoriums and ill-conceived “programs” to prevent foreclosures. The foreclosure problem and the government intervention will significantly extend the time until we see a housing recovery. Banks are starting to take back more distressed properties, at substantial losses, to try to clear their balance sheets. But banks have severely curtailed the pool of qualified mortgage borrowers as they revert back to normal credit requirements. The continued large pool of foreclosed homes and strict lending requirements will put continued and considerable downward pressure on home prices for longer than anticipated.
The housing sale price situation in Nassau County is under significant duress due to factors within the housing market itself and negative economic trends and indicators. The large number of homes for sale, the large shadow inventory, and the large number of homes in foreclosure are a recipe for an extended housing price slump. Add in gasoline prices up 33% in six months, food prices up 18 percent in one year, ever higher school property taxes, rising interest rates, and a ruinous national economic policy, and you have a housing market inflation adjusted price slump that will continue for the next seven to ten years.
Edward W. Powers, New Hyde Park
