Saturday, October 25, 2008

Economy Slows Real Estate Sales

By Joseph Kellard

Developer Jan Burman expressed cautious optimism about the Long Beach real estate market after Congress approved a $700 billion bailout bill last week.

The president of Engel Burman Group, a Garden City-based developer of properties from Montreal to Miami, is in the midst of building the Aqua, an eight-story, 36-unit luxury condominium complex overlooking the ocean on Shore Road. So far, Burman has sold six units, including two penthouses that went about $3 million each.

Despite the faltering economy, interest in the Aqua has been “pretty good,” Burman said, particularly among Manhattanites seeking beachfront property closer than the Hamptons, as well as retired homeowners from the North Shore, Five Towns and the boroughs of New York City. Next month Burman plans to display the development’s sales model — featuring units that range in size from 1,730 to 2,400 square feet and start at $1.3 million — and he believes he will have the building fully occupied within a year to 18 months.

“The hope is that once this economic crisis gets resolved, the mortgage money will open up,” Burman said, “because a lot of people who would like to move have to sell their first house to buy the second house, and they can’t sell the house unless there’s some way to get mortgages.”

Like Burman, Long Beach real estate agents who spoke with the Herald last week said the city’s real estate market remains generally stable, but some confessed to uncertainty.

“The Realtors are definitely concerned that they are going to lose buyers,” said Karen Adamo of Century 21 Petrey in the West End. “... The buyers are going to have to be what I would call super-qualified: very good credit, a good percent down and their closing costs.”

Joe Ponte, an agent at Prudential Douglas Elliman on West Park Avenue and a former director of the South Shore Chapter of the Long Island Board of Realtors, called Burman’s 18-month forecast a safety zone. “In 18 months the whole world can change,” Ponte said. “But if I had to predict, the whole market should be robust in that time, because everything should be straightened out within six months to a year.”

Though the mortgage crisis remains headline news, New York state’s foreclosure rate, as of August, ranked 33rd among the 50 states, according to RealtyTrac, an online site listing available foreclosures. Adamo said that while some areas of Nassau County have seen many foreclosures, such as Baldwin and Freeport, the South Shore is otherwise “not so bad,” and on Long Beach island “it’s not terrible” — though those words hardly inspire confidence.

Today, Long Beach island homes are on the market much longer — an average of about six months — before they sell, most for between $450,000 and $699,000. Ponte said the trend is that people who bought homes before 1980 are holding on to them.

“They’re retirees who find there’s no reason to sell, because they’re all going to relocate to Florida and they’re waiting for a better day,” he said. “They want top dollar.”

Although housing prices have dipped about 6 percent since 2007 in Long Beach, real estate agents are finding that sales of lower-priced condos — and particularly co-ops — are on the rise. “What is not selling in Long Beach are homes, but what are holding their own are condos and co-ops, especially on the ocean,” said Joyce Coletti of Prudential Douglas Elliman.

Many lower-priced condos and co-ops — studios and one-bedrooms — are selling in the $275,000 to $400,000 range, mostly to singles and young couples. “They’re selling because they’re lower than buying a house,” Adamo said.

The Windward, at 251-255 W. Broadway, between Laurelton and Lafayette boulevards, is a newly renovated, less-costly co-op development. The three-story building has 29 units, either studios (400 square feet) or one-bedrooms (800 square feet), that sell for $219,000 to $400,000, Coletti said. She has sold 11 of the pet-friendly units since they were first offered in July. “Really, if someone is looking for a place just to hang their hat for the summer, this is perfect,” she said.

Meanwhile, agents say that higher-end condos aren’t selling as well as their lower-priced counterparts. A case in point is the Riverside, at 125 E. Broadway, between Riverside and Long Beach boulevards.

According to a few agents, the 50-unit Riverside was unable to show a high enough percentage of sales for owner David Shokrian to close on the building, and he has started to put most of the units on the market for rent. Shokrian declined to comment.

Ponte attributed part of the slower sales in high-end buildings to once-willing buyers with $300,000 to $500,000 nest eggs who were wiped out in the Wall Street-mortgage meltdown.

“That money was their money to buy a home or condo,” Ponte said. Ponte compared the Riverside to the Avalon Towers, at 10 W. Broadway, which was built in 1991 as a condo complex but had to turn to rentals when the economy teetered on recession.

“This is history and economics repeating itself almost 20 years later: overbuilding in Long Beach and they couldn’t sell anything,” he said. “They were building all these condos in the late 1980s and there was a boom and then the market fell out.”

Nevertheless, Ponte and other real estate agents believe that despite the present difficulties in the local market, Long Beach remains an attractive locale for many people looking to move. The agents note that the city is rare among Long Island communities not only because of its beachfront property, but also because it has a vibrant downtown with many restaurants and shops, as well as convenient transportation.

“It is still the hot place to move,” Adamo said. “People on the North Shore used to look down on Long Beach, and now they’re selling their big homes and downsizing because they want to be directly on the ocean, and this is what they can afford.”

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