People who follow the ebbs and flows of real estate sales will know that the luxury home market has been suffering. Those who have a high-end home to sell know this in their gut. That suffering hits them personally.

Here in Croton-on-Hudson, the picture is especially stark. As of early November, a month into the fourth quarter, Croton has a whopping 21 houses for sale in the million-dollar range*. Yet the total number of million-dollar houses that have sold so far this year is just four, one in February, one in April, two more in October. With just one other recently in contract, chances are slim of another closing in 2009. At that rate, we have a five-year supply of luxury homes for sale – provided no more come on the market.

Recent reports have noted an up-tick in sales activity that might portend a long-awaited turnaround in real estate. But that good news is offset by the fact that, while houses are selling in greater number, prices continue to decline. The freeze at the high end accentuates the overall drop in prices. Most of the sales these days are concentrated at the low end, spurred on by the federal stimulus program that offers substantial tax credits to first-time home buyers in 2009. But without sales of costlier homes to balance the cheaper home sales, both the average and the median home prices get driven down.

Croton has always had its sprinkling of luxury homes – up in Teatown, off Mount Airy, out the Post Rd., overlooking the Hudson. Still, sales of homes for over a million dollars used to be a rarity in Croton, limited to the occasional estate property or exceptionally large or luxurious house. That all began to change in the late 1990s – just yesterday, it seems – as builders started feeding a hungry market with the new big-box colonials for the first time locally. The Arrowcrest subdivision off the Albany Post Rd. was the biggest development of these houses, but prices there initially didn’t approach $1 million. One Indian Summer Drive, the 5,000 sq. ft., 5-bedroom model for the development with Hudson River views and all the bells and whistles, sold in 1999 for only $753,000.

By the turn of the century, however, the market heated up enough to drive prices for high-end houses into seven figures. In 2000 an Arrowcrest house, one of the biggest in the development, sold for the first time for over $1 million. Two other properties, both older estates, also broke the million-dollar barrier that year. In 2001, four houses sold that had listed at over a million, then eight in 2002 and eleven in 2003. By 2006, that same model Arrowcrest house, the one that sold for $753,000 in 1999, was being offered for sale at $1,599,000! From 2002 through 2008, an average of eight houses a year, the majority of them newer construction, sold in the million dollar-plus range.

Then the bottom fell out. Or more precisely, since the subject is luxury homes, the top fell off. By the third quarter of 2008 the real estate bubble had burst nationally and the collapse of credit and the meltdown in the financial markets had hit the fan. The housing market had been softening and then slumping for a year already, but now it went into virtual hibernation. Buyers didn’t want to purchase in a falling market, and sellers didn’t want to take the losses the market seemed to demand. The Wall Street bonuses that traditionally fueled high-end sales after the holidays just never materialized.

Luxury home sales in Croton had an above-average year in 2008, when ten houses were sold at a million dollars or more. But 28 other such houses on the market in 2008 failed to sell; 14 of these were either withdrawn or expired without selling, the other 14 were carried over as still active into 2009. It’s even worse in 2009. Besides the 21 active houses, 10 others have already been taken off the market without selling, and a high number of the 21 remaining actives will likely be withdrawn or carried over into 2010.

What can be done? How can these houses get sold? Well, nothing can be done by sellers (or their agents) to change a bad market. They can’t persuade reluctant buyers to come in and start scooping up what are some pretty amazing bargains. But there are ways to differentiate a house from the competition.

Pricing is one answer. A Croton luxury home that didn’t sell at $1.4 or $1.3 million in 2008 was withdrawn long enough to update the kitchen and make other improvements. It was then returned to the market this year at $925,000, was in contract a few months later, and just closed at $910,000. Ouch! And, Hooray! The sellers were able to approach selling their home as a hard-nosed business proposition. They decided to bite the bullet and get on with their lives.

But pricing isn’t the only answer. Sometimes, after a series of price drops, it isn’t even the right answer. A house can be too big or too sumptuous or too unusual for buyers in its price range. The better solution might be to wait (if possible) for the right buyer, the one who appreciates the house and is willing to pay reasonably for it. Or wait (if possible) for the market to come back.

In the meantime, the suffering is bound to continue for luxury home owners, probably for the next year, maybe more. There is a sense among realtors of a pent-up demand among potential buyers, who have been putting their plans on hold but may be drawn back into the market by the undeniable bargains on offer. But that may be wishful thinking. Indeed, what buyers there are seem to be more intent on getting the deal of their dreams than the house of their dreams. Pretty cold comfort for sellers.

*I’m counting as million-dollar homes any house that was initially marketed at $990,000 and above, regardless of selling price or final asking price.

Posted By: Bruce Dollar

Just a few years ago, bidding wars were commonplace in our red-hot real estate market. Not bidding wars in the sense of a back-and-forth auction, where buyers were asked to top the latest offer until someone quit. Westchester’s more genteel approach was to give the competing buyers a deadline – “tomorrow by 5:00 p.m.” – to submit a sealed envelope with their highest and best offer. Highest in price, best in terms (how much in cash vs. mortgage, closing date, etc.).

Buyers hated this device. Basically, they had to bid blind, with no clue as to what the others might offer. I used to tell my buyers to figure out the most they could afford and the most the house was worth to them, then take the lower of the two numbers and offer that. Houses routinely sold for higher than the asking price, sometimes way higher.

Those days are so far gone, the market is so turned around, that recently I found myself contemplating a reverse bidding war: challenging two competing sellers to counter my buyers’ offer with their lowest and best. Here’s how it happened.

I was working with some high-end buyers who were looking in the Hudson River towns – Dobbs Ferry, Irvington, Tarrytown, Sleepy Hollow, Briarcliff Manor, Croton-on-Hudson. They had exhausted the available options in their price range and decided to just wait for new listings to come on the market. One house really tempted them, but price-wise it was too much of a stretch for them. A few months later, a house was listed that met all their criteria. They looked at it and, despite some minor drawbacks, they fell in love and put in an offer. The sellers countered, and while we were considering our next move, the house they had liked earlier dropped its price very close to the one they were now bidding on. What to do?

The buyers said that they liked the two houses equally well, they would be happy with either one. So it came down to price. They decided to buy whichever had a lower price. Hmm. A reverse bidding war. Give the two sellers until noon tomorrow to come up with the lowest price they would consider to sell their house.

I must confess, on some level the prospect of turning the tables on sellers was delicious. Don’t get me wrong. Nobody beats me as a champion of my seller clients. For at least two years I sold my listings at an average of more than 100% of the asking price. But in this case my clients were the buyers, and I couldn’t help feeling, on behalf of past buyers who’d been forced to jump through the highest-and-best hoop, that revenge would be sweet.

In the end, it wasn’t to be. I insisted that my buyers revisit both houses before launching our strategy (they hadn’t seen the first house for months), and when they did they had a clear preference. They signed contracts (!) by the end of the week. But in this buyer’s market it wouldn’t surprise me to hear that other buyers are pitting one seller against another in a reverse bidding war.

Posted By: Bruce Dollar

Last March I was prompted by a buyer client to analyze the relationship between asking prices and selling prices in two of the communities I cover, Briarcliff Manor and Croton-on-Hudson. A savvy Wall Streeter who followed market trends, this buyer was looking at houses in both places, and he told me flatly that he’d be a fool to pay any more than 75% of the asking price.

Sure enough, he liked a house I showed him and made an offer that took about a third, or almost 35%, off the asking price. When I told him he could not expect the seller to counter such a low-ball bid, he replied that given how the market was trending in Croton, especially for million-dollar-plus houses like this one, and given the history of this house which, although the price had come down from its original asking price, had been on the market for months at the same price, the seller should be happy with his offer.

The seller did not counter his offer.

When a realtor gets greeted with the question “How’s business?” it’s not the same as being asked “How are you?” People really want to know the answer. It’s not surprising. In a Westchester community like ours, most of us have some skin, one way or another, in the real estate game.

For this reason – and because big money is involved, and because it affects not just our personal fortune but those of our friends and neighbors – real estate is fertile ground for gossip and rumors.

Lately there has been buzz about a purported mini-surge in activity, that deals have picked up. People ask, “Is it true? Does it mean we may be coming to the end of this slumping market?”

Let’s start with what we know. Late in July, the Westchester-Putnam Multiple Listing Service (WPMLS) released its report* on residential sales for the second quarter of 2009, and it brought good news and bad. The good news was that home sales had picked up from the previous quarter. The bad news (unless you’re a buyer) was that prices continued to fall.

The rise in sales activity was substantial. Single family home sales, adjusted seasonally, showed a 19% increase over the first quarter, “the first significant break in the unrelenting decline in sales rates since the first quarter of 2007,” according to the WPMLS report.

On the pricing side, the median sale price of a single-family home in Westchester fell by 16.3% compared to 2nd-quarter sales in 2008. In the first quarter of 2009, the decline from 2008 had been 14.5%.

Unfortunately, I can not break down these county-wide figures by individual communities and get meaningful results because the volume of sales is not high enough. Croton-on-Hudson and Briarcliff Manor, for instance, each had only four sales in the first quarter of this year, too small a sample to derive valid statistics.

The problem with the numbers in the MLS report, revealing as they may be, is that they’re old. They mostly reflect sales activity from last winter. So a house that was listed in January, went into contract in February and closed in April would be counted in 2nd quarter statistics (and most home sellers today can only dream of a transaction that speedy). Similarly, a house that goes into contract in August and doesn’t close by September 30 will be reflected in 4th quarter figures, the report for which we can look forward to seeing next January!

So what’s happening right now? Real estate insiders see a softening in the hard-line positions on pricing both buyers and sellers took up earlier this year, resulting in many standoffs and few deals. Christopher Meyers, chief operating officer of Houlihan Lawrence, said recently, “I think we are now in an environment where the buyers and sellers are coming to some consensus on where values should be.” In other words, prices are coming down enough to begin to be persuasive to buyers. How far down? According to Mr. Meyers, “they are down typically by about 20% from where they were at the height of the market and at those levels they are trading again.”

Does this mean we have hit bottom? The bottom of the market, like the peak, is usually visible only through a rear-view mirror. Few thoughtful observers see the start of a turnaround in the near future. The realistic optimists hope that prices are at least stabilizing. Others, like Multiple Listing president Mark Boyland, expect prices to continue to fall this year. Bottom line: the encouraging signs of late give reason to hope but not enough reason to predict a recovery any time soon.

*Contact me at Bruce@BruceDollar.com if you would like a copy of this report. I also welcome any feedback or questions.

Posted By: Bruce Dollar

Half Moon Bay, a luxury gated community in Croton-on-Hudson, is the only purely residential condominium complex in Westchester that is directly on the Hudson River.* The setting is just north of the Croton Point peninsula, where the river broadens dramatically into Haverstraw Bay, the widest part of the Hudson at about 3½ miles across. Location.

Only 25 miles upriver from New York City, Half Moon Bay is virtually adjacent to the Croton-Harmon train station, an express stop on the MetroNorth commuter train and an easy - and gloriously scenic – 45-minute ride south along the riverbank to Grand Central. It’s walkable, but a jitney bus takes residents to and from the station during rush hours. Location.

The complex is sandwiched between two waterfront parks. Croton Point Park just south is a 500-acre county park offering year-round events and activities with facilities for camping, hiking and swimming. It is one of the best “birding” sites in Westchester, featuring regular bald eagle-watching events. Adjoining to the north, the village’s Senasqua Park has waterside picnic and recreational facilities for local residents, including the Croton Sailing School, serving both children and adults. Above Senasqua is the Croton Yacht Club, followed by a new village park that just opened in October 2008. Croton Landing Park extends the Westchester Riverwalk pedestrian walkway for another mile along the water’s edge. In the center of these great amenities lies the Half Moon Bay complex, with its own paved promenade along the shoreline. Location.

Oh, did I mention? Half Moon Bay is close enough to walk to many of the village’s key commercial establishments, including at least four of Croton’s best restaurants, the big gourmet food store, the post office, two pharmacies and many others. Location!

The Half Moon Bay complex was first developed in the late 1980s, on one of the few strips of waterside land that was not already occupied by the railroad tracks that have lined the Hudson shore since the mid-19th Century. A second phase of construction, called Discovery Cove, followed in 2004, and the complex now comprises 158 units ranging in size from 900-2600 square feet.

Resort-style amenities make residents feel like they’re on permanent vacation. The complex has two heated pools, two clubhouses, two tennis courts, new state-of-the art exercise facility, sauna, a full-time guard at the gate, and a bike path in addition to the river walk promenade. There is even access to the adjacent Half Moon Bay Marina, an award-winning 173-slip facility that enhances the maritime scenery of the area..

Purchase prices in the last two years have ranged from $360,000 for a 2-bedroom, 2-bath unit with 1160 square feet to $1,450,000 for a 2600 square-foot 3-bedroom, 3-bath unit. Naturally, prices are greatly affected by proximity to and views of the river. That million-dollar unit was the biggest model; it had two decks overlooking the water and every room had a close-up, panoramic river view. Prices for the ten units on the market in April 2009 range from $400,000 to $800,000. Twenty-seven units have sold in the last 24 months, so the turnover averages about one a month. Rentals are also available, but in smaller numbers. Finally, you can buy one of those boat slips, called dockominiums, in the Marina.

I have sold and rented repeatedly in Half Moon Bay, and have listed the only two dockominiums currently available. I would be happy to answer any questions. Bruce@BruceDollar.com

*Ichabods Landing in Sleepy Hollow, the only other condo complex that does not have train tracks between itself and the water, has residential mixed with commercial spaces.

Home buyers who are drawn to Westchester County for its proximity to the majestic Hudson River sometimes insist on a house right on the water, and are willing to pay for it. When told there are virtually no houses with direct water access they are incredulous. Thirty-five miles of shoreline from New York City to Peekskill, and the number of waterfront houses for sale is zero? How is that possible?

The explanation is quite simple: the railroad. In the 19th Century, trains offered a faster, more efficient means of transport than boats, and the shoreline, unlike the rocky hills above it, was flat. Tracks were laid in 1850, and soon attracted factories and warehouses that cemented the character of the riverfront as largely commercial and industrial.

Not that there’s any shortage of houses with great views of the river. And commuters to Manhattan get the full benefit of those Hudson Line tracks, watching the changing seasons as the river scrolls by, and those glorious sunsets on the way home. But homes on the water? Mostly ruled out.

There are a few exceptions. Condos, for instance. In the late 1980s a strip of land on the water side of the tracks in Croton-on-Hudson was reclaimed for development of Half Moon Bay, an upscale, gated condominium complex. (More about that in a future blog posting here.) Similarly, another luxury condo complex, Ichabod’s Landing, has just been constructed where the huge former General Motors assembly plant used to sit, on the water just north of the Tarrytown train station.

Farther north, just above Croton, the tracks suddenly veer inland at Crugers and don’t reappear at the water’s edge till Peekskill, leaving the river hamlets of Montrose, Verplanck and Buchanan on a peninsula free of the railroad. Most of the shoreline here is taken up by a veterans hospital, a county park, a power plant, a yacht club and some light industrial buildings. There are, however, a few tiny enclaves of mostly (but not exclusively) modest houses on the water that very occasionally come on the market. It helps to know an agent who pays attention to these areas who can alert a buyer to an upcoming opportunity.

The next best thing to actual water access is a close-up river view from just behind the tracks, and here there are usually some interesting opportunities, especially between Tarrytown and Ossining, including Sleepy Hollow, Philipse Manor and Scarborough, but also in Croton and a bit farther north. More distant river views are more plentiful, and they too will be addressed in future postings. The point for now is to have realistic expectations of houses with direct water access on the Hudson River.

For more detailed information, contact me at Bruce@BruceDollar.com.

Posted By: Bruce Dollar

Not long ago, a new client of mine told me he wanted to check me out via a virtual interview. So he googled me. How many Bruce Dollars could there be? But he gave up. “There were too many,” he said, “and they couldn’t all be you. Obviously the Houlihan Lawrence realtor was you. But then there’s the private detective named Bruce Dollar who investigated a big Madison Avenue ad agency after its top executives defected to another firm. (NY Times) There’s the Bruce Dollar who wrote a widely reprinted article about “Child Care in China.” (college course reading lists), and the one who tailed the car of a notorious Caribbean dictator’s wife in a high-speed chase on the French Riviera. (NY Times), and the one who had a private meeting in a Paris hotel room with an African president l (Amazon.com). There’s the Bruce Dollar who authored a book on Youth Participation, and a book on Youth Tutoring Youth. (Amazon.com) And the one who played a role in a so-called “secret war” between French intelligence services and the Paris-based company where Bruce Dollar was managing director. (Book chapter) Google also found a doctoral dissertation on the politics of school reform by Bruce Dollar on file at Columbia University. There’s even a Bruce Dollar who coaches football in Carlsbad, New Mexico.”

The client was right. The Bruce Dollar who sells houses for Houlihan Lawrence has never coached football in Carlsbad or anywhere else. The rest were me.

I’ve had an interesting life so far–most of it undetected by Google–and I’m still having fun. I like selling houses. It means meeting new people, figuring out the best ways to meet their needs whether it’s buying or selling, and helping them through a process that’s often fraught with challenges and unknowns. And I think my extremely varied experience has prepared me to be a good advocate, guide and problem solver for my clients.

Posted By: Bruce Dollar

Lately I’ve had buyers tell me they’ve heard that if they spend more than 10% (or 15% or even 20%) of the asking price for a house in today’s market they are not getting a good deal. This may be true in some parts of the country, but not in Westchester, at least not in my part of it. In fact, my impression has been that houses are still selling at close to the asking price, as long as the price is right. Overpriced houses tend not to sell at all. They have to lower their prices to a point where they are a good buy for the market, and then they sell fairly close to the final asking price.

To see if this impression was correct, I looked at sales figures in two of my primary markets, Briarcliff Manor and Croton-on-Hudson. Briarcliff and Croton are adjacent communities, about the same size in population and housing inventory but different demographics: in 2008, Briarcliff single-family homes sold at a median price of $942,450, while the median selling price of a house in Croton in 2008 was $520,000. I took all of the houses sold in both communities in the last six months and compared their selling prices with their final asking prices. In the period since Sept. 20, 2008, a total of 16 houses were sold in Briarcliff and 17 in Croton. In Briarcliff, the average selling price was 95.53% of the average asking price, while in Croton the selling price averaged 95.11% of the asking price. These numbers are remarkably consistent, both across the price range and across the two communities.

What lessons can we draw from this? For sellers, you need to find the correct price, the one that will attract buyers. Many sellers are reluctant to cut their price “too much,” fearing that buyers will simply low-ball their offers by the same margin they did at the higher price. But these figures suggest that the correct price will yield a selling price that is surprisingly close to asking.

For buyers, you need to adjust your expectations of what you may have to pay for the house of your choice. If a house is well priced, it is reasonable for a seller to expect to sell close to (within 95% of) the asking price. Anyone who expects to pay no more than 90% will probably be disappointed.

So how do you judge, whether you’re a buyer or seller, what the correct price is? This is where your agent comes in. It’s your realtor’s job to know the local market and to advise you when a price is right.

Posted By: Bruce Dollar