With white tin ceilings, original woodwork, bay windows, and a $699,000 price tag, the two-bedroom apartment at 719 Carroll St. in Brooklyn would have been snatched up in a New York minute a couple of years ago.
Instead, it’s been on the market for more than two months. On a recent spring weekend 14 buyers came through, and still no bids.
“We’re in the early stages of the search,” said Joanna Brett, 33, as she checked out the apartment with Sarah Madigan. “We’ve been looking on and off for six months.”
Welcome to the spring selling season.
The number of house hunters out this spring is an encouraging sign that the real estate market is beginning to turn around. There’s just one problem — a lot of them are in no hurry to buy, according to interviews with dozens of shoppers at open houses last weekend.
The market’s turning point will be tough to predict, because it will be gradual and obscured by conflicting signs like recent housing reports that showed sales of previously occupied homes fell 3 percent from February to March, while new home sales seemed to have bottomed out.
Even more puzzling for homebuyers, economists expect sales volumes to recover at least six months before home prices stabilize.
“Prices will continue to fall sharply this spring and summer and will stabilize at year’s end,” said Mark Zandi, chief economist for Moody’s Economy.com.
In March, the median price for a new home dropped 12 percent from a year ago to $201,400, and the price tag for a previously owned home also fell 12 percent to $168,200.
The real estate crisis, fueled by reckless lending and borrowing from 2001 through 2006, triggered not only the U.S. recession but also a global financial meltdown. And the nascent signs of recovery in the housing market could be short-lived if employers continue to lay off staff in bulk.
The speed of real estate recovery also varies by region. Since February, sales volumes have been trending upward at different rates in 50 major metro areas tracked in The Associated Press-Re/Max Monthly Housing Report. The report includes transactions from all real estate agents in the metro areas, regardless of company affiliation.
Compared with March of last year, sales are only up in 10 cities — all of them saturated with deeply discounted foreclosures. In San Diego, Los Angeles, Phoenix, Las Vegas, Miami and Orlando, Fla., for example, sales volumes are up at least 50 percent over last year.
“A quarter of the purchases this year in Vegas have been cash purchases, so that’s crazy,” said Craig Stott, a real estate agent with Coldwell Banker Premier Realty. “You have a lot of investors back in the market.”
Home values in Sin City have cratered by 50 percent since their peak. And that has made buyers like Erik Sandu cautious.
“I’m not sure that we’ve hit (bottom) yet,” Sandu, a 37-year-old advertising executive, said while checking out a $525,000 five-bedroom house in Las Vegas.
In a few markets around the country, sales are still deteriorating. Detroit and Cleveland, Ohio, where there is an exodus of unemployed auto workers, are among them.
Home sales also reversed course last month in Fargo, N.D., where sandbags were taller than for-sale signs after the Red River busted over its banks.
For prospective homebuyers, who are weighing what is often the biggest financial decision of their lives, the decision to buy this spring can be a sleep-wrecker.
In the yes-column: Many can now get the lowest mortgage rates they’ve ever seen, an $8,000 tax credit for first-time buyers, and huge discounts on foreclosed or must-sell properties.
In the no-column: Record foreclosures are still inundating many markets and driving home prices down, at the same time employers are handing out pink slips by the thousands, making home shoppers nervous.
The majority of prospective homebuyers interviewed at open houses last weekend were like Amy Borgognoni and Seth Cuni — in no hurry to make an offer.
The couple in Raleigh, N.C., is looking to buy a home after their wedding in the fall. They toured a $549,000 four-bedroom home near downtown.
“We’re just browsing for now,” said Borgognoni, 33. “We’ll do one stressful thing at a time.”
The agent showing the house, Graham Young of Prudential Realty, said, “We’ve had some people who have shown some serious interest, but they just haven’t made an offer.”
There are, of course, real estate shoppers who are now ready to go all the way.
Mark and Linda Fussell have been renting in New York for 10 months after moving from Austin, Texas, where they owned a home. The couple want to buy before their lease expires in July.
When interviewed last Sunday, they had visited seven open houses already and had three more to go. They found the two-bedroom rowhouse apartment with original woodwork, tin ceilings and a private deck “a pleasant surprise” for $699,000.
“We’re aggressively looking,” said Linda Fussell, 43, a teacher at the United Nations. “We want to make a decision no matter what.”
But while foot traffic at open houses — especially in foreclosures and other must-sell homes — is up from the winter doldrums, hesitation still reigns.
“We’re just driving around, just starting the process,” said Victor De Rossi, 33, a renter in Miami. “If I don’t find the right house, we’ll just rent another year.”
If he buys he will qualify for the tax credit for first-time homeowners, but he said that won’t sway his decision.
Suzanne Allred, a Salt Lake City real estate agent, said it’s hard to gauge the effect of the tax credit when it comes to motivating buyers, but she thinks “it’s playing a part.”
The National Association of Realtors said Thursday that first-time homebuyers snapped up half of all homes sold last month.
Allred blamed the weak foot traffic last Sunday to spring weather and the Utah Jazz playoff game happening at the same time. The 2,300-square-foot house with designer colors and French doors she was showing was listed for $485,000.
“It’s not the same market it was two years ago when this house would have sold in about two seconds,” she said.
Standing on the concrete stoop with the sun in her face and a plate of barely touched cookies just inside, Allred figures the market will rebound given time and patience.
“I’m hopeful,” she said. “Everything’s just taking longer than it used to.”
Copyright 2009 The Associated Press