There are few individuals in residential real estate who can lay claim to having an influence on the market from Manhattan to Montauk; Dorothy “Dottie” Herman is one of them. As CEO of regional real estate powerhouse Prudential Douglas Elliman, she is afforded the unique position of having a local and a regional view of the housing market’s twists and turns.
Herman has been a player in the market since 1989, when she purchased Prudential Long Island Realty. What followed since has been steady growth, highlighted by the purchase of Douglas Elliman in Manhattan in 2003. As a result, her’s is one of the few real estate service firms that serve all of Long Island.
With that, Pulse discussed the health of the real estate market with Dottie to get her input on the year that was and the one that lies ahead.
“In 2010, it was very difficult to put deals together,” Herman explained. “In 2011, the market will closely mimic what we experienced last year.” In part, her expectations stem from the lack of a first-time homebuyer tax credit, which fueled much of the sales activity in 2010. “The high-end market did kick up a little bit and we expect to see more of that in 2011. But on the whole, it looks as though prices will remain stagnate.”
She noted that the Baby Boomers, who largely fueled the McMansion phenomena, are no longer a market factor, and those in Gen X and Y are less interested in having super-sized homes. The green movement and the crippled economy have spurred many to choose a simpler approach to solving the housing puzzle.
Given the economic malaise, 2011 will remain a buyer’s market. Herman noted the vital importance that sellers put their best foot forward in terms of presentation.
“In this market, one cannot put a house on the market without preparation,” she said. A home needs to be up to date—or at least be thoroughly prepped—before being marketed. “The buying public wants to see what a home will look like finished, not be concerned with all the work that has to be done.” This is a far cry from days when even the most dilapidated structure could spark a bidding war with the right zip code.
“If the home is tired or functionally obsolete, it will suffer in terms of price,” she explained. “It has to be clean and done. Sellers need to be competitive.”
In order to reach greener pastures, the market will have to grind through 2011 explained Herman, who noted foreclosures will remain a burden in the year ahead. To date, the influence of foreclosures has been muted despite Long Island experiencing some of the highest foreclosure rates in the state. Not wanting to inherit and then dump those homes on the market—and negatively influence pricing—banks have been working with homeowners who are underwater via short sales. “The banks don’t want to depress the market any further,” she said.
Though a buyer’s market, Herman notes it is a good time to trade up if you can. The depressed values can afford a buyer access to homes and areas that may have been too pricey during the boom. On a positive note, she does not see interest rates rising at significant levels.
And if there was a highlight in 2010, it was the Hamptons, which weathered this downturn as good as could be expected. And for those with the wherewithal, they have taken advantage and invested in the homes that would have been much more expensive in better times.