Hi Hugh. I know that the Capital District does not quite follow the national market trends, but with all the hype about the market I have some more localized questions. Do you think home prices will continue to drop in the Forest? With the several homes that you have listed lately, do you think it really is a buyer's market here, or do the state government jobs in Albany and the potential AMD plant make us immune to the drop? Thanks!

I think Luther Forest will follow the pattern of all the other nice neigborhoods of southern Saratoga County. The last buyers market I went through was in 1992-1995. During that period State Farm brought their offices to the area. Everyone thought it would be a boom for Luther Forest and it never turned into the boom people expected. I suspect similar when AMD arrives. There is still a lot of vacant land to build on and builders are just waiting. You're correct that the state employment as well as GE, Albany International, and future business like AMD will keep things stable. One look at Western NY and it's obvious. We never did see the huge growth here like in Las Vegas, Florida,& California. Therefore we won't see the huge drop like those area's are experiencing now. Actually right now the hot market is still with us in the 200K and less range. I'm seeing a trend mostly among the baby boomers (age 45-65)to downsize, less sq footage means lower taxes and lower utility costs. It's the higher priced homes (300+)that appear to be getting hit harder with this most recent slump. One of the problems I'd like to see get resolved is lower property taxes. Malta is certainly not one of the worst areas, but I see and hear people all the time and thats one of the first questions about a home they ask.

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It's the higher priced homes (300+)that appear to be getting hit harder with this most recent slump.

That's because, to keep up with the Jones ....people bought more house than they can afford ...got an ARM ...now the rates are going up and so is their mortgage ..now they foreclose or have to sell. Why did people get an ARM when a conventional mortgage was so low ? I know when i got my mortgage the broker tried to push an ARM to me ...because the rate was so low ...are consumers that stupid they don't understand simple interest and math ....now's the time to get this $300K+ house because these people have to get out from underneath it

I don't think ARMs are really the biggest problem. People with those mortgages have seen their interest rates climb to around 8%, but if they could afford their mortgage at 4%, most of those people can probably still afford their mortgage.

The bigger problem is the creative mortgages that were being pushed. These were like the .coms with no business plan. People with bad credit or not much money were getting interest only or balloon mortgages. These would be fine as long as interest rates stayed steady and property values continued to rise. Then, the people with these mortgages could sell for a big profit and use that profit to buy a house they could afford. Instead, these people are finding they have no equity, they have to refinance because the balloon time is up, and they don't qualify for the amount of money they need. This is going to hit the hardest in the extremely overpriced areas as Hugh indicated and also the second home market.

Hugh, did anyone in your circles study the effect of the recent building moratorium on home prices in Malta? That coincided with the precipitous rise in Luther Forest townhome prices, but so did the general housing boom.

Thanks, Hugh. Pretty much what I expected. I think AMD (or someone else) will end up coming to Luther Forest, and the people who are waiting to sell and make a million will be disappointed. I wish more developers would build to suit the average joe with a reasonable budget. Are there that many doctors and lawyers that can buy in these over-priced developments? We need more neighborhoods like Luther Forest.

I'm with you, UNHOLY. I can't understand why anyone would have taken an adjustable rate when interest rates were at an all time low...or ever for that matter. It's just too risky.

Interesting you brought up the question Roy about the effect on prices due to the building moratorium. I haven't seen or heard of anything about its effect till this past week. Not in regards to any Luther Forest Property. But I just listed a "Major fixer upper" home up on the Malta side of Saratoga Lake. Basically the home needs major work,including a foundation, but the value is in the land and the ability to either rehab the existing home, or use the original footprint of the home to build a new one. Therefore it's a home that needs major work but is priced at $249,900 as the value is in the land and existing structure. My guess is that a builder will purchase this property and use the existing footprint to build a new home due to the fact that it has a footprint, a double lot, and deeded dock rights. I guess with time that will show the effect of the moratorium on existing structures that need work or replacement.