Feb

29

Real Estate Market: Time To Buy (Update)

Filed Under Buyers, Mortgage Matters, Sellers, Sellers & Buyers | Leave a Comment

One of the many considerations you must make as a prospective home buyer that is the most critical is affordability. “Can we afford this? No can we really afford this?” You run through your expenses, mortgage reps tell you this, real estate agents tell you that, on paper it looks good, but at the end of the day, tally it all up and what do you have?

From personal experience, (at least in my case) you have multiple pieces of scrap paper all over the place with scribblings of expenses and income and second thoughts about whether or not, this is the time to actually buy. Especially in this market, buyers are determining the timing of their purchase and thinking to themselves, “Can I get this for less money? How low will they go? How bad is the market…really?”

Great questions to ponder among the many. However, at the end of the day, you’ve got to search for the best deal on a mortgage (if conventional financing is being sought) first and foremost. It really all starts with the financing. Your financials compared with the best financing you can possibly obtain that will allow you the flexibility to at least breathe somewhat comfortably when making your monthly payments…all of them.

There are a number of tools you can use as prospective home buyer before you even meet with a real estate agent or mortgage/bank representative. Realtor.org is a great place for people to start their information investigation. From this site, another great site is housingmarketfacts.com, which was developed by Realtor.org to assist buyers in determining the “if’s”, “how’s”, “where’s”, “who’s” and “what’s” of the real estate marketplace.

There is plenty of opportunity out there right now. As a result of several factors like builders across the country skimming back on new construction projects and the government stimulus package helping out delinquent sellers to avoid foreclosure, the market is being corrected. In a previous article entitled, Real Estate Market: Supply Vs. Demand, we looked at how the basic principles of supply and demand are impacting prices (when supply exceeds demand, prices must drop in order to bring balance to the market).

So let’s look at two key factors that are helping lower supply. The outlook for the government stimulus package appears to indicate that 370,000 homes will avoid foreclosure as a result of this plan being implemented. That’s not a massive number in comparison to the 2.2 million homes that will most likely hit the market in foreclosure, but it will certainly help inventory stay down somewhat. Additionally, new housing starts are down over 33% and permits for new construction are down over 50%.

These are two strong indicators that supply is catching up to demand. Here locally on Long Island, many builders have cut back on new housing starts and those that own land and are ready to build have pulled back on their projects until the market balances out. Home builders pulling back on new construction is a natural occurance of the market correction. Builders have to stop putting up houses every month because there’s no buyers for them.

New Construction Starts
click here to enlarge

Also pulling demand upward is the new mortgage products backed by the FHA (Federal Housing Authority). With the projected raise in loan amounts expected to be passed very soon, the amount borrowers can get, at good interest rates will end up saving home buyers more money. Plus these are government-backed loans, which lenders like because they know their loan has a very good borrower, plus the 80% of the loan amount is backed by the government. A few things need to be explained here:

1. Borrowers must go through a more stringent qualifying process in order to qualify for an FHA mortgage (this makes lenders feel better because they know they’re getting someone who most likely can afford the loan and will not default on the payments).

2. An FHA loan represents added security to lenders because if the borrower defaults and doesn’t pay, the government will give the lender up to 80% of the loan amount. This brings the risk ratio of the loan way down and the lender, any lender, feels better about making “safe” loans where they know their investment will be a good one.

Jumbo Mortgage Amounts
Click here to enlarge

So, finally, if you’re thinking about buying real estate, take into consideration that the average homeowner’s net worth is $171,000 - that’s 46 times more than the average renters, which is about $4,800.

Prices are down and interest rates are hovering around 6% for a 30 fixed mortgage. Call me if you want more information on loans, homes, rentals, investments - anything real estate. 631.587.1700, ext. 51

(c) Copyright 2008 www.tommcgiveron.com

By Tom McGiveron

Slides developed by Steve Harney Inc.

Feb

25

Real Estate Market: Energy and Foreclosures

Filed Under Mortgage Matters, Sellers & Buyers | Leave a Comment

With all the many problems we’re faced with in the real estate mortgage market, do you think we’re missing the boat on the main causes for the increase in foreclosures and families being unable to pay their mortgage? We hear quite a bit of talk from the media about the “sub prime” mortgage mess. However, all things considered, when these families entered into these loans that they “couldn’t afford”, does anyone really look at the cost of energy that has taken this country by storm over the past three years?

This is something I think many of us need to take a good look at. Why you ask? The answer will be painfully simple. In 2003, when sub-prime mortgages began to increase and take over a larger portion of market share, gas prices ranged from $1.35 to $1.72 a gallon.

Pause.

Think about this for a few more seconds. Let that sink in.

Okay. So within 4 1/2 years, the price more than doubled and is hovering right now around $3.35 a gallon here on Long Island for regular (February 2008). The price of oil in 2003 was (drum roll please)….$25 a barrel. Today, we’re hovering around $100 a barrel. That’s a 400% increase.

So let’s take another look at the family that borrowed, possibly through an adjustable sub-prime loan instrument to live the American Dream. They saw their heating costs rise 400% and the cost of gas which helps them get to work increase 100% in 3 years.

If you’re not shaking your head right now think that has nothing to do with the situation we find many homeowners in, you’re not thinking this through entirely. Any person, family, or business that sees dramatic cost increases like this, will be effected dramatically. So while we’re all sitting around bashing these “irresponsible” people who took out loans they “couldn’t afford”, let’s take a step back and re-evaluate what’s happened over the past few years. I’m all for a clean environment, but when environmental special interest groups get in the way of our government allowing for the free market to create energy resources like drilling on American soil, I say forget that!

Write your local and state officials. Let’s make this an issue for these so-called leaders to discuss the real issues facing families. No one wants to “destroy the environment”, but who’s to say that drilling for natural resources will destroy anything? And if some carrabou die because of it or have to change their migration patterns - measure this against the rising cost to families and the children (human beings) caught in the middle of homes torn apart.

(c) Copyright 2008, tommcgiveron.com

By Tom McGiveron

Feb

15

Long Island Real Estate Market: Priced Too High To Compete?

Filed Under Buyers, Sellers, Sellers & Buyers, Taxing Matters | Leave a Comment

If you were to think about the 50 states of America as 50 independent businesses, vying for buyers to purchase homes, become gainfully employed, open businesses, volunteer at local charity organizations, make families and contribute to the overall social and economic welfare of the state, one might consider Long Island as part of a declining company which is losing market share every quarter.

How? Well if we were to think of property taxation as the cost of goods (the goods being homes in the area), then we’ll see that Long Island Politicians are pricing us clear out of the market.

Think about this. If McDonald’s hamburgers cost .89 cents in West Babylon and cost $9.99 in Babylon, where are the customers going to buy their hamburger? So now let’s look at the market competition of two counties, one county in North Carolina and Suffolk County here on Long Island. In Mecklenberg County, North Carolina, the average annual taxes are about $1000. That’s not $1000 a month, that’s per year. Contrast this with Suffolk County where the average annual tax (for the sake of argument) exceeds $5000 annually, or over $400 a month.

Where is everyone going to move? Long Island or North Carolina? According to a study done by www.longislandindex.org, click here, Long Island homeowners rate the tax problem as very serious. Yet the politicians will not actually address this problem. They talk more about “affordable housing”, which translates to managing the free market and telling companies how much something can cost.

According to an article in the Suffolk Life, entitled, State Bill To Address Affordable Housing On LI, so many of the politicians talk about “creating” affordable housing. The entire article ultimately fails to address the issue - what about people who don’t want a government handout? What about the people who don’t want “affordable housing”? Take away the $1000 a month my friend pays for his taxes in Miller Place, and he and his family of four can live much better off than they currently are, struggling to pay the monthly tax bill.

I’ll be posting more on this topic along with contact information for my viewers to get in touch with their local and state government officials. We all need to come together and figure out the property tax mess we’ve become wrapped up in due to overspending and government mismanagement.

(c) Copyright 2008, www.tommcgiveron.com

By Tom McGiveron

Feb

13

Google: Foreclosures Deer Park, NY

Filed Under Deer Park Real Estate, Mortgage Matters, Sellers, Sellers & Buyers | 2 Comments

Shocked! That is the feeling I got when I simply typed in the words, “foreclosures deer park, ny” into google.com, the most popular search engine on the internet. Streets like W 22nd street (where I have a listing now), W 15th street, Glenda Drive, W 18th Street, and many more popped up. They came up as a “lis penden”, which is the initial document filed by an attorney or trustee on behalf of the foreclosing lender that starts the foreclosure process. Scary!

The other scary thing was…there was a total of 92 homes on the list. That’s 92 property owners that are in some kind of trouble with their mortgage payment. Whether you live in Deer Park, NY or not, this should be sending chills down your spine. Oh wait, you live in West Islip, NY? Try 39 homes involved in the foreclosure process. Oh you live in Babylon, NY? 18 Homes. Oh you live out east. Okay. Hampton Bays perhaps? There are 34 homes involved in some type of foreclosure process. In Mastic, NY, there are over 335 properties involved in foreclosure proceedings.

These numbers are scary. To think that in Deer Park and West Islip, there are over 120 homes in financial trouble to the point where they may become a bank owned property, thus decreasing the value of surrounding homes by more than 50% is staggering. Here is a list of some other Towns throughout Long Island that I randomly looked up:

Let’s tally all of these numbers up including Deer Park, West Islip, Babylon, Mastic, and Hampton Bays. The number is 915. Nearly 1000 homeowners in 15 Long Island towns are facing the threat of having their home foreclosed on. Now there is a good chance that most of these homes will make it through a tough time and not face the legal proceedings of being removed from their home. However, if 2 in 10 do, that’s almost 200 properties that will be vacant and destroyed. Probably a majority of these homes will be families, not investors making poor investments. That’s a lot of families in trouble. And this is only 15 towns on Long Island.

If you or someone you know needs to sell their home or is having difficulty keeping their home, call me. I will evaluate how I can help with the situation as a real estate agent. If I cannot, I can certainly help by providing people with information and contacts that can help.

(c) Copyright 2008, www.tommcgiveron.com

by Tom McGiveron

Feb

9

Real Estate Foreclosures: Solutions?

Filed Under Buyers, Sellers, Sellers & Buyers | Leave a Comment

I’m going to provide a link to inman news that features John H. Vogel, a professor of real estate at the Tuck School of Business at Dartmouth. Professor Vogel describes the housing market craze and the subsequent foreclosure challenges we find our communities facing today. With over 72,000 homes being foreclosed on in November of 2007, this is an issue that we simply cannot afford to simply ignore.

Some of the statistics are shocking.

keeping_current_matters_0108.jpg

Click here to enlarge

With a 93% increase in total filings over the previous year, it’s safe to say that this is a problem that needs to be addressed. Keep in mind that with every foreclosure that occurs in your neighborhood, the equity loss in your home will be about $10,000…per foreclosure. The national average is $5000 in instant loss of equity with a neighbhorhood foreclosure. Here on Long Island it’s double due to our higher pricing index.

Click the link below. This is the inman news interview with Professor Vogel. He discusses some points I’ve made in past articles about the real estate market and how the steepest rise in home values from 1995 to 2004 is a phenomenon that the real estate market has never witnessed, dating back to 1890, when statistics on the market began to be compiled. Here’s a link to the real estate roller coaster. If you haven’t already sat for a few minutes and seen this, click this link first before going on. This will give you an idea of what we’re facing now. So click it now and watch. Then come back and read the rest of the article.

Now does the saying, “What goes up, must come down”, ring a bell?

Click here for the link to Professor Vogel. His comments on the market and some proposed solutions may be something you want to write your local congressman about. We’re all in this together and if we want to get through this, we’re going to have to be neighbhors again and step outside and smell the coffee.

If you are facing financial difficulties at home, whatever you do, do everything you can to pay your mortgage. This will help you if/when you need to contact the bank in order to discuss your options. If you need help in negotiating with the bank on the sale of your home, please do not hesitate to contact me. Paul Musso and I specialize in short sale negotiations and we also work with investors who may purchase your home, straight up with no funny business like take ownership of your home to “help” you clear up your credit. Whatever you do, do not under any circumstances get involved with anyone or in any deal without having consulted a real estate attorney.

For a free market analysis of your home’s value, please call 631-587-1700, ext. 51 or you can call toll free, 1-877-SOLD-123 and ask for me.

(c) Copyright 2008, www.tommcgiveron.com

By Tom McGiveron