Jan

28

Where Do Mortgage Rates Want To Go?

Filed Under Buyers, Sellers, Sellers & Buyers | 1 Comment

It’s no secret that mortgage rates are low right now. Just about every buyer I talk to knows that rates are low. But it seems that most are not aware that they are historically low. I think many people, especially Long Island homeowners, firmly believe in the saying, “What goes up…must come down”.
Well for the interest rates, maybe buyers should be watchful for the opposite when it comes to the interest rates.

This slide shows us that the trend during the last year, was for interest rates to be quite volatile. Whereas in the past, mortgage rates generally rose over a three month period, during 2008, rates were jumping up over a point in just 5 weeks. And even now, from week to week, it seems on a Monday, the rates spike to 5.4%, then slowly go back down.

My question is, what happens if the rates don’t go back down? Now I’ve gone over the whole “it costs a lot more for a mortgage at 7% than it does at 5%” thing and I’m not doing it here again.

Now this graph is probably the most interesting you’re going to get on the internet…anywhere! Statistics was never my bag, but when you look at them and step back, you really can see the big picture. Rates in 2008 were going up. And they went up until the government stepped in, for better or for worse, and implemented a “bail out” of Fannie and Freddie Mac.

Then shortly thereafter, as mortgage rates went up rather swiftly, the gigantic bail out occured and rates went back down. So where does that leave us?

With another “bail out” of sorts coming, in the form of a “stimulus” package from the federal government, it appears like for now, the rates will remain low. However, inflation is something that does not mold well for low mortgage interest rates. And there’s not a whole lot the government can do to change the natural course of the financial markets.

Without government intervention, at least from where I’m sitting and writing this article, it sure seems like rates want to go…up.

Jan

19

Long Island Real Estate Market: Is It A Buyers Market?

Filed Under Buyers | 2 Comments

Throughout the Long Island real estate market, I continually run into the question, “Is it a buyers market?” Let’s take a look at some information which will enable us to gauge where the market is right now. Then you, as the reader, can come up with your own conclusion.

The median household income shows us the percentage of household income used to pay a mortgage. Note that from 1982 to 2007, the average percentage of income spent on a mortgage was approximately 23%, according to Credit Suisse. Currently, due to a reduction in prices and a steady increase in overall income for the average household, less than 17% is used towards paying a mortgage. So less money is being used to pay the mortgage for the average household.

When people talk about a “Return On Investment”, they look at the return of cash or equity back in their pocket, after having invested a certain amount. For this chart, assume a $100,000 investment. If, on January 1, 2000, you invested $100,000 in the Dow, you would have lost 19.8% or $19,800 as of December 31, 2008.
Look at the Nasdaq! If you invested that $100,000 in the Nasdaq, your portfolio would have lost 59.9%…or $59,900. Ouch!
Now, if you took that money and purchased a home, even after the last 2 years of a down market, you would have an actual profit of 90.1% or $90,100, here on Long Island. And with real estate, please keep in mind that you wouldn’t need to invest the total $100,000 to purchase a $100,000 home. You would use a mortgage to leverage your purchase, keeping money in your pocket – so, assuming you used 10% of that money ($10,000) to purchase a $100,000 home in January of 2000, your return on investment would be 900% (the beauty of buying real estate).
And now if we talk about interest rates being at an all-time low, right now, the savings alone on a good, low interest rate is very advantageous.

A $250,000 loan has a payment of $1,663.26 per month for 360 months. The total interest for this loan is $348,769.07.

A $250,000 loan has a payment of $1,580.17 per month for 360 months. The total interest for this loan is $318,861.58.

A $250,000 loan has a payment of $1,498.88 per month for 360 months. The total interest for this loan is $289,593.34.

A $250,000 loan has a payment of $1,342.05 per month for 360 months. The total interest for this loan is $233,141.28.

Interest rates currently are at an all-time low.

Finally, I will leave you with a quote from the famous financial adviser on CNBC, Suzie Orman, and what she said on Oprah recently.

If you have any further questions about the market, please feel free to leave a comment or call me at 1-877-765-3123, Ext. 51.

Jan

14

Client Testimonial: Christian & Marcella

Filed Under Sellers | Comments Off

Click Here To View The Email

Details:
Asking Price: $339,000
Sold Price: $340,000
Days On Market: 96

Thanks Christian. It was an absolute pleasure selling your home and I really appreciate the kind words. Thanks again.

If you want to sell your home, please call 877-765-3123, Ext. 51

Jan

10

Long Island House Prices: Home Pricing Update, January 2009

Filed Under Foreclosure Info, Sellers | 3 Comments

Long Island house prices are down 14.7 percent for 2008

I am going to take you through a lot of information in this article. The purpose of this article is to lay it all out for you in plain english and simple graphs. That 14.7% figure is directly from Multiple Listing Service data. It is Island-wide, not nation-wide.

Long Island foreclosures are rising.

How are foreclosures affecting the the Long Island real estate market? The foreclosures are setting the market value…because there’s so many of them!

Why would a buyer pay 335k when they can buy the same house for 280k?

This slide shows the difference between asking prices and sales prices. That $92,000 difference is directly being affected by the amount of foreclosures throughout each town.

So I am going to assume that some of you think your town isn’t effected by foreclosures.

I have written multiple articles about many towns throughout Long Island that have been effected by foreclosures. This is just a sample of towns throughout different areas. If you want numbers on your area specifically, call me or leave a comment.

So let’s talk about pricing.

If you’ve read my previous articles about house prices, you’ve heard about me talking about supply vs. demand and months of supply. With over 34,000 homes for sale and only 1,700 sales, that equals out to about 20 months of supply. That means it would take almost two years to sell off all the current homes for sale, without taking on any new homes to the market.

Feng shui not going to get you $40,000 more for the house. It’s all about pricing effectively to begin with. Marketing techniques and effective home enhancements help to seperate a home that shows poorly and a home that shows great.

So where are prices going and what does the future hold? The Case Shiller index is considered the best source for accurate real estate data. Robert Shiller is an American economist, academic, and best-selling author. He has been a research associate of the National Bureau of Economic Research (NBER) since 1980. He is the founder and chief economist of the investment management firm MacroMarkets LLC and is ranked among the top 100 economists of the world.

Again, one of the main items that supports this outlook is the months of supply.

If found this map to be an amazing snapshot at real hard facts. The good news, the map is 6 months old. And the Long Island portion of it is down now to 19.7 months according to the Multiple Listing Service of Long Island.

So if you are thinking of waiting until Spring…or next Spring…or next Spring (by the way that’s 2012), at the very least, I suggest you call me so that I might share more information with you about the market and talk about what value Coldwell Banker brings to the table in order to help a great agent like me sell your home in this tough market. I look forward to hearing from you (877-765-3123, ext. 51).

Jan

5

Foreclosured Homes: Are They Really A Good Buy?

Filed Under Buyers, Foreclosure Info | Comments Off

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Time and time again, I have people calling me or emailing me about foreclosed homes. I reply to alot of posts on trulia.com, where home buyers and sellers can ask questions about real estate and I find alot of people asking about foreclosures. So what’s all the hub-bub about anyhow? Are foreclosed homes a good buy or not?

I’ll provide an example. In Deer Park, there is a very nice colonial, priced at $319,000. It is a foreclosure, which means that it is bank-owned. Please note that a foreclosure is an “as-is” sale, where the bank is making no representations and is not going to do anything to rectify any problems with the property, whatsoever.

Now this nice colonial for $319,000 compares with other colonials in the area and they are priced in the upper $380,000 to $450,000. That’s a big difference.

But let’s take a closer look. This is where I like to really help potential buyers get the full picture. Now, at $319,000, this house, without getting into too many details, needs about $40,000 worth of work…that we can see. This doesn’t include any c/o (certificate of occupancy) issues or unseen problems with plumbing or heating systems.

If the asking price is $319,000 and we assume that we can purchase the property at $300,000, with the additional $40,000, plus another $15,000 just to be safe, this would put the total cost at $355,000. Since we assumed a $19,000 negotiable range on this foreclosure, lets apply that to a “normal” house for sale at $380,000. So a “normal” colonial, with only minor updates needed, would cost $361,000, assuming the negotiable price range of $19,000 (same as the foreclosure).

That’s a difference of $6000.

I am not trying to discourage any buyers from considering a foreclosure purchase. Not at all. However, the majority of foreclosure listings are still priced along with the rest of the market. When all is said and done, a foreclosure may not be any different from your average regular listing.

A number of issues should be understood by any buyer who considers purchasing a foreclosed property. Should you have any questions, please feel free to leave a comment or contact me directly at 631.831.9048.

Jan

28

Where Do Mortgage Rates Want To Go?

Jan

19

Long Island Real Estate Market: Is It A Buyers Market?

Jan

14

Client Testimonial: Christian & Marcella

Jan

10

Long Island House Prices: Home Pricing Update, January 2009

Jan

5

Foreclosured Homes: Are They Really A Good Buy?

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