Long Island Real Estate Market: Prices Are Dropping?

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I recently sat with a homeowner to discuss the fair market value of their home and to talk with them about the Long Island real estate market. We sat to talk and started talking about the market. She had lived in her home for 35 years and was curious about selling.
As we talked, I showed her all the information that I normally review. This information contains the latest insights from experts in the real estate industry as well as my expert analysis of the Long Island market.
Halfway through our discussion, she said, “Oh, so prices are dropping?”
This interaction helped me realize that I, and my colleagues in the real estate business, have our work cut out for us. There are a number of homeowners out there that just do not pay any attention to what’s happening. And there are some that do listen and know a little, but still think Spring will bring higher prices.

With nearly a 28% drop in prices since 2006, Long Island real estate [NEWSFLASH] prices are dropping. This graph shows just how different the Long Island real estate market is today as opposed to the 1990’s. I recently had a discussion with an investor in Babylon who told me, “We’ve been through this before in the 90’s. We’ll ‘bounce’ back.” Well this graph breaks down both the 90’s and now and what you see is that long line going down…we’re over 200% worse off now than we ever were in terms of lost equity/value. The depreciative numbers are staggering.
The current inventory, as of February, 2009, for homes available for sale on Long Island was 32,746 homes for sale. As for demand (buyers), 2486 closings ocurred in February, with Suffolk county seeing the most sales at 905 units sold according to the Multiple Listing Service. And remember, those closings are homes that went into contract most likely in November/December, 2008 and some in January of 2009. Click here for more information on Inventory and how it’s affecting price.

These are numbers you can’t reason with and certainly can’t rely on and support the idea that, Spring will be bring higher prices. Those days are gone. What we saw last year is that Spring helps to stabalize prices somewhat from falling and of course, we see more units go into contract during Spring than at any other time.
But again, prices are dropping and have been for nearly three years. Check out this article I wrote in 2007 about the real estate market. You be the judge of whether or not I have my finger on the pulse of Long Island real estate.
So again - why is it a good time to sell?
Well, it’s not. That’s obvious. I won’t lie to you. But, it is a good time to sell if you really want to and if you’re life would be better off if you did because prices will continue to drop, just read my articles on unemployment, price depreciation, and foreclosures. Selling now will net you the money you need to move…on with your life. Wait and you will see another 12 to 20 percent of your equity evaporate. This is not my opinion or “gut instinct” either. See the expert opinions within my articles.
If you want to talk more about the real estate market, please feel free to contact me at 631-587-1700, ext. 51. Buyers reading this article, remember, real estate is a long term investment and realize you can’t time the bottom perfectly. Buying now will net you great returns 5 to 7 years from now (most likely) just playing the averages. It’s a fantastic time to buy. Price and interest rates, as of today, are extraordinary! And sellers, you should be considering the advantage of cashing in now on this magnificant opportunity to sell and buy using the low interest rates to attract buyers to your home and also have the advantage of buying with a great low interest rate!

Mar

13

Option ARM Mortgage Defaults Hitting Long Island In 2009

Filed Under Foreclosure Info, Sellers | 1 Comment

For the past 3 years, we’ve heard about mortgage defaults and lots of people talking about the “subprime loan crisis” but Option ARM mortgage defaults will shortly become the unfortunate talk of the town. Option Adjustable Rate Mortgages are mortgages that reset after a specific time to a capped mortgage rate and they adjust with market pricing.
Watch the video to get a better insight into these and similiar loans.

Now if you watched the video, you’ll get a sense of doomsday. Others that I’ve talked to about the next wave of mortgage defaults and foreclosures say the government will solve the “problem” by mandating massive loan modifications and just buying more banks.
Let’s take a look at some information first before we say the government can solve the problem.

If you look closely, you’ll see that the subprime mortgage crisis is “behind us”, although we’re still feeling the pinch from this because many of those borrowers have their homes on the market as a short sale or have already foreclosed. However, looking forward, you’ll notice a gigantic increase beginning halfway through 2009 and through 2011, that Option ARM loans and Alt A loans will see their resets begin to occur. This means those homes (many are already behind on their mortgages) will see an increase of their mortgage payments (that they can’t afford now).
The amount of these loans that were written are astounding as well. Option ARM’s make up nearly 18% of every mortgage in America (that’s nearly 2 out of every 10 household). If that doesn’t make you scratch your head and say, “Hmm”, you’re either brain dead, simply really don’t understand (call me), or you don’t care. And to get to the point of the title of this article, while I don’t have statistical data as of yet, it’s a very well-known fact that “a ton” of these types of loans were written here on Long Island. That’s where a lot of people, made a lot of money.
When you think about 50% of these loans being unable to be paid, that’s alot of loans in default. And to touch on the point about the government “saving the ‘victimized’ people from losing their homes”, who’s to say that after the government “saves” them, that they’ll continue to pay the mortgage or maybe people who are paying their mortgage will scratch their head and say, “Why am I paying my mortgage when I can be ’saved’?”
And think about this - if the government helps people to restructure their loans, eliminate portions of outstanding balances, and extends loans to…100 year fixed, all that money that is tied up in these homes is essentially “dead money”. The value of these assets to banks will be minimal.
At the end of the day, the problem is, many of these people don’t belong in homes, they belong in apartments or their parent’s homes. It’s unfortunate that this has happened, but unlike some politicians, the “dream of homeownership” is not dead and will never be dead, it just means, you’ve got to save up, work hard and earn it, not lie on a mortgage application.
The problem is…I could go off on a tangent here about state, federal and local taxation, but that’s another story. What I will do is leave you with a unique comment by my uncle who I spoke with about my website.
My uncle recently told me he visited my website. He said to me, “Tom, why do you have all this ‘negative’ information on your website? Do you think that’s going to ‘get people to list’ with you?” My response was simple. I told him, as I’ll tell my readers, the purpose of these articles and the information is here because it’s what I hear and read, and I’m going to share it - straight up - with my customers, clients and casual website visitors.
The other thing I told my uncle was, “The message of my website is for homeowners who really want to sell and still take advantage of unprecedented real estate appreciation should call me immediately. Otherwise, watch their home values quite possibly drop back to 2003 levels and then ride it out over the next five to ten years. It’s their choice.”
Unprecedented Real Estate Appreciation - click there to get a feel for how “lucky” you still are as a Long Island homeowner who bought at or prior to Januar 1, 2000.