Jul

31

Long Island Real Estate Market: Attention Homeowners

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In the Long Island real estate market, we continue to see foreclosures rising - steady and surely. To piggy-back my last article, I visited www.mortgagenewsdaily.com and viewed this clip from bloomberg news. It’s a must see.

I currently listed 2 foreclosures in West Islip, New York and one in Bohemia in the past 30 days. I launched www.islandforeclosures.org just last week.

The problem for homeowners is they must realize that another 20% reduction (which is very possible) over the next 12 to 18 months would be very real in their wallet. For buyers who buy now, that 20% is just that. If you buy now, the home you buy will drop in value 20%. Okay. But you’re buying a long term asset and you will recoupe that loss in equity and in 18 months, when rates are 9%…you’ll be sitting pretty at 5.2% (a nearly $900 monthly savings).

For sellers, another 20% reduction in their home value will be on top of the 30% lost since 2007! Yes…that’s 50%. If your home is worth $400,000, living in that home from month to month, will cost you approximately $4000 a month (in lost equity) to live there. Attention homeowners, if you want to sell, now is the time. Sell low (ouch)…buy low (yay!).

(c) Copyright 2009 www.tommcgiveron.com
By Thomas McGiveron, Licensed Real Estate Salesperson


Jul

20

Foreclosure Numbers: Keeping An Eye On The Unknown

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Foreclosure numbers are going to skyrocket. We keep hearing this, but what do most people really think? Seems when I speak to homeowners, either they don’t believe me or don’t think much of the threat foreclosures present to home value.

But let’s map out some of the areas that have bank-owned properties. The New York Times sports a decent tool for mapping out foreclosures throughout the New York area. This tool was featured in the article, “Battling the Decay of Foreclosures” in the NYTimes.

It’s clear we have a challenge and I think most homeowners would acknowledge at least that much. However, one thing that I keep coming back to is, articles like these on NY Times do not demonstrate the massive amount of delinquencies that are pending, nor does it highlight the incredible amount of short sales located throughout Long Island.


Reports on foreclosures cover what is on the market on the local MLS (Multiple Listing Service). These reports do not cover what is coming down the road. For instance, a short sale is not a bank-owned property, but if it doesn’t sell and the seller walks away, it will become a bank-owned property (a foreclosure).

It’s important for homeowners to understand that a foreclosure hurts equity values in a given area. The more foreclosures, the lower the home values. The greatest area of concern for any homeowner right now should be the increasing trend for foreclosures to be setting market value. This is extremely dangerous for housing stability.

Why?

Because historically, foreclosures or other distressed property sales are generally infrequent. For instance, on a given appraisal of real estate property, a foreclosure most likely is not used to determine market value for a given property.

And you know where I am going with this.

Noooowwwww, in this crazy real estate market, foreclosures and other distressed property values are being considered and are becoming more common place for determining true market value of surrounding homes.

This is a problem for any homeowner looking to sell right now or any homeowner who wants to sell within the next 3 to 5 years.

Why is this not a problem for buyers? Good question. Real estate is a long-term investment. If you’re thinking of purchasing real estate, now is the best time. Buy low. Sell high. Two complete sentences that add up to “good investment”. If you’re in this for the long-term, buying now and riding out the next several years so that ten years from now you’re ready to sell, you will almost certainly be selling for a profit!

(c) Copyright, 2009 www.tommcgiveron.com
By Thomas McGiveron, Licensed Real Estate Salesperson


Jul

20

Long Island Real Estate Market: What’s Next?

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So what’s next for the Long Island real estate market? That’s a great question. Do I have an answer? You bet! Let’s just take a look at what experts are saying.
bottom-prediction-fhfa.jpg
The Federal Housing Finance Agency was created to assist homeowners with information and updates overseeing the mortgage market in America. The FHFA report is about future pricing and this statement about the “trough” or bottom is very important. I find that many people mistakenly think the market is going to just “pick up”. No doubt it will start to go up again, but not like it did from 2002 through 2006! The “pick up” will be slow and steady, like throughout the history of real estate.
This point is so very important for homeowners to understand. Once we have reached a bottom, it’s going to take time for the market to recoupe what it has lost. I cannot stress this point enough.
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Fortune.com’s prediction as of 6/19/09, is right in line with the numbers on Long Island. The comment about some prognosticators saying 2013 is suspect. But in terms of a bottom, let’s just stop and think about something. I will be posting June’s numbers within a week or so. But let’s “ballpark” the numbers: 33,000 listings for sale and 1800 sales for the month of June. That adds up to over 20 months more of inventory that either has to sell or expire off the market and it doesn’t include future listings that will come to the market.
So right there we’ve got 20 more months of supply exceeding demand. It’s that simple. I would go as far to say that, locally, on Long Island, we’ve got about 2 more years of a downward trend in pricing (20% more decline in prices).
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Love’em or hate’em, the Mortgage Bankers Association does know the numbers. And we know that they know mortgage delinquencies because they’re the ones that got us here! Mortgage defaults are the shadow of the market that will either bust the back of the housing market and cause a 30% to 50% decline in home values or by some miraculous chain of events, the economy will turn around and people will be able to hold on through this tough time. One thing is for sure, mortgage delinquencies are high and they’re increasing every month.
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There is more talk about the market “leveling off” and “staying flat” for severals years to come. I don’t see the data that tells me this is going to happen. But it could be a “hang over” effect where interest rates go very high and thus discourage buyers from entering into the market and sellers from selling.
bottom-prediction-business-week.jpg
I wanted to finish with this comment because it has a very key point to prove. The housing inventory must shrink. Now this is a “national” outlook, but Long Island and New York City will fall right in line with the rest of the nation, because, we are the “mecca” of the financial and housing market. As we go, so does the rest of the country, in general.
One of the key points to pay close attention to over the next 12 months is the New York City commercial real estate market. Because NYC and Long Island are lagging behind in terms of the total meltdown seen in Nevada, California and Florida, some say that we’ve got the worst yet to come.
I disagree with this mainly because New York City isn’t Nevada or those other states. It’s diverse economy, made up of thousands of different industries, fantastic moderate climate and diverse population make it much stronger than the likes of a Florida or Nevada.
All in all, the overall outlook isn’t what most sellers would like to hear. And for buyers, the time to buy now is so good and will continue to get better as time goes on (just watch those interest rates!). What’s next you ask? Twelve to twenty-four months of continued decline of home prices on Long Island. No doubt about it.

(c) Copyright 2009 www.tommcgiveron.com
By Thomas McGiveron, Licensed Real Estate Salesperson


Jul

1

What’s With All The Moaning About Home Appraisals?

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The following was provided to me by Coldwell Banker corporate offices. It’s an article written in the WSJ about appraisals and every homeowner and buyer should read it.

What’s With All The Moaning About Home Appraisals?; Wall Street Journal

By James R. Hagerty, June 25, 2009

Lately, mortgage brokers, builders, real estate agents and others in the housing business have been moaning about appraisals. On Tuesday, it was the turn of Lawrence Yun, the chief economist of the National Association of Realtors. He lamented that May home sales were “less than expected because poor appraisals are stalling transactions. Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan.”
Left unexplained is how Mr. Yun and others can decide which “valuations” are faulty. Of course, it would be far too cynical to suspect that that the Realtors classify as faulty any appraisal that stands in the way of a commission check. Still, the issue is tricky–and all the moaning in the world is unlikely to make much difference.
An appraisal is merely an educated guess about the price a home might fetch. It’s true that an experienced and intelligent appraiser knows tricks of the trade that allow him or her to make a better guess than I could. And regulations such as the national Uniform Standards of Professional Appraisal Practice, or USPAP, provide detailed instructions of how to go about this vital chore. But the appraisal is still at best a good guess, and it’s harder to make such guesses when the national housing market is in a freefall the likes of which no living appraiser has ever seen. (See “Appraisals Roil Real Estate Deals“)
Most of those who are fuming about appraisals blame Andrew Cuomo. The New York Attorney General last year held a gun to the heads of government-backed mortgage investors Fannie Mae and Freddie Mac–threatening to sue them for failing to make sure that appraisals weren’t being inflated to pump up home sales.
Fannie and Freddie had enough other problems on their hands. So they almost immediately caved in and agreed to what became–after much back-room negotiation–the Home Valuation Code of Conduct, which took effect May 1. The code covers any mortgage that can be guaranteed by Fannie or Freddie, which means the majority of all home loans. It bars loan officers, mortgage brokers or real-estate agents from any role in selecting appraisers. The idea is that people who are hungry for commissions shouldn’t be in a position to lean on the appraiser.
While that idea is sensible, it has has encouraged more lenders to outsource the selection to appraisal-management companies, or AMCs. There is nothing inherently wrong with an AMC. These firms, in theory at least, can provide a valuable service in finding appraisers and screening for quality. But AMCs are controversial because they take a big cut of the appraisal fee, leaving less for the appraiser. Appraisers moan that they aren’t being given enough time or money to do a good job, and that the AMCs don’t care enough about quality. In some cases, critics say, AMCs choose appraisers with little or no knowledge of the area where they are making an educated guess about the value of a home. The AMCs, of course, dispute all this and say they do a fine job.
Mr. Cuomo’s code isn’t perfect. For one thing, it was imposed on the nation without any sort of legislative debate or vote. And the code makes it more likely that consumers will have to pay for more than one appraisal because lenders generally won’t accept an appraisal ordered by a rival, for fear that the rival didn’t scrupulously follow the code. Worse, the code allows lenders to own stakes in AMCs. So the lenders–who require borrowers to pay for an appraisal, which is designed to protect the lenders–can also profit from that appraisal. Whenever and wherever the home buyer can be nicked for another fee before the keys are handed over, that’s exactly what happens.
A few people in Congress have echoed the moans of the Realtors and the mortgage brokers on these appraisal issues. Yet it seems unlikely that Congress, busy with many more pressing issues, will soon get around to another rewrite of appraisal regulation. Mr. Cuomo is having it his way.
Meanwhile, the smarter lenders will go beyond the code and strive to ensure that they are getting appraisers who know the local market and don’t play any games with the numbers.
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IF YOU ARE LOOKING TO SELL YOUR HOME AND WANT A COMPREHENSIVE MARKET VALUE ANALYSIS OF YOUR HOME - CALL ME AT 1-631-587-1700, EXT. 51
Thomas McGiveron, Licensed Real Estate Salesperson
Coldwell Banker Matherson