Jul

11

Long Island Real Estate Market: Home Values Update May 2010

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The Long Island real estate market in May 2010 numbers are out and I am still waiting on June numbers to be released. With all the commentary about what happened to prices in the market, I think many homeowners are confused as to where the market is and where it is going.

For the purposes of this article, I’m going to look at one thing that tells the story of the entire market. It’s not prices per se, but inventory. I’m going to give you a statistic here that’s kind of scary if you understand it and appreciate it.

The standard of keeping track of statistics mostly centers around comparing one month or quarter to the years previous. So for instance, I’m going to give you May 2009 numbers of homes available vs. homes sold and then I’ll give you May 2010 numbers.

May 2009

Now I’ll provide May 2010 numbers for homes sold vs. homes available.

Now from these two time periods you’ll see that the only major difference is the homes sold were higher in May 2010. The available homes (inventory) appears to be just about the same with some slight variation.

But the real key to stat to look at is, if we just go back three months to February 2010.

Here we see some major changes to the market. Over 12,000 homes were added to the available market from February to May of 2010. That’s a gigantic leap of more than 25%.

That means, in general, in your area, if you had your home on the market in February and didn’t sell it and were still on the market in May, if there were 75 homes for sale in your area in February, there were nearly 100 homes for sale by May. Thus you were competing against 25 new homes for sale in your area. This gives buyers more options and when supply exceeds demand (as it does in all of these slides – there’s a lot less homes being bought then are listed for sale) that means one thing – prices must adjust downward!

This is the reality of our market. I continually go back to this statistic because it tells the story of what exactly is going on in the Long Island real estate market. Prices of SOLD HOMES may have risen during the month of May, as it was reported, but that could be attributed to many factors such as maybe the high end market sold more, thus throwing off the numbers (which is what many local experts are saying).

One thing is for sure, unfortunately for sellers, home values on Long Island are not going up. They are stagnant or declining slightly. One reason for the prices not dropping more rapidly has to do with the low mortgage interest rates.

It takes unique marketing strategies and cutting edge technology to sell homes in this market. That along with current and valuable real estate analysis will go a long way toward helping you sell your home in this very challenging market.

If you want expert analysis of your home’s value and want to discuss my comprehensive online marketing plans, please contact me at 631-831-9048.

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Jul

10

Mortgage Rates Fiesta And A Good Agent: Great Combination!

Filed Under Buyers, Sellers, Sellers & Buyers | Comments Off

I recently had a conversation with a potential buyer who asked me if now was a good time to buy a home. I sighed and proceeded to review with him the current real estate market conditions and the basic formula for wise investment.

Do you know the basic principle of investing? I’m sure you do if you stop and think about it.

Okay so it’s Buy low, sell high. Great. Easy four word phrase: Buy low, sell high. So let’s see, the Long Island real estate market is down nearly 40% from peak. Is that low enough?

Forget about that for one second and take this into account; the mortgage interest rate is under 5%…still! It’s like this gigantic carrot hanging out there, but potential buyers aren’t reaching for it and if they are, somewhere in the back of their heads, they’re thinking (or perhaps you’re thinking) not yet. It’s still not a good enough time to buy.

Take this theory into account:
Low mortgage rates

What goes down, will eventually go up. When something hits the bottom, it normally doesn’t stay there indefinitely. The mortgage interest rate has no where left to go. It can’t go any lower.

But it could jump up one whole point in less than a month. Right now the rate is low.

I just helped a client buy his first home. He and his family will benefit from a low 4.875% rate for as long as they live in their home, up to 30 years. Think about that for a second. He will be able to deduct his mortgage interest from his taxes and he will benefit from the investment of real estate in a down market where he took the plunge and in his words, “…did the best thing for my family.”

The combination of my professional services and his willingness to listen and follow the my instructions of capitalizing on the mortgage interest rates of our lifetimes, has him in a new home at a great price and a mortgage payment that he can afford.

One of the greatest things to consider from this market is your buying power. Not every agent is going to cover this in their discussions with buyers, but I make sure I cover it with all of them. With rates so low, it’s always wise to remember that your dollar goes a lot further when rates are low. So instead of being able to buy a 3 bedroom/1 bath home, you can probably afford 4 bedrooms, 2 baths and a full basement with a garage!

If you’ve got questions about the rates and about homes for sale and how I can help you make the dream of home ownership a reality, call me today (631)831-9048.

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Jul

9

Long Island Home Values: What’s Going To Happen To Prices

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Everyone is wondering what to expect Long Island home values to do in the next year or two. With misleading headlines in May, leading people to think that prices are increasing and the market is bouncing back, I think many homeowners are going to be very disappointed.

First I want to say this, this is not a doom and gloom article about what’s going to happen to the market. This is information from leading experts and sources that look beyond the headline. It’s information for homeowners to view so they can be educated about what’s happening to Long Island home values.

I’d like to start by saying, from my own personal experience during the last few months, things were very “hot” during the months of April and May. From my phone logs and email contacts and showing activity on my listings, June had a cooling effect where activity from buyers seemed to decline. The June numbers will be out soon and I will be posting them here when they come out.

Here’s what the experts are saying about home values in general. First, this website link – http://www.npr.org/templates/story/story.php?storyId=111494514 – will take you to information broken down by county on foreclosures. Nassau and Suffolk counties are among the highest in the nation for foreclosure and distressed property activity. And remember, foreclosures bring down home values. So this is really point one, Long Island home values will suffer a drag from increased foreclosure and distressed property sales.

This next slide is from Case/Schiller and gives us a look at overall future home prices.
Case Schiller Future Home Prices

The dip in values to a bottom in May 2011 is a projected bottom, but what’s more significant is the time it’s going to take to get back to current values in 2010! By November 2013, according to Case/Schiller (experts in the field of real estate), we will be back to 2010 values…not 2005 values.

One thing this chart doesn’t take into account is mortgage interest rates and how they’ll impact home values. With the rate so low, buyer activity hasn’t fallen off a cliff. And on Long Island, with high taxes and still relatively high home prices, mortgage rates must remain low in order to keep Long Island home values stable.

A very interesting web link to check out is http://www.forbes.com/2010/06/04/migration-moving-wealthy-interactive-counties-map.html?preload=36103. Now we’ve all heard about the “brain drain” from Long Island and if you haven’t, it has to do with the youth on Long Island (people over 18 through 30) leaving Long Island to live in more affordable areas of the country.

When you bring up this link, allow the interactive map to load then click on Long Island. Red lines represent movement from an area and black lines represent movement to an area. What I noticed right away was that there weren’t too many black lines leading to Nassau and Suffolk county, but red lines (moving away) cover the map!

What does this have to do with Long Island home values? If there isn’t a high demand for people to move here, the buyer pool shrinks or remains stagnant. This is, in my opinion, Long Island’s great challenge – to keep people here and to entice more out of towners to move here! Now combine this “brain drain” with increased mortgage interest rates and what you have is a buyer pool that will not be able to purchase homes because they won’t be able to afford them…unless home sellers…drop their prices. This is clearly something home sellers want to avoid.

Housing analysts have recently grown gloomier about the outlook for home prices as sales slump, with a survey released by MacroMarkets LLC finding that 56% of 106 economists and analysts surveyed expecting home prices to decline this year, up from 40% a month ago.

With a growing number of experts in the field calling for further declines in prices, I’m one to say that if you’re thinking of selling your home, further delay may only hurt your chances of capitalizing on what’s left of home values on Long Island. And with mortgage rates so low, buyers are out there looking. They’re just waiting for the right house to buy.

Feel free to call me to schedule an appointment – (631) 831-9048.

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