I recently had one of my buying clients ask me, “How much appreciation will I get 5 years from now?” What I told him at the time was, I honestly didn’t know. So I decided to look up some information and came across an interesting piece of information.

The Home Price Expectation Survey, recently completed in July came up with an interesting number of 10%

According to this survey, much like the Case-Schiller Future Home Price Index predicts, home values are going to continue going down. As you can see from the graph, from “TODAY” you see the price indicator drop until about the middle of 2011 and then start going up. By 2013, values will be back to where they are today.

So while it’s going to take the market three years to get back to today’s values (which for sellers isn’t great compared to 2005), you can see that a modest, but respectable, appreciative value of more than 3% annually should be realized by homeowners.

So to answer the question specifically I’ll use an example. If you buy a home today at $350,000, in about five years, the home will be worth about $385,000.

I don’t know about you, but I’ll take that over the ups and downs of the stock market any day. And plus, you get a home to live in for 5 years! You can’t live in a stock.

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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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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:

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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This video is about a buyer I spoke with today who “found a home” to buy on their own.

I want to preface this two words, “Buyer Beware”.

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Mortgage rates remain low after The federal government stops purchases of mortgage backed securities and you might want to ask me why I was wrong about that. I listened to the experts in the industry who said the rates would go up. But this video explains why and the graph below is a direct quote about the markets.

Should you have any questions about this or any other topic related to real estate, please feel free to contact me at 631-831-9048.
By Thomas McGiveron, LSA

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Recently, Gallup conducted a poll asking, “Is now a good time to buy a home?” The respondents overwhelmingly stated that it was. Over 72% of Americans feel that now is a great time to buy.

So what does that mean to you as a buyer? I would say that it doesn’t mean much at all. Who cares if nearly 3 in 4 people think it’s a good time to buy. They’re not going to be paying the mortgage!

But let’s dig a little deeper and find some reasons that do make sense. Let’s start with the cost of price.

In this example, the cost of a $200,000 loan in 2003 would be $1232.74. That same loan amount today would cost $1087.13. That’s a difference of $145.61. The cost is your out of pocket expenses for borrowing money to pay a price. Prices are down nearly 40% from peak.

The real beauty of this real estate market, even for sellers, is that the cost of borrowing money is so cheap in comparison to “normal” mortgage markets. That’s a real reason that makes this real estate market great. Prices are at or near 2003 levels, so as you buy today, you’re paying at or below 2003 levels (seven years ago) and the money you borrow is cheap!

The more I speak with buyers, the more I get a sense that many are still worrying about whether or not now is the time to buy. And I’ve been saying the same thing since 2008; With rates so low and the market down, anytime you buy now, is a good time to buy.

And now that prices are down even further and mortgage rates are still historically low, it shouldn’t take a “salesperson” to “sell” you on the idea that it’s a good time to buy, the salesman in your head should be screaming at you, “Buy now!”

With all this information at your hands, let’s continue digging to see more evidence that helps you understand why now is a good time to buy. I want to talk about the average mortgage rates or “normal range” of rates. Since 1995, the average mortgage rates are between 5.83% and 8.05% (Source Federal Reserve). That’s a 6.94% average mortgage rate, meaning that’s the average mortgage interest rate since 1995. Wow!

With mortgage rates currently at around 5.10% for prime buyers, that’s a difference of 1.84% in the rate. That’s incredible. As I type this article, I’m thinking of the words to describe the advantages of such a low rate and the only word I can come with is ‘incredible’.

Now of course, the party must come to an end. I’ve been talking about how the federal government has stopped purchases of Mortgage Backed Securities which was helping keep the mortgage rate low. Since they’ve stopped it, we’ve seen the rate go up fairly quickly.

What does this mean for you?

If you’re a buyer, it means you’re going to pay more and I suggest looking at the impact that will have on your buying power.

If you’re a seller, it means the buyer(s) looking at your home will pay less as the cost of the money they borrow goes up. Just as you would expect, if you went in to buy a home now, you would ultimately look at what you can afford in terms of monthly payment. The more the payment goes up, the less you can afford. Thus, the less buyers can afford overall will drive down the price of not just your home, but all homes.

Of course you’re home is only worth a monetary number, when you call me and want to sell it. Otherwise, it’s your home and you live there and the “value” is experienced not monetarily but in reality. However, I’ve seen many homeowners say in 2007, “I don’t need to sell.”

And then in 2008, they call me and said, “I really want to sell”.

And then in 2009, they said, “I have to sell”.

And the end result was…they lost nearly 35% of their value…monetarily speaking.

If you’re thinking of selling, my message has been the same since 2007. If you really, realistically, need to sell your home, waiting will not do you any further good. For every 1% the mortgage rate goes up, prices will need to adjust 10% down.

Once again, I hope the information I provide here on my website was helpful. I go out of my way to keep it honest and I do my best to get only the most accurate information and valid sources to bring you valuable insight.

If you’re thinking of selling or buying a home or both, please contact me at (631)831-9048.

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(c) Copyright 2010 www.tommcgiveron.com
By Thomas M. McGiveron, LSA

These video’s feature me discussing the Long Island real estate market being at 2003 levels and the relationship to the benefit of buying now, even after the tax credit ending. I’m discussing the interest rate and the savings you’ll benefit from, by taking seriously, the buying power you have today.

Part 1

Part 2

Call me with any questions or to schedule an appointment - (631)831-9048.

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I don’t know about you, but I’m starting to get a little offended at what’s happened to Long Island in the last few years…as a Long Islander of course. I’ve decided to take “the battle” to the streets and created the Long Island Real Estate Market Fan Page on Facebook to start making Long Island great again!

Okay - What’s Facebook?

Now I’m sure if you’re on the internet more than one time in your life, you’ve heard of the website facebook.com. It is the “cleaner” version of myspace.com, and by that I mean, it’s just less advertisements and more connecting with friends, family and more importantly, topics of interest and information.

When I first learned about facebook, I only saw it for one thing, connecting online with…whomever. The more I learn about facebook, the more I see it’s a place to find any kind of information, company, service, product…just anything you can think of. It’s the social “google” if you will.

It’s All About Long Island…

Rather than type into a boring search engine, I can connect locally with a company or a local expert. And that is why I’ve decided to create the Long Island Real Estate Fan Page.

The more I can share with you and vise versa, about this great place to live, the better off we all are, as we educate people on how great it is to live on Long Island (despite high taxes!). And a note about those high taxes, I say it’s like anything else; You get what you pay for! If you want to live where the taxes are $600.00 a year, well then knock yourself out. I did and let me tell you, there’s no comparison! I’d rather pay $6,000 a year or more and live in the best place in the country.

From the climate, to the location to New York City, to the convenience of the ocean and magnificent waterways…Long Island is just a great place to live.

And when this economic “ice age” settles and we survive past 2012 (Nostradamus and Mayans eat your heart out!), Long Island will thrive!

Do we need government officials who believe in spending less and lowering taxes - you better believe it, but let’s get there one fan at a time. I urge you to join me on the Long Island Real Estate Market fan page.

One of the best things about the facebook platform is, the news and information is there when you want it. It’s not like receiving e-newsletters you don’t want or commercials you don’t want to see on Television. If you become a fan and bounce around on there once in a while, for any topic or fan page, it’s so easy and it’s free.

If you’ve read my web articles or gone through my websites, you know that I post pertinent information that can be valuable to the person who’s interested in real estate. That’s what I will be posting on the Long Island Real Estate Market fan page.

I’m also going to be posting things on there from all over the internet. I hope you do as well.

If you’ve got a cause you believe in and it’s local and important, bring it on and share it on Long Island Real Estate Market on facebook.

Again, that’s what’s so powerful about the facebook environment. It’s a community sharing local information from local people.

Now is this a “revolution” on the fan page…Yes it is!

We’ve got to come together and start making it clear that Long Island is better than Tennessee, Georgia, Utah, Colorado, etc. People are leaving here - young people - and we’ve got to help our community grow with youthfulness, not perish with age. That’s what this fan page is all about. I’ve posted the link enough. Just join and let’s start making Long Island great again!
(c) Copyright 2010 www.tommcgiveron.com
By Thomas McGiveron, LSA
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So you’re wondering what’s going to happen to mortgage rates. If you’re a buyer, you’re wondering that because you are trying to figure out how much the cost will rise for your monthly payment. If you’re a seller, you’re thinking about a lot of things and saying to yourself, “I should have sold 3 years ago”. But I digress.

When we look at information available to us, we see that mortgage rates are going to rise and we wonder, how that might impact the Long Island real estate market. Well just like any other market, when rates rise and demand remains lower than supply, prices must drop in order for someone to sell their home.

But let’s really look at the added costs of an increased mortgage rate.

Now this graph is packed with a lot of different information about mortgage rates.

The Impact On Buyers
Well first thing you must realize is that in order for you to buy a home and pay about the same price per month for that home as the rate goes up, you’ll notice that the price of the loan must go down significantly. Let’s say you’ve been looking for a while and you see a few houses or one in particular that you love. But for some reason, you’ve held back for reasons such as…well to put it bluntly, fear.

Let’s face it, this economy has many people a little uneasy about the future. So you hold back for whatever reason, you want to wait until you get married, you need to “save more for the down payment”, prices are still too high, taxes are too much, the dining room is too small, and on and on.

Well look at that graph and ask yourself this: Do you honestly believe that this house you’ve seen or these few houses that are “potentials” will be there 10% from now? What I’m saying you to ask yourself is, will this same house or houses be on the market for sale 5 months from now when rates are quite possibly 1 full percent higher than they are now? Maybe. But more than likely, if you’ve got your eye on a nice house that you really like or love, chances are so does someone else. And if they’re a little less afraid than you, guess what, they’re buying it.

Another thing for buyers to look at is simply the savings. Paying 6% on a loan as opposed to paying 5% on a mortgage rate is a no brainer. You will save more money. And again, this graph is based on prices dropping as the rate goes up. Just because the rates goes up, doesn’t mean that the home(s) you like has to sell (or can sell for that matter - given the likelihood that they have a mortgage to pay off).

The Impact On Sellers
The cold harsh reality of the market is that prices are going to continue to see-saw in a downward spiral. Every economic and real estate expert out there predict a further decline in prices. Here on Long Island, the simple curve of supply exceeding demand will absolutely keep prices from appreciating for the near future (6 to 18 months).

With the flow of homes off and back on the market and increases in foreclosures, this extra supply, as it comes in waves, will continue to keep prices from going up.

Now this graph adds an element that is not seller-friendly. Historically, a 6% mortgage rate is incredibly good. However, given the current economic situation, decreased consumer spending and high unemployment (currently over 7% on Long Island), a 6% rate might as well be 8 or 9% in a “normal economy”.

Buyers on Long Island, with the high taxes and cost of living that exceeds about 90% of the rest of the country, living here isn’t cheap and many buyers don’t have $80,000 to buy a modestly priced home of $300,000. Remember, the standard, “good loan” for a home is 20% down (on $300,000 that’s $60,000) and the other $20,000 is for the very high closing costs associated with buying on Long Island.

So looking at the graph, as the mortgage rate goes up, if you need to sell, you will absolutely be forced to drop your price as the rate goes up. There is no question about this. Why? Because the buying market won’t have buyers to purchase your home at a 6% mortgage rate at the current prices of today (April 2010). And please note, that I’m not even mentioning the home buyer tax credit that is expiring in 2 weeks that’s helping home values remain somewhat stable. Without that, prices will drop.

But there’s definitely hope in that if you hire the right agent, who uses cutting edge technology to market your home, buyers will check out your home more often than just having it sit idle on mls, overpriced. Oh by the way, that “right agent” - that’s me - click here and let’s get started!

So What About The Mortgage Rate Anyway?

Let’s look at what experts are saying.

From Moody’s Economy.com to Credit Suisse to Barclay’s Capital, we see that the experts are predicting increased mortgage rates. Why? Read my article on what’s happened in the last month with the Fed.

National speaker and residential real estate guru, Steve Harney, talks about how since 2006, April to July months have seen mortgage rate volatility.

So to close this discussion out, I think it’s particularly important for buyers and sellers to consider their options. Information like this is invaluable and I hope it helps you make the best decisions for you and your families. If you have any questions at all, I can always be reached at (631)831-9048.

By the way, if you missed the commission discount I’m offering for home sellers, please click here.

(c) Copyright, 2010 www.tommcgiveron.com
By Thomas McGiveron, Licensed Real Estate Salesperson
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In this video, I will discuss how important this week in April really is for anyone who wants to capitalize on the home buyer tax credit. I think there are a lot of people who mistakenly believe they can find a home in the last week of April and make it into contract before April 30th.
One sad thing to point out is that I was speaking with a fellow agent just the other day and they thought buyers had until June 30th to be in contract. Wow! Who ever you’re working with, make sure they know what they’re doing or they could cost you $8,000 dollars!
Here’s the video.

Below is a general guideline for getting into contract. Call me today in order to increase your chances of making it happen!

(631)831-9048

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