Jan

20

The State of The Long Island Real Estate Market: December 2009

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Well 2009 is in the books and I want to put a stamp on exactly how the Long Island real estate market faired throughout the course of the year. The Long Island real estate statistics for 2009 may surprise many people. There’s one very clear message from the stats that I want to share right away and that is, we are in “the trough”.

As the downward trend has dropped, these statistics which I’m sharing here, demonstrate that we are in the low point of the Long Island real estate market. It doesn’t mean that things are miraculously going to turn around and homes are going to start appreciating, but it does mean that we are almost certainly at the low point and we could “skip along” here at this level for quite sometime and even dip down a little.

I’ve talked alot over the past 3 years about supply and demand. Supply is still very high, but little by little, it is decreasing and more homes are being sold so demand is catching up with supply. Ask any real estate agent on Long Island and they will tell you, when a property for sale is priced right, it sells quick and usually receives multiple offers. So buyers are out there and more importantly, they’re buying.

Now before moving forward I need to preface this information with the following challenges our market faces. One, unemployment is high and inflation may hit the country in 2010, which most economists say it will. Two, foreclosures are rising due mainly to unemployment with prime buyers being the hardest hit (now we’re in the second phase of this foreclosure crisis) - see previous article here. Regarding the foreclosure crisis, you can see the article in Newsday’s Sunday, January 17th paper online about foreclosures on Long Island.

The state of the Long Island real estate market for December 2009 is broken down into a comparison between December 2008 and also a slight comparison to April 2009 (the last time I did this graph).

What you’ll see is not just one or two anomolies but many areas having increased sales prices or very slight declines over December 2008 and April 2009. Long Island is broken down into zones. For information on where you live and what zone you’re located in, please contact me directly at 631-831-9048.

For the above Long Island real estate market information, it actually surprised me to see the dramatic improvements from the April, 2009 report. One of the main themes throughout the statistics was, that the market is leveling off. Units sold from December 2008 were basically doubled in December 2009. And with over 11 out of 17 zones, actually seeing an increase in sales price averages, that represents an improvement of 65% of the overall Long Island market.

Again, I’m not saying that values are “going up”. What this data suggests is that more homes are selling and many of those homes that sold, sold for more money than they did in just April of 2009.

Now for a closer look at where we are in the Long Island market, we need to look at the amount of homes that are for sale and how many are selling. The graph below demonstrates very simply that while the market has made great strides in the right direction (less inventory), we still have a long way to go until demand evens out with supply.

For buyers, these are clear signs that if you want to buy a home, now is the time to seriously do what you must to purchase a home at the lowest rates in our history. I continually hear prospective buyers tell me they’re waiting…and I’m thinking in my head, “…for what, cows to fly?”

Five percent interest rates are not here to stay. And once they go up, chances are we will never see rates like that, on 30 year loans, for a very long time, if ever again in our lifetimes. Rates are historically low and the Long Island real estate market is down nearly 37% (and more in some areas)…and let us not forget about the $8,000 tax credit (which is money in your pocket).

This State of The Long Island Real Estate Market tells me what I need to know and that is, convince buyers to buy, rather than sit around and wait. The bottom is here and the market might stay down in this area for a good amount of time, but interest rates of 5% and $8,000 will not.

For sellers, your motivation for selling is paramount. If you’re highly motivated, it’s so important that you hire a real estate agent who can prove to you that he or she can sell your home for the most amount of money in the shortest period of time. Selling before May 1st, 2010 is extremely important. Call me if you don’t know why.

631-831-9048

Nov

15

Long Island Short Sales: Update, November 2009

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When it comes to Long Island short sales, having completed several this year, let me say that throughout the course of 2009, the process has improved…but has a long way to go. I came across some very interesting information about the process of how “banks” determine whether or not to move forward with a short sale negotiation.

I put the word “banks” in quotations because it’s not necessarily banks that are handling the short sales. During the course of the past several years, Loan Servicing companies have become increasingly popular.

There are two basic elements to a mortgage loan. They are Processing and Servicing. Keeping in mind that any business must function with the intent on making a profit.

In order to explain this slide simply, anything that says “negative” would mean that the loan service company would lose money on that aspect of a short sale. Without incentives to go through with a short sale, loan service companies have no choice but to lean in the direction of foreclosure. Hence, where it says “positive”, that’s where the companies will make money, rather than lose.

Now the Treasury Department has come up with a viable plan to actually encourage banks and loan service companies to consider short sales over foreclosure, many homeowners may be saved from foreclosure.

So what does this mean to buyers?

It means that a short sale may very well be an excellent opportunity to purchase a home and help a struggling homeowner to avoid foreclosure.

For sellers, it’s simple, if you want to ever buy a home again or at least within the next 3 to 4 years, cooperating with your “bank”, may very well put you and your family in a position to buy again sooner than you think.

If you are struggling to make your mortgage payment, please call me at 1-877-765-3123, ext. 51, immediately.

If you’re a buyer, it is imperative that you find a qualified real estate agent to help you through the process of buying a short sale. They can be very good opportunities, but know which ones are good and which ones are not is the key to successfully purchasing a short sale. You can visit www.islandforeclosures.org and contact me there by signing up to receive email updates on properties for sale throughout Long Island or call me at the number above.

Nov

7

Homebuyer Tax Credit Update

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Homebuyer Tax Credit Update!

TAX CREDIT OVERVIEW

Who Gets What?

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

What are the Income Caps?

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

What is the Maximum Purchase Price?

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

What is a Tax Credit?

A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.

How Much are First-Time Homebuyers (FTHB) Eligible to Receive?

An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is Eligible fort FTHB Tax Credit?

Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible.

This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How Much are Current Home Owners Eligible to Receive?

The tax credit program includes a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property?

No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a Taxpayer Claim a Credit if the Property is Purchased from a Seller with Seller Financing and the Seller Retains Title to the Property?

Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Some examples of this would include a land contract or a contract for deed.

According to the IRS, factors that would demonstrate the ownership of the property would include:

Are There Other Restrictions to Taking the FTHB Credit?

Yes. According to the IRS, if any of the following describe a homebuyer’s situation, a credit would not be due:

They buy the home from a close relative. This includes a spouse, parent, grandparent, child or grandchild. (Please see the question below for details regarding purchases from “step-relatives.”)
They do not use the home as your principal residence.
They sell their home before the end of the year.
They are a nonresident alien.
They are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
Their home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
They owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.

Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?

Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.

If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?

Yes, provided that the child meets the other requirements for the tax credit.
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If you’re a seller and you don’t quite understand how this can help you, call me at 1-877-765-3123, ext. 51.

By Thomas McGiveron, Licensed Real Estate Salesperson

Oct

25

Government Purchasing of Mortgage Backed Securities…The Party is Coming to an End?

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The government purchasing of mortgage backed securities is nearing an end. To quote, Steve Harney, national residential real estate expert, “When the banks have to lend their own money to people on a 30 year loan, they’re not going to be satisfied with 5%…”

If you’re frequented my website, you know that I pay close attention to what’s happening in the real estate market. I do this so I can be a strong source of valid and useful information for my clients and my readers. What I’m going to cover in this article is going to be like smelling salts that wake you up from a daze.

The Fed will gradually slow the pace of the purchasing mortgage-backed securities (MBS) in anticipation of a full execution of the program to keep the mortgage interest rate low by the end of March, 2010.

It marks an extension of the MBS-purchasing program past the previously anticipated year-end date of December 2009. The slowing of purchases is intended to “promote a smooth transition in markets” as the government ends its participation in the agency MBS market. Basically, the government is going to stop buying mortgage securities in March, 2010.

To implement the gradual slowing of agency MBS purchases, agents acting on behalf of the Federal Reserve Bank of New York’s open market trading desk plan to reduce the average weekly purchase amounts beginning with the reporting week that starts September 24, according to a NY Fed statement.

Will the real estate market be strong enough to withstand this slowdown? Are banks and their investors, willing to invest money into such an unsteady market area, such as the current real estate market? This is the big question…is the party [of low interest rates] coming to an end?

With the largest purchaser of MBS, not buying up these assets (helping turn money over quickly for banks and their investors), will banks be apt to continue writing mortgages at 5%?

The answer is no.

So rates will go up after March, 2010.

Question is, how high and will buyers continue coming out to buy? I would say the answer to buyers still buying is a big fat YES [they just can’t pass up the fact that prices are down 35% from peak]. Additionally, as mortgage interest rates go up, prices must drop [hear that sellers?].

1-877-765-3123, ext. 51

Oct

25

Foreclosures Expected To Rise

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Here’s an article, Foreclosures Expected To Rise, in the Financial Post, showcasing several points that I have continually spoken to homeowners about.

If you are behind on your mortgage, you can call me and we can discuss how you can avoid foreclosure.

Tom McGiveron, LSA 1-877-765-3123, ext. 51.

Oct

16

“What’s Goin’ On?”

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Whenever I think of the Long Island real estate market (which is every single day, 365 days a year), for some reason, the song lyric “What’s Goin On?”, by Marvin Gaye, rings through my head. I believe that many homeowners out there are in the same situation, trying to make sense of all that is happening around them, both locally and nationally.

Every person out there is trying to just raise a family, work, and somehow, somewhere in there, just enjoy day to day living. They’re a cop, an accountant, doctor, garbageman, fireman, nurse, limo driver, coach, teacher, an unemployed job hunter, a mother, a father, son, daughter, etc., and they’re focus isn’t the real estate market. Especially on a daily basis (thank goodness, it will drive you nuts!).

My point is, the country is motoring along and we’re all just doing our thing.

And hopefully, we spend sometime out of our busy week to visit some websites and blogs to read up on what’s goin on, in the markets. But are we visiting the right places with the real information we need to hear?

Well, if you’re reading this article, you’re in the right place because what I’m about to cover is the real deal. Unedited and packed with real useful information, in my next article. So please frequent back to the website to see what’s goin on…

(c) Copyright 2009 www.tommcgiveron.com
By Thomas McGiveron, Licensed Real Estate Salesperson
Contact me at (877)765-3123, ext. 51

Sep

26

Long Island Real Estate Market: Unexpected Drop In Sales Across Nation

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I posted this article on my blog site: tommcgiveron.blogspot.com about how the Long Island real estate market is following along with the rest of the nation.

I, as a real estate agent, am very busy working with buyers and sellers. But I have seen somewhat of a slow down, overall, in call volume. Last month was very busy and much of what I have for sale went to contract and many of my buyers bought a home.

It’s the lack of new faces that concerns me and should concern sellers out there.

Anyhow, check out there article here: Unexpected Drop In Sales Across Nation.

Sep

9

Announcing New Blog: WWW.TOMMCGIVEORN.BLOGPOST.COM

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So I am going to begin another blog at tommcgiveron.blogspot.com, which will be ramblings that I don’t think should be posted to my website here. I like to use this website for strictly information-type articles that are filled with facts about the market. My other blog will basically be…a true blog.

Part of me does not see the point of a “blog”, endless ramblings like this one that serve absolutely no purpose but to put information out there about how I think or what I’m doing. I’m not a big fan of twitter, although I am on there and have followers and I think I’m following people. But again, I don’t see the true value to my customers or clients about silly ramblings.

So my posts on tommcgiveron.blogspot.com, will not be silly meaningless blog posts, but will focus on my day to day operations. The point? I really don’t know.

Thanks for listening…

Sep

1

Long Island Real Estate Market: Home Valuation Code of Conduct

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There are new guidelines called Home Valuation Code of Conduct for the appraisal process. In a “normal market”, during a transaction where a buyer and seller agree on a contract for the sale and purchase of a home, the bank would get in touch with the appraisal company and the real estate agent would be in contact with the appraisal company. Of course, during the earlier years in this new millenium, there were many instances of fraudulent mortgages written.

As per the Home Valuation Code of Conduct, now the bank cannot have any contact directly with the appraisal company hired to appraise a prospective transaction. The rules continue to change, but since Appraisal Management Companies were created (AMC’s), introducing a “middle man” into the process, the process has slowed down. Additionally, AMC’s are getting paid and paying appraisal companies less, so appraisers are getting paid less. If the appraiser is not open to completing a particular appraiser, AMC’s are hiring appraisers outside of the local area, exposing homeowners to poor appraisals.

Fannie Mae and Freddie Mac issued clear guidance on two very important points. First, the guidance states that lenders should use appraisers who have clear experience in the geographic area. Second, it clarifies that appraisers are not prohibited from talking to real estate agents. However, these guidelines do not require lenders use appraisers having clear experience in a particular geographic area, so the bottom line is, no seller or buyer knows who they’re going to get to appraise a particular home.

This is just a sample for sellers and buyers to be aware of regarding the new appraisal process. If you’re working with a real estate agent right now and they’re not discussing this issue with you, you should contact them and at prepare for any appraisal issues that may arise and jeopardize your prospective deal. For more information, call 631-587-1700, ext. 51.

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.

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.

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).

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.

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.

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.