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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

(c) Copyright 2010 www.tommcgiveron.com
By Thomas McGiveron, Licensed Real Estate Salesperson

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These videos will explain what’s behind the impact of foreclosures in 2010. The unemployment rate is staggering and is the new challenge for the real estate market. While the Long Island real estate market has seen some improvements (small steps toward recovery), foreclosures and other distressed sales will be the topic of 2010.

For the website with the report on the impact of foreclosures throughout New York, you can visit http://data.newyorkfed.org/creditconditions.

Should you have any questions you can reach me at 631-587-1700, ext. 51.

(c) Copyright 2009, www.tommcgiveron.com
By Thomas McGiveron, LSA

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In New York, it’s important to understand what exactly is in store for the real estate market. Buyer demand is extremely important to keeping home values from dropping further. The higher demand is for home purchases, the more valuable homes will be.

One of the things that is helping real estate market sales is the tax credit for home buyers. Right now through April, 30th, 2010, buyer activity will continue to be higher because home buyers have access to up to $8000 in tax credits. This tax credit is helping homes maintain some value continuity.

From the graphic you can see that after the tax credit ends, there is nothing to help the real estate market maintain value or slow decline. Right now, buyers are looking. This is very important to remember.

Now note the graphic that shows what’s in store for price rebounds throughout the country.

As a homeowner myself, I could easily shrug my shoulders and think that a graphic is meaningless, and think that the real estate market is on the rebound already. I wish that were the case. But wishful thinking isn’t what helps people understand what’s happening with the market. Insightful analysis is what will help a seller make an educated decision about selling their home.

For more information on the Long Island real estate market, click here.

You can reach me at 631-831-9048.

(c) Copyright, 2009 www.tommcgiveron.com
By Thomas McGiveron, LSA

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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.

(c) Copyright, 2009
By Thomas McGiveron, Licensed Real Estate Salesperson

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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:

1. Right of possession,
2. Right to obtain legal title upon full payment of the purchase price,
3. Right to construct improvements,
4. Obligation to pay property taxes,
5. Risk of loss,
6. Responsibility to insure the property, and
7. Duty to maintain the property.

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:

1. 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.”)
2. They do not use the home as your principal residence.
3. They sell their home before the end of the year.
4. They are a nonresident alien.
5. 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.)
6. Their home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
7. 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

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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

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

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The Long Island real estate market is going to see a flood of hopeful buyers scrambling to close by November 30th, 2009. If you don’t know why that is, then call me immediately (631-587-1700, ext. 51). But most of you will know that the date of Nov. 30th, represents the final day a first-time buyer must close on their new home, in order to be eligible to receive the $8000 tax credit.

For sellers, the date of November 30th, 2009 should be a signal to get their price to a place where they will receive offers. This of course, varies on price range (most first-time buyers are purchasing homes with price tags of under $500,000 here on the Long Island real estate market).

Another item to keep in mind, as a buyer, is the final month of the tax credit eligibility is going to be an extremely busy month for banks, appraisal companies, title companies, and attorney’s, as they all rush to complete transaction tasks.

So if you’re a buyer in this market, as of today, there is a very good chance, that if you’re not in contract as of this week (10/12/09 - 10/16/09), you will not be able to receive the $8000 tax credit.

With regard to speculation as to whether or not the government is going to extend the tax credit, I simply say, that as of today (and the past 2 years), the tax credit ends November 30th, 2009. I am not one to speculate as to what the government is going to do or not going to do.

There may be actually very little reason to extend the tax credit, mainly because we are nearing a bottom, on a national level. Even if there’s still a leveling off period, say of 6 to 10 months of further slight declines as the market adjusts, that may not be enough reason for the government to continue such a program because the “problem” is curing itself.

From articles that I read, it is clear to me that even the experts don’t know exactly what to expect in the future. Read this article and see for yourself.

At the end of the day, if you’re a buyer who’s not in contract, rates are super low, they’re going to remain relatively low and prices are down 35% from peak here on the Long Island real estate market. Now is such a great time to buy and working with a buyer’s agent to get the “inside scoop” on property values is key. I welcome the opportunity to assist.

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

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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.

(c) Copyright 2009 www.tommcgiveron.com
By Thomas McGiveron, LSA

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For the Long Island real estate market, there are issues facing the market overall that you’re not hearing about in the media. I want to take a peak at the money issue.

Part of me really doesn’t want to write a series of articles about the realities because it just doesn’t look good for sellers. Another part of me says that I owe it to my communities here on Long Island to “keep it real”, otherwise I risk becoming just another real estate agent with head firmly implanted in sand.

One item we hear about is the “FHA” or Federal Housing Authority and the loans they back called “FHA loans”. Banks provide money to buyers at a greater amount (up to 96.5% Loan to Value or LTV). LTV is based on what the total appraised value is of a given home is and how much the buyer puts down and how much the bank lends.

So if a bank lends $80,000 on a home that costs $100,000, the LTV is 80%. The bank is lending 80% of the total money to a buyer to purchase a given home. This is referred to as a conventional loan.

On Long Island, due to the cost of homes in this area, many buyers put down less than 20% and thus require a FHA loan.

When a bank lends more than 80% to as much as 90% of the value of a given property, it’s risk factor increases because the equity position of the buyer (new owner) is very little.

Here on Long Island, the market is losing about 1% every month. So banks are lending money to buyers right now, in this local Long Island market, who are putting down 3.5%. The bank lending this money is providing money to a buyer who is buying a declining asset. For you who invest in banks, it would be wise if you reconsider your investment.

Now while this seems okay because real estate is a long-term investment overall, it still begs the question, why are banks lending 96.5% or over 90% of a value of a property during a time of 9.7% unemployment nationwide? Also, why are banks lending money to such a high risk investment?

The answer is because FHA loans are “guaranteed” by GSE’s or Government Sponsored Entities like FANNIE MAE up to 80% of the loan. So the exposure of the bank(s) lending on a given property is significantly reduced.

Now behind all this are mortgage insurance companies that provide the banks an insurance policy against default of a given asset or assets. What does this mean?

Anyone who’s bought a home has heard of “PMI” or “MIP”, primary mortgage insurance or mortgage insurance premium. Anytime a property is purchased with less than 20% equity position for the buyer (they put down 20%), the bank must have an insurance policy to back the investment, beyond the 80% loaned.

Well, read this article: Short On Capital, Mortgage Insurers Still Feel The Crunch in DSNews.

Now if you clicked the link for Fannie Mae, you noticed that as of today, it’s trading under $2.00. If you read the article in DSNews, which covers the Default Services field of real estate (foreclosures, short sales, etc.), it doesn’t take a genius to realize that we, as a real estate market both locally and nationally, are no where near out of this challenge.

Banks need money to invest. Part of the TARP funds from the government were made possible to avoid a complete breakdown of the real estate lending market in America. You do remember TARP? That’s the money the banks got and didn’t really need…and now not everyone knows where that money went (but that’s a political/governmental debate which I will leave out of this equation).

Now bringing things back down to us, read my last articles about the Long Island market:
August Update
Distressed Properties

Now for Part II in this series, I will be talking specifically about foreclosures and how bad things really are. Back in April, I broke down every zone of Long Island demonstrating exactly how the market has been hit in 12 months previous. I will be doing this again with an update. And I will also show, as much as I can from the information at hand, how many short sales (pre-foreclosures) there are all over Long Island. And here’s a small taste of what’s going on with foreclosures nationwide.

Sigh. When insurance companies don’t have the business they need to sustain, nor the money to back loans for real estate, what happens to the local Long Island market, that relies so heavily on FHA loans? Is the answer another bailout for the mortgage insurance industry?

I urge anyone reading my articles to leave a comment. Come back and continue checking in. It’s articles like this that make the difference between being informed and being misguided.

For buyers of today, I am not suggesting that now is not a good time to buy. Indeed it is. With prices approaching 35% less than peak and with interest rates so low, it’s an unbelievable time to buy. Just be clear on what you want and how much you’re spending.

To work with me as a seller or buyer, please call 631-831-9048 or email me.

(c) Copyright, 2009 www.tommcgiveron.com
By Thomas McGiveron, LSA

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1-877-765-3123 Ext. 51
463 Montauk Hwy
West Islip, NY 11795
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REAL ESTATE MARKET UPDATES

• The State of The Long Island Real Estate Market: December 2009
• Loan Originators Disclosure of Closing Costs
• A Closer Look At The Impact Of Foreclosures In 2010
• Buyer Demand, Prices & Rebound
• The Future Of Mortgage Interest Rates
• For First-Time Buyers: The Process Of Buying A Home
• Long Island Short Sales: Update, November 2009
• Homebuyer Tax Credit Update
• Government Purchasing of Mortgage Backed Securities…The Party is Coming to an End?
• Foreclosures Expected To Rise

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