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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