Mar

25

Long Island Real Estate Market: Prices Are Dropping?

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I recently sat with a homeowner to discuss the fair market value of their home and to talk with them about the Long Island real estate market. We sat to talk and started talking about the market. She had lived in her home for 35 years and was curious about selling.
As we talked, I showed her all the information that I normally review. This information contains the latest insights from experts in the real estate industry as well as my expert analysis of the Long Island market.
Halfway through our discussion, she said, “Oh, so prices are dropping?”
This interaction helped me realize that I, and my colleagues in the real estate business, have our work cut out for us. There are a number of homeowners out there that just do not pay any attention to what’s happening. And there are some that do listen and know a little, but still think Spring will bring higher prices.
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With nearly a 28% drop in prices since 2006, Long Island real estate [NEWSFLASH] prices are dropping. This graph shows just how different the Long Island real estate market is today as opposed to the 1990’s. I recently had a discussion with an investor in Babylon who told me, “We’ve been through this before in the 90’s. We’ll ‘bounce’ back.” Well this graph breaks down both the 90’s and now and what you see is that long line going down…we’re over 200% worse off now than we ever were in terms of lost equity/value. The depreciative numbers are staggering.
The current inventory, as of February, 2009, for homes available for sale on Long Island was 32,746 homes for sale. As for demand (buyers), 2486 closings ocurred in February, with Suffolk county seeing the most sales at 905 units sold according to the Multiple Listing Service. And remember, those closings are homes that went into contract most likely in November/December, 2008 and some in January of 2009. Click here for more information on Inventory and how it’s affecting price.


These are numbers you can’t reason with and certainly can’t rely on and support the idea that, Spring will be bring higher prices. Those days are gone. What we saw last year is that Spring helps to stabalize prices somewhat from falling and of course, we see more units go into contract during Spring than at any other time.
But again, prices are dropping and have been for nearly three years. Check out this article I wrote in 2007 about the real estate market. You be the judge of whether or not I have my finger on the pulse of Long Island real estate.
So again - why is it a good time to sell?
Well, it’s not. That’s obvious. I won’t lie to you. But, it is a good time to sell if you really want to and if you’re life would be better off if you did because prices will continue to drop, just read my articles on unemployment, price depreciation, and foreclosures. Selling now will net you the money you need to move…on with your life. Wait and you will see another 12 to 20 percent of your equity evaporate. This is not my opinion or “gut instinct” either. See the expert opinions within my articles.
If you want to talk more about the real estate market, please feel free to contact me at 631-587-1700, ext. 51. Buyers reading this article, remember, real estate is a long term investment and realize you can’t time the bottom perfectly. Buying now will net you great returns 5 to 7 years from now (most likely) just playing the averages. It’s a fantastic time to buy. Price and interest rates, as of today, are extraordinary! And sellers, you should be considering the advantage of cashing in now on this magnificant opportunity to sell and buy using the low interest rates to attract buyers to your home and also have the advantage of buying with a great low interest rate!

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


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3 Comments so far

  1. Vincent Gerretz on April 15, 2009 4:10 am

    Mr. McGiveron,

    I have talked with many Realtors on Long Island who do not see how bad the current market is. They are quick to jump on any “Good” information that the market is turnng around. When I quote current numbers and trends, they dismiss it and me.

    I see this as a problem for the sellers. When a seller lists a house with one of these realtors, the price is higher than the market will bear. So, the house sits there with no offers. The realtor now convinces the seller to lower their asking price, although slightly, to improve their chance to sell. This does not help and the house sits again.

    This cycle continues until the house is finally reaches the price that the market will buy the house for. This is a dis-service to the seller. If the realtor did their homework and did a proper CMA, they would have shown early on to the seller what their house should have been priced at in the beginning. This could have saved them many months of waiting. In most cases, the seller does not have the time as foreclosure proceedings have already started.

    Granted, the seller has this idea of what their house is worth because of how the housing market was before the bubble burst. It falls on the realtor to educate the seller to the new reality that we are in now. This works sometimes but mostly it fails and the seller lists with a realtor who will feed into the sellers misconceptions and fall into that viscious circle I mentioned earlier.

    Many of your articles reflect the actual market we are in today. It is not a pretty sight and it will be with us longer than most people believe. I believe the sooner the sellers and their realtors wake up to this fact, the sooner we can reduce the huge inventory of homes.

    I for one appreciate a realtor who tells it the way it is. Keep up the good work.

  2. Alex Razzano on April 19, 2009 12:03 am

    Tom,
    I sense the fustration in your article of how most agent and sellers are pricing homes out of range to todays buyers.
    Although, in defense of most sellers trying to grab some principle in their investments,..it’s only the homes priced reasonable, that are selling.
    THEIR ARE MANY BUYERS out here like myself looking high and low for a home and like you i’m fustrated as well.
    If homes on Long Island where to reduce 10% you’d see an overnight turn around.
    But, I think the bottom line is this,..if you can’t list your home for fair market,..don’t list it! Rent the basement!
    And fair market is not last years prices.
    For Amusement:
    Guy in massapequa had a home listed for 725k for a year and never had an offer,..so 2 weeks ago he raised his price to 779K because he felt interest rates where low.
    Here’s another one:
    Guy in Seaford bought a home for 650k(fair price at the time) one year ago,..and it’s on the market now for 679k.
    My Predictions:
    Homes prices will fall another 10-12%.(Apr 09)
    Homes 1m and up (16%)
    Homes 700k to 1m (15%)
    Homes 400k to 700k (10%)
    Homes 240k to 400k (5%)
    Mutifamily (7%)
    Condo’s and Coops (15%)

    Inventory will decrease by 20-35% by 18 months.
    Market stable in 18 months
    Home prices will increase slowly in 2 years.

    Well, great article and wish me luck.

  3. LI Home Prices Far From Reality? um...yup! - Long Island - New York (NY) - Page 14 - City-Data Forum on June 3, 2009 12:12 pm

    […] and deserve all the praise and trust from buyers. Below is a great example of a great Agent. REA Tom McGiveron[SIZE=7][/SIZE] whom I would consider a one of the few honest REA’s on Long Island takes time to research market […]