Long Island Real Estate Market: The Big Picture

Filed Under Sellers |

Sometimes people don’t listen to me when I talk about the Long Island real estate market. Many people I spoke to at the end of 2007, when I told them to sell within 30 days, didn’t listen. They listed their home higher with someone else or they continued (and still continue) to try and sell their home on their own. I applaud their persistence and belief in themselves.
Sadly, and I mean that genuinely, many of these homeowners now find themselves faced with a reality that they’ve watched nearly 20% of their equity in 14 months, evaporate. If I told them today, that we’re only halfway through the decline in prices, would they believe me today?
In speaking with a local investor, he mentioned to me the 1990’s decline and related our current market condition on Long Island to that time period.
Let’s take a look.

Please note that thin red line that splits the graph. You’ll notice at the top the years of 1990 through 1997. At the bottom, you’ll notice the years 2007 through 2009. On the left side of the graph you will see percentages. This measurement of time frames demonstrates how different this real estate market is from certainly, the 90’s and rivals any other in the past 100 years (since data has been tabulated on the flow of the real estate market - we have data dating back to 1895).

Taking this slide a bit further, there are two things specifically that I want to make reference to.

1. Notice that we’re only 2 years into our current decline.

2. With the next link, you’ll see why I believe this current decline will last at least just as long as the 90’s did. Notice in the 90’s the decline carried through to about 1996. If we have the same type of decline now, that would take us through to about 2012.

Before you think to yourself, “You can’t predict that!” - please pay attention to the next link and slide.

Play this youtube clip - featuring a 60 minutes show in December of 2008.

What does Goldman Sachs think of these loans?

Much of what I have talked about on my website has been about foreclosures. And the Center For Responsible Lending covers this topic with precision.

A foreclosure every 13 seconds is a very startling piece of information. It can help put this current housing crisis into perspective.

However, putting all the “hype” about foreclosures aside, one thing I think many people are feeling now is either, actual unemployment (being unemployed currently) or fearing unemployment (fear of losing current employment status). The unemployment numbers in Suffolk have increased over nearly 50% since December, 2008.
Now this will impact the buying market because the fear of losing a job will put prospective buyers back on the fence. Now, in all honesty, as of April 20th, 2009, I personally see an increase in buyer interest. From my open houses to my actual buyers making the move to buy. However, I could tell you that out of all the people I know of, looking to buy (about 150 buyer leads that I have cultivated during the past 15 months or so), 10 have bought a home, 15 are really curious (but still haven’t bought), and the rest are a mixture of people who can’t afford it or can’t qualify for a loan.

While homeowners continue to contemplate putting their homes on the market or not, there is one thing for absolute certain, home values will continue to decline as the supply of homes (as of March, 2009 32,363 homes available) far exceeds the buyer demand (March 2009, the market saw about 1400 sales total). This equals depreciation and it will continue.
Example: Sell now at $400,000 (just an example) or sell 24 months from now at $340,580 or so (assuming a guaranteed 15% decline in prices).
Or, hold off for 5 years, waiting for prices to come back to 2009 prices (please notice the 2009 number, not 2005).
The clock is ticking…

Apr

20

Long Island Real Estate Market: The Big Picture

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