May

18

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

Filed Under Buyers, Sellers, Sellers & Buyers |


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I am conducting buyer and seller seminars throughout Long Island and I am continually hearing people tell me what they think about the Long Island real estate market. I hear things like, “Oh, the market’s going to pick back up soon.” I also hear things like, “The market is crashing and all prices are going to go down another 50%…”
It’s usually sellers saying the first thing and buyers saying more of the latter. Obviously.
Now my website is directed entirely towards educating sellers and buyers on the Long Island real estate market. I do not dress up the information and I pull no punches when it comes to taking a good hard look at what’s going on. At least in my opinion, my information is transparent in as much as the information presented is as accurate as I can make it.
To specifically address what has happened to the Long Island real estate market, I decided to take a look at all the zones of Long Island, which includes in this article: Queens, Nassau and Suffolk. I took a look at the most current data available via the Multiple Listing Service Of Long Island. I measured April 2008 and April 2009 respectively. What I found was shocking, even to me.
april-2009-the-state-of-the-li-real-estate-market-stats.jpg
Long Island is comprised of zones, which cover multiple hamlets. If you have a question about what zone you are in, please call me at 1.877.765.3123, ext. 51 and I’d be glad to review this with you.
These statistics do not lie. When a seller tries to tell me that the market isn’t “as bad” as what I say - I refer to this chart.
I was recently at a friend’s party and his father-in-law was trying to tell me that the average home in Suffolk is selling for $415,000. I promptly told him that information was inaccurate and proceeded to tell him that prices have dropped 17.5% in the last twelve months and the average selling price in Suffolk County is currently around $370,000.
Well, I was the party-pooper. Hey, there’s a first time for everything!
So if you’re buying or selling, please refer to this chart. I will do my best to update it every month, so keep checking back in monthly to see where we’re at. To me, this is a great way to stay on top of where the market is.
april-09-inventory-vs-sales.jpg
So where is the market going? Well, the above slide is pretty clear on that. With over 33,000 listings for sale (inventory) and less than 1500 sales, we have a long way to go toward leveling the supply of homes on the market. This point is irrefutable. These numbers do not lie.
Are there signs that things are improving? Absolutely, but the improvements are slow and small (which is a lot better than nonexistent). Now what does this mean for buyers? It means, for the time being, that home prices will not be increasing anytime soon. However, as I always say, interest rates are at historic lows so getting in now is an incredible time.
If you would like to learn more about one of our seminars or would like to sit and review more market information, please do not hesitate to contact me at 631.831.9048.

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


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6 Comments so far

  1. Mike on May 21, 2009 8:01 am

    Interesting data. The prices are still too high to be supported by the median income of Long Islanders. There are still a lot of stubborn sellers who refuse to let go of the fantasy that their average home is worth $450K.

    On top of that, Long Island is lagging behind the rest of the country when it comes to job losses. The unemployment rate is on the rise now. It is quite a standoff as your chart on homes available shows. The fantasy world of fixer-uppers selling for 1/2 million dollars is over. There isn’t a bank left on the planet that is going to fund the kind of crazy loans that drove the LI RE market WAY past the ability of people to afford.

    A more reasonable median price for Suffolk would be about $170K.

  2. tmcgllc on May 28, 2009 2:08 pm

    Mike,

    Yes the financing bubble definitely has burst - big time. However, your asseesment of where median prices on Long Island should be is way off. I would say a much more accurate and HEALTY median would at the very least, be about $290,000. Remember that Long Island and other areas of the country will always be above the average for the country. If I’m not mistaken, I think $170,000 would fall below even the countries median (not sure).

    I am finding many “buyers” are just plain scared to buy. Yes this is a buyers market, but don’t expect home values to fall another 50%. IF that happens, that would be indicative of a total collapse of real estate values across the country, which would not be good for anyone - other major crisis factors would need to occur and trust me, even you, as a buyer, don’t want that for our Island or our country.
    The average home sells for $370,000 in Suffolk as of April, 2009 (not median but lets assume that’s pretty close to 370k). $170,000 median price would bring the values back to 1999 ish. At “Best” for buyers - we’re looking at a retraction to 2003, possibly even 2002 values - but don’t hold your breath thinking median prices are going to fall back an entire decade.
    Figure another 10 to 15% (at the most) in price drop. And if you still “can’t” afford a home at that point - maybe you should consider relocating or creating alternative avenues of income.
    Have a great day and good luck to you.

  3. Vincent Gerretz on June 12, 2009 1:27 pm

    The median is now lower.

    County Overview
    As of 2009, Suffolk County’s population is 1,453,229 people. Since 2000, it has had a population growth of 3.55 percent.

    The median home cost in Suffolk County is $355,900. Home appreciation the last year has been -11.70 percent.

    Suffolk County, NY Income and Salaries
    The income per capita is $30,917, which includes all adults and children. The median household income is $73,712.

    Source: Sperling’s Best Places (www.bestplaces.net)

    With a median household income of $73,712, the potential homeowner can PROPERLY afford a PITI of $2,027.08. The property tax rate is $22.4 per thousand. That is $7,972 for property taxes on the median house price (See above). That mean $664.33 of the monthly PITI is Property Taxes!

    Disregard the insurance cost for now, the PI would be $1,363. Now assume a 6% interest rate, the actual price that this potential homeowner could REASONABLY AFFORD is really $244,850. That means they need to make a down payment of $111,049 to be able to purchase the “Median Home Price” in Suffolk.

    So, how many buyers have that amount of a down payment?

    Prices still need to come down to allow the typical person in Suffolk to afford to buy a house. Reducing this crazy Property Tax System that plagues us here on Long Island would help too. Let the NYS AG know that.

    Comments are welcome at vincejg@mycityhomebuyers.com

  4. tmcgllc on June 13, 2009 2:50 pm

    Vin,

    We exchanged a few emails on this prior to the posting of your comment on here - I wanted to run by you the idea that most home buyers are married or are a couple of some sort.
    Two incomes.
    How do you think this plays into the financing and affordability of homes here on Long Island?

  5. MIchele on July 15, 2009 7:59 pm

    what does pi mean

  6. Long Island Real Estate Market | Tom McGiveron | Coldwell Banker Realtors on September 22, 2009 10:33 am

    […] 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 […]