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

Filed Under Buyers, Sellers, Sellers & Buyers |

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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

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Comments

2 Comments so far

Michael on February 11, 2010 9:37 am
Hi Tom,

I’ve been reading your posts for a while and I think you are probably one of the most honest RE agents out there. I love the fact that you post this valuable data even when it may not necessarily be great for business. It shows real integrity.

But I’m writing to ask a question. I’m an amateur Fed watcher and a partially trained economist. I watched with great interest how the RE market (first time homebuyers in particular) fell off a cliff when the initial first time homebuyer credit expired (if I’m not mistaken we saw the drop off in November.) Sometime in the March-April timeframe, this year, we are facing both the end of the extended tax credit AND the Fed has announced that it still plans to remove the housing supports it has been offering the housing market in the form of their purchases of agency MBS (a total that is approaching 1 TRILLION dollars).

If both these supports get kicked out from under housing we’ll see both the tax incentive and the low interest rates go away. Now, that would normally mean that you’d want to jump into buying NOW except that a collapse in demand would also mean much lower prices. I’m trying to quantify the risk of waiting by determining how much interest rates could rise compared to how much home prices could fall. Needless to say this isn’t easy. I’d love to hear your thoughts on the subject.
tmcgllc on February 11, 2010 3:22 pm
Thanks for commenting - to your question - rates now are historically low. We will most likely, never see rates this low for 30 year fixed loans. As you’ve pointed out - the government purchases of Mortgage Backed Securities has kept the rate low.
Unfortunately, most people, and I’m speaking from EXTENSIVE experience, either do not understand this, or they don’t believe people like me, when I tell them this kind of stuff.
No one can predict how high the rates will go. But do this - say the prices go down 10% if the mortgage rate goes up 1%…so let’s assume that by May, 2010, rates are 6%. Assume a MOTIVATED and REALISTIC seller drops their price in your price range (whatever that is)…do the math. Run numbers now, at 5% - with the price where it is now and run numbers at 6% rates and a 10% reduction in price.
My guess is, you’ll be in the same ballpark.
Now - more to this point - and I stress this with a lot of people. NOW, the rates are 5% - and this seller is on the market NOW. The house you like is on the market NOW and the rate is 5% NOW.
There are NO guarantees that
A. the house will be on the market in May.
B. the rate will be 6% (could be higher - might be lower but doubtful on that).

And you know this - HOUSE PRICES HAVE DROPPED OVER 35% FROM PEAK. If that’s not good enough - with a combined 5% rate….you might as well either move or just continue to rent - because if you’re not ready now - you never will be.

Call me -

Are you working with a Buyers Agent? How long have you been looking? OR are you just asking this question in general?