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Sunday, 28 February 2010
5% to 30%: According to Fortune magazine, that’s the decrease in home prices that economist Mark Zandi of Moody’s has predicted for 2010, depending on the region. Other noted experts, such as Karl Case of the Case-Shiller Home Price Index, have made similar predictions.
(See Exhibits 1 & 2.) The bottom line is, if you have any thought of buying or selling a home this year, you can use this information to your advantage as part of a strategic plan.
Prices & Rates: In the end, the housing recovery depends on prices.
In any market, boom or bust, homes must be priced right to sell.
Today, that means more than just being competitively priced. Today, a home must be so well priced that the buyer actually feels compelled to buy it for fear of missing the
opportunity to do so. Buyers right now have the benefit of historically low mortgage rates, plenty of inventory from which to choose, and generous tax credits. In many cases, the final factor to tip the scale is price, pure and simple.
The smart seller knows this.
For Buyers: Some buyers feel that if prices are still decreasing, they can hold off and get a better deal in six months. However, buyers must consider the opportunity cost of waiting. Right now, rates are still low, due to certain federal government programs.
However, as explained below, these programs are slated to end, and when they do, mortgage rates are expected to increase, probably dramatically. Any decrease in price will likely be offset by higher mortgage payments.
In addition, although a buyer who proceeds now may see a decrease in value for the short term, real estate is best viewed as a long-term investment. In 10 years, today’s buyer will likely be sitting on a tidy appreciation figure, in a home that would have been out of reach in 2005. Savvy buyers will seize the moment and realize that there hasn’t been a better time to buy a home in at least 25 years.
For Sellers: Some potential sellers have discovered that the best strategy is to
become a buyer. People are realizing that selling, even at a lower price than originally anticipated, frees them up to reap the benefits of buying in this market. Many people are ending up in better homes in move-up neighborhoods at greatly reduced prices. With mortgage rates so low, some people actually end up with the same monthly payment in the new home.
Sellers also need to understand the effect of foreclosures and short sales.
Foreclosures continue to drag down prices in all segments of the market. No state is
immune, and no neighborhood is immune. In addition, an emerging trend for 2010 is the
increased use of short sales to avoid foreclosure. In a short sale, the home is sold for less than the amount owed to the lender. The strategy for sellers is clear: Price your home properly to attract qualified buyers before competing foreclosures and short sales do.
Governmental Actions: The $8,000 first-time homebuyer tax credit has spurred home sales all over the nation. Toward the end of 2009, the credit was extended, and a new credit of $6,500 was added for qualified move-up buyers, stimulating further activity. Also, the Federal Reserve has been purchasing $1.25 trillion in mortgage-backed securities to keep interest rates low.
However, both of these measures are slated to end in the spring of 2010. When they do, sales activity is likely to slow or even halt, and rates are very likely to increase. (Exhibit 3 shows expert predictions of where rates will stand at the end of 2010.) For both buyers and sellers, the opportunity for strategic action is clear:
Take advantage of the momentum that has been created by these programs by lining up your transaction now.
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As always, I am committed to keeping you abreast of market conditions. As a nationally recognized real estate expert with decades of professional experience, I’ll continue to provide updated, pertinent information. For additional data, visit my website at www.Ardolino.com, where you’ll also find my blog. If you need help formulating a real estate strategy, call me at 631-941-4300 or
e-mail: Michael@Ardolino.com.
All Rights Reserved
Copyright © 2010 by Michael Ardolino
Tuesday, 23 February 2010
As seen on All Action Alarm & Communication WebSite www.Allactionalarm.com
Amanda's Law
All Action Law Announces
Greetings!
ALBANY, NY (02/22/2010) (read media)--
Governor David A. Peterson today announced that Amanda's Law, signed into law in August 2009, takes effect today. Amanda's Law mandates the installation of carbon monoxide (CO) detectors in all homes in New York State. The law is named for 16-year old Amanda Hansen of West Seneca, New York, who died on January 17, 2009, due to a carbon monoxide leak from a defective boiler while sleeping at a friend's house.
Thursday, 28 January 2010
As seen in the The Village Times Herald 1/28, 2010
Historians may note that a luncheon last Wednesday at the Curry Club was a pivotal point in making the Three Village Area into this century's model college town.
The luncheon was the regular third Wednesday of the month meeting of the Three Village Chamber of Commerce. The topic: Can the Three Villages become the Princeton of the 21st century? Sixty Chamber members filled the Curry Club dining room to overflowing.
The topic broadened as we planned the program. The Program Committee initially wanted to have Patchogue's innovative Mayor Paul Pontieri Jr. tell the Chamber how Patchogue's successes might be duplicated here. Then someone had the idea of asking the mayor to imagine himself here with the huge economic engine that is Stony Brook University right in the middle of his community.
Later we remembered something Lawrence Martin, dean of the Graduate School at SBU, said at the Chamber's holiday dinner in December: "We need to be planning our development together." It seems obvious enough until you realize that it hasn't been done, at least in more than a cursory fashion.
We invited Martin to speak with Mayor Pontieri at that meeting, along with Deborah Ongania, a Prudential Commercial Real Estate Broker who's a member of the Chamber and knowledgeable about local properties. Martin agreed to speak with the understanding that he would be there not as an official university representative but rather as a 25-year local resident.
What a trio these three speakers made. Ongania told the group that Princeton was an excellent model for us, rated the number one college town in America. Pontieri said he'd noticed driving up Nicolls Road that the University's layout was not conducive to interaction with the community. "It's like a castle," he said, urging all of us as a first step to look for strengths on campus and in the community which could be enhanced for mutual benefit.
Then Martin recalled growing up in England, in Cambridge, and said he couldn't imagine Cambridge the town and Cambridge the University existing without one another. "It all should be part and parcel, the same way here, Stony Brook University and the Three Villages," he said. "Kids should be playing on campus. Professors and shop keepers should be talking baseball … and astronomy, geology or whatever in college town taverns, conveniently accessible whether your starting point was the Stony Brook University Library or Quaker Path."
And yet, Martin said that after 25 years living in the Three Village Area and working on campus, he could find little of this interaction here.
What to do? The physical barriers between campus and community ought to be addressed, he said. Let's look at aerial maps of the whole area, campus and community and see what can be done.
The group at that Chamber luncheon included Bob Brown, our president emeritus who followed Roy Dragotta in running the Chamber for so many years, Interim Superintendent of Schools Don Webster, Three Village Civic President Kara Hahn, Professor Bob deZafra from SBU's Physics Department, a pioneer in ozone layer research and one of the first university people to get involved in local civic affairs, serving as president of the civic, also Cynthia Barnes from the Three Village Historical Society, Peter Lessing from Mirabelle/Three Village Inn and others.
They mentioned Assemblyman Steve Englebright's imaginative Setauket Center plan several years ago as a potential starting point for joint campus-community development. That would seem to make sense, especially since Steve as our local official and as a SBU faculty member has a great perspective on both sides of our town/gown situation.
The most important thing, however, is that this powerhouse group seemed united, enthusiastic about our Princeton possibilities.
The Chamber of Commerce and others have long been interested in this. As I moderated last Wednesday's program, I told the group that we'd wanted to pursue a Princeton college town model here for "at least 30 years," that the Chamber's founder, Roy Dragotta, who still sits with our Board of Directors, had sent two of his then-Board members to Princeton back in 1980. They came back filled with enthusiasm but it wasn't matched either on campus or in the community. Nothing happened.
The time, this time, seems ripe and I hope we'll be able build on last week's momentum and begin to make changes — town and gown working together — that will make our community and the campus within it part and parcel of each other.
Michael Ardolino is president of the Three Village Chamber of Commerce.
Thursday, 14 January 2010
Wednesday, 04 November 2009
Real change has to stand the test of time. That’s why I remain guardedly optimistic about the housing recovery. We are still getting quite a few positive reports, such as the huge surge in existing home sales in September, peppered now and then by less favorable news, such as the disappointing level of housing starts in September. Similarly, there was good news on pending home sales for September, but a disappointing decrease in new-home sales. The bottom line is that the longer this healthier, more stable market can sustain itself, the more likely it is that it will continue to improve, until we eventually find ourselves back in a normalized market.
This month, I’d like to give you some graphics on the most important factors affecting real estate right now:
Mortgage Rates: Mortgage rates have been moving up and down within a narrow range for quite a few months, and they remain historically low. (See Exhibit 1.) According to Freddie Mac, the 30-year fixed rate is currently averaging 5.03%. Clearly, anyone even remotely considering buying should get out and look now. For several weeks, the number of mortgage applications has been rising and falling by double-digit percentages, depending on the movement of rates. There does seem to be a new sense of urgency in the air.
Part of the reason that rates are so low is the government’s program of purchasing mortgage-backed securities. That program is slated to end in March, and some experts predict that when it does, mortgage rates will quickly and drastically increase. The smart money says, buy before spring!
The American Dream: In spite of all the events of the last few years, from the housing bubble to foreclosures to bank failures, real estate remains the best way to build wealth. As Exhibit 2 shows, real estate makes up the largest portion of household assets, whether in a good year like 2002 or in a challenging year like 2008. The American Dream still lives.
Real Estate Is Local: I cannot stress enough that what is happening in Bismarck or Sarasota has little to do with what is happening in Belle Terre or Setauket. MLS figures are very positive. Our sales figures at many price points are up. For a good look at what has been happening in the Northeast in general, see Exhibit 3.
Foreclosures: Foreclosures remain a major factor. RealtyTrac found that for the third quarter of this year, foreclosure filings were up by 23% over the same period in 2008--a record high. July through September were the worst three months ever. Some experts predict another wave of foreclosures in late 2009 and into 2010.
Although it is a sad fact to note, the reality is that foreclosures do present opportunities for buyers.
Foreclosures are now affecting higher-end homes and even luxury homes, as pointed out by Chip Case of the Case-Shiller Home Price Index. (See Exhibit 4.) Mortgage delinquency rates in this group are way up, due largely to high unemployment figures.
Prices: The soon-to-expire $8,000 first-time homebuyer tax credit has done much to prop up sales. Unless the credit is extended, demand will be down, which will mean decreased sales, which will translate into reduced prices, even if only temporarily. However--and this is a big however--our local sales are no longer being driven by the existence of the credit. The credit initially spurred activity back in the spring, but now all parts of the market, from starter to luxury, are active.
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As always, I am committed to keeping you abreast of market conditions. As a nationally recognized real estate expert with decades of professional experience, I’ll continue to provide updated, pertinent information. For additional data, visit my website at www.Ardolino.com, where you’ll also find my blog. If you need help understanding how the current market affects your own particular situation, call me at 631-941-4300 or e-mail: Michael@Ardolino.com
All Rights Reserved
Copyright © 2009 by Michael Ardolino
Thursday, 29 October 2009
Thursday, 08 October 2009
Tuesday, 01 September 2009
It’s hard to believe that it’s almost a year since we all watched in awe as workers filed out of their Lehman Brothers’ offices, headed for an uncertain future. We witnessed the bailout of Freddie Mac and Fannie Mae, the failure of banks, and the unprecedented attempts by the federal government to stem the tide of negative news brought about by the worst economic crisis since the Great Depression. Since then, it’s been a wild ride for the whole country, to say the least.
Lately, though, some commentators have been proclaiming a definitive end to the recession and a virtual end to the housing downturn as well. After so many months of negativity, they are being almost too positive!
So, it seems appropriate that now, on a one-year anniversary of sorts, we take stock of the current condition of the real estate market, both locally and nationally. What’s the watchword? Unbridled enthusiasm? Cautious optimism? I’m decidedly in the latter camp. My gut feeling is that calling the game too soon could do more harm than good.
Accentuate the Positive....
The increases in both new-home sales and existing-home sales are impressive. The latest report from the Commerce Department shows that new-home sales were up by 9.6% in July. This marked the fourth month of increases. Sales of existing homes have also posted gains for four months in a row. They rose a whopping 7.2% in July, according to the National Association of Realtors (NAR).
The latest report from Standard & Poor’s Case-Shiller Index, which tracks home prices, showed that for the second quarter of this year, prices were up by 2.9% over the first quarter. This is an important milestone, since it represents the first quarterly increase in three years.
The inventory of unsold homes, a key factor in the recovery, has finally decreased in many areas of the country. Pent-up buyer demand is fueling activity levels that haven’t been seen in quite some time. Many consumers feel that prices have bottomed, and they are ready to buy. The stimulus package, particularly the first-time homebuyer tax credit, has certainly spurred sales. Also, all indications so far signal that the Federal Reserve is willing to continue actions designed to foster the recovery.
According to NAR, the pending home sales index rose 3.6% in June, which was much more than expected. That was the fifth month of .. All this is wonderful news.
....But Don’t Lose Sight of the Big Picture
On the flip side, there are other factors to consider: Foreclosures are still escalating. From June to July, the number of homes in jeopardy rose by 7%. As reported by RealtyTrac, this is the highest rate of foreclosures it has seen in the four years it has been tracking them.
Foreclosures were up 32% in July compared to July of 2008.
Furthermore, analysts predict that there will be a flood of option ARM loans causing new foreclosures when these adjustable loans reset at higher rates. Also, foreclosures are hitting other states now, not just the handful of states we have heard so much about for the last year, and are affecting prime loans and even jumbo prime loans.
Mortgage rates have been up and down lately, but are nowhere near the March low of 4.78% for a 30-year fixed-rate loan. Most analysts expect that rates will trend upward. This could discourage buyers and decrease overall activity, thereby slowing the recovery.
Home affordability, which has been at all-time highs for quite a few months now, is decreasing. That means that fewer people will be able to afford to buy a home. Those who wait much longer may miss the boat.
A final factor to consider is housing starts, an important barometer of future activity. The latest report shows a 1% decline in July, which was lower than expected.
The mixed bag of factors above leaves me cautiously optimistic—— let’s call it realistic—-about the housing market as well as the economy in general, nationally speaking. But the national picture is much more complex than our little corner of the universe. Where does all this leave us locally?Right Here, Right Now
I’m happy to report that this has been a very busy selling season. Homes at all price points are selling, and selling in more reasonable time frames. Trade-up buyers as well as luxury buyers are out in force, whereas initially it was only first-time homebuyers who were active.
In terms of inventory, we have definitely made a significant dent in the number of unsold homes. This is beginning to lessen the gap between supply and demand, putting the market on more of an even keel. It won’t happen overnight, but gradual improvement is better than none at all. The lower inventory figures will also help to decrease the downward pressure on prices, which should in turn spur even more activity in our area.
Another factor is the government’s stimulus plan. Although the first-time homebuyer credit will soon expire, the new, higher limits on jumbo loans under the American Recovery & Reinvestment Act remain in force. The new limits definitely help areas like ours, where homes tend to be more expensive than in other areas of the nation.
I have also noticed a very telling intangible factor at work: a subtle shift in attitudes among both buyers and sellers regarding pricing. For too long, both were expecting extremes: Sellers were refusing to realize they would have to accept a lower price. Some actually expected to get the top prices from the height of the market. On the other hand, some buyers were expecting prices so unrealistically low that transactions actually became impossible. It seems that finally, cooler heads are prevailing. When it comes down to it, recovery of the housing market in our area depends largely on prices. Serious sellers must price their homes accordingly.
So yes, we can all breathe a sigh of relief, because it is clear that tremendous progress has been made, but it’s not quite yet time to uncork the champagne!
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As always, I am committed to keeping you abreast of market conditions. As a nationally recognized real estate expert with decades of professional experience, I’ll continue to provide updated, pertinent information. For additional data, visit my website at www.Ardolino.com, where you’ll also find my blog. If you need help understanding how the current market affects your own particular situation, call me at 631-941-4300 or e-mail: Michael@Ardolino.com.
All Rights Reserved
Copyright © 2009 by Michael Ardolino
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