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Real Estate Blog
Tuesday, September 01 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!

  *******************

     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

 

Posted by: Michael Ardolino AT 01:39 pm   |  Permalink   |  0 Comments  |  Email
Tuesday, September 01 2009

Summary: Celebrating our favorite 50 or so who are over 40 and proud of it!
Date: September 24th, 2009
Time: 6-10pm
Where: The Garden City Hall
For additional information and to reserve seats, please visit www.LIBN.com or call 631-737-1700.

Long Island Business News Aug 14-20 Edition.

Posted by: Michael Ardolino AT 10:35 am   |  Permalink   |  0 Comments  |  Email
Tuesday, September 01 2009

Three Village Chamber of Commerce - Breakfast Meeting

Date: Wednesday, September 16th, 2009

Time: Breakfast Meeting - 8:30 a.m.

Place: Long Island Museum, 1200 Route 25A, Stony Brook

Program: "Cutting Costs, THEN Increasing Revenues," another of our popular Chamber member panels with Chamber President Michael Ardolino moderating and speakers including Tom Belleau, Chamber Treasure George Rehn, Mirabelle/ Three Village Inn's Peter Lessing and Lenore Paprocky from the Holiday Inn Express.

Price: $18 Members, $20 Non-Member
            (Full Breakfast, Catered by The Dish, formerly the Golden Pear Cafe)

RSVP: David Woods 631-689-8838 - Number Attending Needed or threevillagechamberofcommerce@yahoo.com

 

Posted by: Michael Ardolino AT 10:10 am   |  Permalink   |  0 Comments  |  Email

 

Michael Ardolino
Team Ardolino/Realty Connect USA
764 Route 25A
Setauket, NY 11733
Office: 631-941-4300
Direct: 631-941-6262
Fax: 631-675-1857
Email:
Michael@Ardolino.com 

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