In March of ’07, in “The Climate Has Changed,” I discussed the challenging real estate market that had recently emerged.  I explained that market changes, like climate changes, are cyclical.  Now, four years later, I’m here to tell you that the climate is changing again—for the better.

 

The first quarter of this year has given us new hope.  To recap, there is a definite sense of momentum in our local market.  That momentum is being fueled by some pretty powerful forces:  Mortgage rates remain remarkably low, excess inventory is gradually being absorbed, and unemployment on Long Island fell to 7.1% in March from February’s figure of 7.7%. 

Locally, our stats have been improving.  Home affordability has continued to trend up, putting more homes in reach of more families.  (See the graph below.) The number of contracted sales has been encouraging, considering the fact that there is no federal tax credit stimulating sales this year.  In addition, consider these factors:

·         Pent-Up Demand:  As Dorothy Aschkar, President of the Multiple Listing Service of Long Island wrote in the April issue of Realtor magazine, “Coming off one of the worst winters we have had in decades, I believe there is a pent-up demand of buyers, who are finally digging themselves out of their driveways and are beginning to search for a new home.”  

 

I agree with Ms. Aschkar.  This pent-up demand explains the increased level of activity in general, and the higher level of attendance at open houses.   All this bodes well for future sales.

 

·         Shifts in Attitude:   Sellers are being more realistic about listing prices and price adjustments, and in turn, buyers are being more realistic about what to expect in concessions and price negotiations.  The result is that buyers and sellers are no longer so far apart, which makes more sales more likely.

 

Nationally, several recent reports have raised some eyebrows:

·         New-home sales increased by 11% in March. 

·         Home construction went up by 7.2% in March as compared to February. Not only does this help the real estate market, but it also bolsters the broader economy by creating jobs and generating tax dollars.

·         Building permits went up by 11.2 % in March, a strong indication of higher future construction levels.

·         Existing home sales were up in March by 3.7%, although it was primarily investors behind this increase.

On the other hand, the latest Case-Shiller Home Price Index report showed a 3.3% drop in prices nationwide in February, compared with a year earlier.  Only 1 of the 20 cities covered by the Index showed a year-over-year price increase.  In addition, homebuilder sentiment was down in April, due largely to concerns about foreclosure levels and home prices.  So nationally speaking, the news remains mixed.

 

A Welcome New Slant

A very interesting article recently appeared at CNNMoney.com (“Real Estate: It’s time to buy again,” by Shawn Tully, Senior Editor at Large, Fortune magazine, Feb. 28, 2011).  Its intro stated: 

 

 “Forget stocks.  Don’t bet on gold.  After four years of plunging home prices, the most attractive asset class in America is housing.”  

 

The article discussed many fundamental factors influencing the market, such as home affordability and home prices, and went on to say “So let’s state it simply and forcibly: Housing is back.”

 

Looking Forward: What’s on the Horizon?

The local market should continue to improve over the next few months.  The fundamentals seem to be in place.  Also, this may be one of those times when Long Island benefits from a very unique factor: being right next door to New York, one of the greatest cities in the world, where prices have held up better than in most places.

 

My gut instinct tells me that our market is well on its way to stabilizing.  Once that happens, we can begin to work our way up.  Remember, it’s all cyclical.  Want to know your home's current value?  Call Michael: 631-941-4300 or Michael@Ardolino.com.

 

 

We have Ducks tickets!  Free with our compliments… There are many games available.  For your free tickets, please call 631-941-4300.  We have 4 tickets for every home game directly behind home plate!  If you haven’t gone to see a game, it is a great way to enjoy time right here on Long Island.  Hurry and call for your tickets.  They go fast!

 

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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 information.  For additional data, visit www.Ardolino.com, where you’ll also find my blog. 

 

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Copyright © 2011 by Michael Ardolino