(03/19/2009) South Fork real estate professionals are bristling at national news stories about dismal market conditions this winter that they say have done nothing to help.
On Monday, Michael Daly’s Hamptons Real Estate blog pointed out that the number of pre-foreclosure filings on eastern Long Island last week was almost the same as the number of sales. Within hours, The Telegraph, a London-based newspaper, used those statistics to spin out a story titled “Hamptons Hit by Recession.”
Bristling is an interesting word.
bris·tle play_w2(“B0486800”) (brsl)
1. A stiff hair.
2. A stiff hairlike structure: the bristles of a wire brush.
v. bris·tled, bris·tling, bris·tles
1. To stand stiffly on end like bristles: The hair on the dog’s neck bristled.
2. To raise the bristles: The cat bristled at the sight of the large dog.
3. To react in an angry or offended manner: The author bristled at the suggestion of plagiarism.
4. To be covered or thick with or as if with bristles: The path bristled with thorns.
I would imagine that the author was using the term as in #3 above.
There are still some brokers who are spewing the same old “now’s a great time to buy” campaign they did in 2005 and have NO IDEA how that makes comsumers bristle and fuels the mistrust and lack of respect these consumers have for real estate agents.
The truth is that values in several sectors of East End real estate are down between 20-35% to roughly 2004 levels and now would be a good time to buy for some people, depending on their situation.
Affordability – for some first time home buyers, a home on the East End is finally in reach, providing you have a secure income and terrific credit – or are a cash buyer. Interest rates at 5% are a real cost saver, and check into First Time Homebuyer Tax Credits too. Some programs qualify you as a first time home buyer if you haven’t owned a home in over 3-4 years. Ask your mortgage broker.
Investment – some homes could be a good buy, depending on how the property fits into your strategy. If you expect to rent it to cover your payments, you might want to think again. The number of rentals are reportedly down 75% or more and rental prices are taking a hit, too. Perhaps as much as 10-20% (or more in some cases). Future appreciation is a cloudy picture as well. After the late 80’s /early 90’s recession, prices stayed flat for nearly a decade. Yes, the circumstances were different but a recession is like a bruise and takes time to heal.
That being said there are still some unknowns:
The Bottom– are we at bottom? Can’t say. With all the government bail out programs coming out, it’s possible that consumer confidence and capital availability will improve, making this a “bottom” for some markets. It appears that several markets like pockets of Florida, California and Arizona are seeing an increase in buying, but that appears to be a result of prices falling 50% or more to 2000-2002 levels, making it “a terrific time to buy” in those markets. Also, in many of the markets that are seeing an up-tic in sales, as much as 50% of the sales are foreclosures. That’s not happening here, on the East End and frankly, we don’t know if it ever will.
In addition to the national scene, we have the direct impact of what’s happening to Wall Street jobs, compensation, etc affecting our market. Not that ALL clients and customers are Wall Street people, but approximately 1/3 of mine over the years have been and probably another 1/3 have made their money from the robust New York economy. Oddly enough, Wall Street has helped to insulate the East End market in the past, it is possibly serving as the double-whammy at present. Time will tell how deep and long this downturn lasts. I love (despise) the “pundits’ who say “Prices are going down another 35% !!!” How the hell do they know? I put my crystal ball in the closet after September 2008…it let me down.
The Rental Card – One thing is for sure: The rental business has been a big part of the income and investment strategy for many homeowners here on the East End, especially the South Fork. While everyone (except the most jaded, cynical and jealous) is hoping that warm spring weather and the stimulus package will bring improved confidence and spending to the market through rentals and sales, fact is that if this rental season doesn’t take off, there will be some serious pain as a result. Rental income has gone a long way in keeping many homeowners and investors afloat and in maintaining values. Even though rentals have gone from the old rule of thumb – 10% of real estate value for the Memorial Day to Labor Day season, to more like 4-5% in recent years, it will be sorely missed if it reduces dramatically or goes away for some. This will also impact the service businesses, foodmarkets, restaurants and retailers.
Conforming Loans – Keep in mind, the current government programs to support mortgage companies modifying loans only covers conforming loans, which are those under approximately $625,000. Many of the lis pendens’ we are seeing recently are over that amount. Call your mortgage broker (if they’re still in business) or find someone doing loan modifications to answer questions about your particular situation.
Loan Modifications – This is basically a “Collection” department for the banks and lenders, so you have to know what you’re doing. It may be tempting to “do it yourself”, but unless you have a personal relationship with your mortgage banker who can keep an eye on your modification, I would seek out a professional. I know a good one. Call or email me if you want to speak to her.
Take Action -There are still many sellers and agents who are holding on, hoping, wishing and praying that things are going to turn around and the market conditions are going to improve. If you need to sell your property or you need to make a living, you might want to lower your price or change your approach to the market. Wishing, hoping and praying is not a strategy or a plan.
see the complete East Hampton Star article here