NYTimes: For Home Buyers, Sweet Incentives

“In October, the number of contracted sales on Long Island totaled 3,061, up 48.5 percent over October 2008, when 2,061 homes sold, according to the Multiple Listing Service of Long Island. At the same time, prices are sliding, with the median at $360,200, a decrease of 6.4 percent from last October’s median of $385,000. Nationally, prices are off by 8.5 percent, according to the National Association of Realtors.”

see complete story here

The October Market Wrap Up

Let’s take at look at some October numbers for single-family houses and condos on Long Island and see how they compare to last year.

Suffolk County

• 12,510 homes were for sale, down from 13,989 in October 2008
• 974 homes sold, up from 844 in October 2008
• The median sold price was $327,000, down from $345,000 in October 2008

Nassau County

• 9,109 homes were for sale, down from 9,929 in October 2008
• 929 homes sold, up from 786 in October 2008
• The median sold price was $400,000, down from $425,000 in October 2008

Queens County

• 9,624 homes were for sale, down from 11,303 in October 2008
• 707 homes sold, up from 653 in October 2008
• The median sold price was $345,000, down from $385,000 in October 2008

These numbers come from MLSLI.

Dig Deeper Into the Trends

These numbers are for county-level trends. To see what’s happening in your neighborhood, check out our stats & trends pages.

The $8,000 Home-Buyer Tax Credit Has Been Extended & Expanded

Earlier today, President Obama signed new legislation extending the deadline for the home buyer tax credit into 2010 and expanding it to include current home owners who are looking to buy a primary residence.

The Basic Requirements

You qualify for the tax credit if the:

• Home you’re buying will be your primary residence
• Purchase price isn’t more than $800,000

This credit is not a loan; it’s yours, but keep in mind you have to live in your new home for three years. If you sell the home in less than three years, you’ll have to pay back the money.

What’s Changed?

With the new legislation, buyers have more time to find a home and more buyers are eligible for the tax credit:

• New deadline: To qualify, you need to be in contract with a seller by April 30th & close on the home by June 30th (The previous deadline was November 30, 2009).
• Not just for first-time buyers anymore: Home buyers who’ve owned and occupied a home for at least five consecutive years during the past eight years are eligible for a credit up to $6,500.
• Increased income limits: Individuals making less than $125,000 and couples making less than $225,000 are eligible (The limits used to be $75K & $150K).

First-time buyers are eligible for a credit up to $8,000 on homes purchased between January 1, 2009 and June 30, 2010. Qualified homeowners can a credit up to $6,500 on homes purchased between November 7, 2009 and June 30, 2010.

Bonus Link

You can check out the full text of the bill. Scroll about halfway down to sections 11 & 12:

• Sec. 11. Extension and Modification of First-Time Homebuyer Tax Credit.
• Sec. 12. Provisions to Enhance the Administration of the First-Time Homebuyer Tax Credit.

The Market Wrap Up for September

Let’s take at look at some September numbers for single-family houses and condos on Long Island and see how they compare to last year.

Suffolk County

• 12,822 homes were for sale, down from 14,413 in September 2008
• 883 homes sold, up from 816 in September 2008
• The median sold price was $338,000, down from $360,000 in September 2008

Nassau County

• 9,516 homes were for sale, down from 10,259 in September 2008
• 845 homes sold, up from 775 in September 2008
• The median sold price was $405,000, down from $446,000 in September 2008

Queens County

• 9,800 homes were for sale, down from 11,377 in September 2008
• 618 homes sold, down from 663 in September 2008
• The median sold price was $341,500, up from $400,000 in September 2008

These numbers come from MLSLI.

Dig Deeper Into the Trends

These numbers are for county-level trends. To see what’s happening in your neighborhood, check out our stats & trends pages.

Case-Shiller: Summer Surge Benefits Low Tier Most

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). Starting this month, we will be basing all of the charts in this series of posts on the seasonally-adjusted data provided by S&P. For the full source data behind this post, plus non-seasonally adjusted and tiered price data, hit the S&P/Case-Shiller website. For an explanation of how the Case-Shiller data is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – August data is released in October).

Here are the basic Case-Shiller stats for the New York City area* as of August:

Sixteen of the twenty metro areas tracked by Case-Shiller saw an increase in their respective seasonally-adjusted HPIs between July and August. Only Cleveland, Las Vegas, Charlotte, and Seattle marked seasonally-adjusted drops month-to-month.

Here’s a look at New York’s latest tiered data, back through 2000:

From the looks of the Case-Shiller tiered data, I’d say that the low tier seems to be benefiting the most from the summer spike. Given that much of the bounce has been attributed to the $8,000 tax credit available only to first-time buyers, that is not surprising.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves:

Here’s our peak decline chart, in which we line up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.

Here’s the flip side of the peak decline chart, here’s a chart of just this year, indexed to January = 100%:

According to a Reuters story from earlier today, Robert Shiller has described the sudden spike seen in many markets this summer as potential “bubble territory.” I agree. As I have discussed on these pages in recent months, the sudden and simultaneous nature of this price uptick does not bear any marks of a return to fundamentals, but instead seems to be driven almost entirely by a mad dash for cheap loans (interest rates in the 5s) and free money ($8k tax credit).

I’m a little bit concerned that by interrupting the natural correction of the housing market, recent government intervention is setting us up for even more pain down the road. I hope I am wrong.

*[Case-Shiller defines the New York City area as all of Fairfield, New Haven, Bergen, Essex, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union, Warren, Bronx, Dutchess, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Suffolk, Westchester, and Pike counties.]

REO’S – Foreclosures – Bank Owned Properties – Cash Is King, but Is It Worth it?

The Foreclosure market is fast and furious, here on Long Island.  Most of the time, these properties are attractively priced and appeal to those who are looking to get into the market, such as renters, first time home buyers and those who missed the chance to buy in the last time prices were at this level, which was 2004.

But many of the foreclosed properties, also known as “REO” and “Bank Owned”  are being bought by cash investors who fix them to re-sell or rent them out.

Photo by ELIYAHU GURFINKEL, THE ANN ARBOR NEWS

These homes are put on the market at 55-65% of surrounding property values.  That leaves the everyday home buyer, with 10%, 20% even 25% down, who wants to get a good deal on a home little chance of winning a bid on one of these properties here in Nassau and Suffolk Counties. If you are an FHA borrower, putting the required 3.5% down, there is little hope – in this current market, Fall 2009 – of getting one of these homes.  Perhaps that will change, but only time will tell. Even if you have a large cash down payment, say 50%, another requirement is a pre-approval for a 203K Rehab Loan offered through the FHA.  Often times, these homes have been left abandoned for a year or more as the banks trudge through the foreclosure process and the home has been damaged as a result from neglect, break-in’s, theft, kids using the home as a party-house, etc.

Many of these homes need bathrooms, kitchens, windows, not to mention mold remediation, roofs, carpet, flooring and paint.  An FHA 203K Loan will help insure that you have the funds put aside to make those repairs that will bring the house back to being liveable. Lenders want to know you have the necessary funds set aside to do this or the house might end up back in foreclosure again.

Lastly, may of these Bank Owned Properties that are listed require you to be pre-approved through one of their own mortgage specialists. There is usually no obligation or cost for this, but they want to make sure you are truly qualified, whether through income and assets or through a proof of funds letter. Yes – if you say you are a cash investor, you must provide the proof of fund available, either through a copy of t[you bank statement (with your account number whited out, of course). Sure, they hope you will use them to get the mortgage because then they have your business, but it is usually not required once you have been pre-approved.

So, if you’re going to play in the fast moving game of REO’s, have your current paystubs, credit reports and bank statements handy so you don’t miss out on these properties while scurrying to get them together.

Then after all that, get ready to give up all your rights to property disclosure and renegotiation due to condition regardless of what you find during your inspection. These properties are sold “AS IS” period.

So, think buying a REO is a good idea? Please read this story three time and repeat after me “I am a Warrior, I will not be defeated in the quest for a Bank Owned Property”.  Good luck.

See this WSJ story below for some more fun anecdotes:

Are Distressed Homes Worth It?

Case-Shiller: Simultaneous Summer Surge Stretches On

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). For the full source data behind this post, plus seasonally adjusted and tiered price data, hit the S&P/Case-Shiller website. For an explanation of how the Case-Shiller data is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – July data is released in September).

Here are the basic Case-Shiller stats for the New York City area* as of July:

Seventeen of the twenty metro areas tracked by Case-Shiller saw an increase in their respective seasonally-adjusted HPIs between June and July. Only Las Vegas, Seattle, and Detroit continued to mark seasonally-adjusted drops month-to-month.

New York’s summer bounce has so far been more mild than other markets, but then prices here hadn’t fallen as much as they had elsewhere either, so we wouldn’t expect them to bounce off as much.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves:

Here’s our peak decline chart, in which we line up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.

I suppose this summer could be called the summer of the sudden surge or the summer of the massive desperate government intervention. Either way, the result has been increasing prices in most markets over the past few months. Potentially good news if you’re trying to sell your house, but not especially encouraging if you’re hoping to buy, but prices had not yet come down quite into your reasonable range yet. Whether the $8,000 first-time homebuyer tax credit expires or not, I think this winter will be interesting.

Here’s the flip side of the peak decline chart, the Great Summer Bounce of Aught-Nine:

It’s the best recovery that $700 billion plus $787 billion can buy!

*[Case-Shiller defines the New York City area as all of Fairfield, New Haven, Bergen, Essex, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union, Warren, Bronx, Dutchess, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Suffolk, Westchester, and Pike counties.]

September City/Neighborhood Price Reductions

It’s been a while since we had a look at which cities and towns have the most price reductions.

The following charts show the percent of MLS, FSBO or REO listings that were price-reduced at some point before leaving the market (either sold or removed unsold from the market) in the past 90 days. Cities/towns or neighborhoods in which the number of homes taken off the market was too small to provide believable estimates are excluded from ranking.

For those that are interested, I have uploaded the full data set in Excel format here. The downloadable Excel file also includes charts showing the top ten cities/towns/neighborhoods with the least reduced-price listings.

First up are the top ten cities with the most price-reduced listings:

Of the 205 cities/towns we ranked in the Long Island / Westchester area this month, only 9 had price-reduced ratios of fifty percent or more. Of the cities/towns we ranked, the median price-reduced ratio was 38.4%.

Getting a little more granular, let’s look at the top ten neighborhoods for price reductions:

Of the 91 neighborhoods we ranked this month, only one had a price-reduced ratio of fifty percent or more. Of the neighborhoods we ranked, the median price-reduced ratio was 31.9%.

Download the full spreadsheet to check where your neighborhood came in.

The Market Wrap-Up For August

Let’s take at look at some August numbers for single-family houses and condos on Long Island and see how they compare to last year.

Suffolk County

• 12,893 homes were for sale, down from 14,650 in August 2008
• 998 homes sold, up from 907 in August 2008
• The median sold price was $350,000, down from $370,000 in August 2008

Nassau County

• 9,702 homes were for sale, down from 10,435 in August 2008
• 907 homes sold, up from 900 in August 2008
• The median sold price was $420,000, down from $477,500 in August 2008

Queens County

• 9,905 homes were for sale, down from 11,171 in August 2008
• 638 homes sold, the same number as in August 2008
• The median sold price was $390,000, down from $410,000 in August 2008

These numbers come from MLSLI.

Dig Deeper Into the Trends

These numbers are for county-level trends. To see what’s happening in your neighborhood, check out our stats & trends pages.

What trends did you see in August?

First-Time Buyer Hoping To Get The $8,000 Tax Credit? You Have Three Weeks To Find A Home

The federal government is offering first-time home-buyers a tax credit of 10% of a home’s sales price up to $8,000. To qualify you must close on a home by November 30th; if you close on December 1st, you’re out of luck.

If you’re a first-time buyer, you have a little over three weeks left to find a home, make an offer and negotiate terms if you hope to close in time to get the $8,000 tax credit.

Close By November 13th

In a normal month, about 20% of closings slip from the last week of a month to the next. This number will almost certainly be higher in November due to the expected rush of buyers trying to get the tax credit and because November 30th falls on the Monday after Thanksgiving.

If you’re hoping to get the tax credit, you want to make sure you’ve closed before the week of Thanksgiving because it’s not a full work week:

• Thursday, November 26th: Turkey day. A day to give thanks and watch the Detroit Lions go for six Thanksgiving Day losses in a row.
• Friday , November 27th: Nassau County offices are closed.
• Saturday & Sunday, November 28th & 29th: The banks aren’t open so you can’t close.
• Monday, November 30th: The last day to close and qualify for the first-time buyer tax credit. It’s going to be a goat rodeo.

To give yourself the best chance of getting the tax credit, plan on closing by November 13th. If you run into any problems during closing, you’ll have more than a week to work things out and still qualify for the tax credit.

Get An Offer Accepted By October 2nd

Right now, it’s taking our clients an average of 42 days to close once they reach initial agreement on terms. This means if you want to close by November 13th, you need to get an offer accepted by October 2nd. That’s a little over three weeks away.

For more information, check out the Home Buyer Tax Credit FAQ from the IRS and get all the details about the tax credit from the agency giving the credit. Also, check out the report that this program may be extended.

Find A Home You Like

Don’t rush into a purchase. Make sure you’re buying because you’ve found a home you want to live in, not because you want the $8,000. You don’t want to end up in the wrong house in the wrong neighborhood with the wrong commute just for a few thousand dollars.