MAKING SENSE OF THIS RAPIDLY CHANGING MARKETPLACE

Last Tuesday’s article, “Home Sales Hit Best Pace in Decade,”* in the Wall Street Journal discussed how the first quarter’s 6.9% rise in median home prices and slightly higher mortgage rates haven’t kept home buyers away. In fact, the first quarter posted the highest rate of sales since 2007.  Last Wednesday’s article in the Wall Street Journal, “A Dip in Construction is Bad for Home Buyers,”** talks about April housing starts declining 2.6% from March and how this is “intensifying the housing shortage and will push home prices and rents up...the slowdown in (housing) starts is likely to exacerbate an imbalance of supply and demand.”

This constant analysis of monthly results of housing data sales, inventory, housing starts and median sales, puts pressure on all of us to keep up with and understand the implications of the information so we know what to do.  Should we buy now?  Should we sell now?  Should we wait for a few months? Should we wait for a few years?  All very important questions with a real financial impact on your net worth.

As a Real Estate Broker, with past professional experience in Finance, Economics and Accounting, I have studied economic trends for many years.  I’ve learned that the one thing we can be sure of – trends change!  So the best advice I can give buyers and sellers is to focus on the current market situation, analyze it and be sure it works for you now, in the short term and into the next 3-5 years. 

If you’re selling, it’s a very good time to sell. Not knowing for sure how long this will last, it seems logical, to make your move sooner rather than later.  If you are selling and buying, check the market where you are moving and then make your decision.  Since the national climate is similar to what we are experiencing in Southold, you probably will be able to preserve net worth and if you are downsizing, put away some capital for the future. 

If you’re buying, it appears that the shortage of inventory is likely to last a bit longer.  That suggests that prices will continue to rise, so buy sooner rather than later.  Look for value, but understand that this market is moving up quickly and something at today’s prices will likely be more expensive for a similar property in a few months.  If you find something you like and it is a bit higher than you planned to spend, measure the impact of the price increase on your monthly expenses and see if you can handle the additional cash outlay.  If you are financing, you’ll find that a higher purchase price may translate to a smaller monthly payment -  which will not change if you get a fixed mortgage – perhaps smaller than you thought.  Higher real estate taxes, on the other hand, are likely to increase over time, so carefully analyze the difference of the monthly cost of a higher prices home with lower real estate taxes, versus a lower priced home with high real estate taxes.  Most importantly, check with your financial advisor, tax accountant, or attorney.

The bottom line - do your home work, ask questions and work with a Realtor who understands the financial in’s-and-out’s of purchasing property. At Beninati Associates, we can help you with the process and the numbers. Call me at 631 765 5333 or email, Marie@BeninatiAssociates.com.

* Wall Street Journal, Tuesday, May 16,2017, page A2.

** Wall Street Journal, Wednesday, May 17, 2017, page A2.