STOCK MARKET VOLATILITY...MAYBE IT’S TIME TO BUY REAL ESTATE

Like any investment, buying low and selling high is the key to maximizing profitably.  However, a volatile market makes it difficult to recognize when a stock is high and going down and when a stock is low and going up.  The TV pundits seemed almost desperate this week, advising investors not to panic and searching for good news among the downward trending prices.

Real estate on the other hand, moves at a slower pace and monthly tracking by government and industry analysts are easier to understand and react to.  Because of the 2008 crash, which was fraught with fraud at high levels and throughout the segment, we have more regulation and a more stable environment.  We also saw a gradual climb in prices that took 10 years to get where we are. 

Recent news on Real Estate suggest that low inventories, higher home prices and, “a new tax law that reduces incentives for home ownership have weighed on the housing sector this year.” Even NYC property prices are softening.  September sales of homes in the U.S., were down 4.1% from a year earlier, “the seventh straight month of decline.” On the other hand, inventory supply is still low but rising, and there are “signs of strong demand.”  

Softening sales and prices, increasing inventory and strong demand, mortgage rates still under 5%- all factors suggesting that this may be a good time to consider investing in real estate.  If you are looking, don’t take a winter break – you will likely lose opportunities.  If you are thinking of buying, start now and take advantage of this favorable confluence of factors.  If you are selling, be realistic about your pricing and insist on aggressive and consistent marketing from your broker.   For help with all your real estate needs, call us at Beninati Associates, we get results!

Source: The Wall Street Journal, October 20-21, 2018, Home-Sales Slump Deepens, pages A1-2.

GOOD NEWS/NOT SO BAD NEWS ABOUT HOUSING MARKET

RIS Media reported that the trends of fewer closings and stabilizing inventory continued through September, punctuated by a surprisingly big 12% year-over-year drop in national home sales, with median sales price of $241,000, marking the 30th consecutive month of year-over-year price increases, and the highest September price in the past 10-years.  Available inventory of homes for sale, dropped for the 119th consecutive month, according to the report, but the decline of appears to be lessening, a positive trend toward market equilibrium.

The Wall Street Journal reflects, “home-price growth has slowed for the last several months and is expected to continue slowing as mortgage rates rise. The volume of existing-homes sales has fallen compared with a year earlier for six straight months.”

The good news is that the state of the housing market is far less volatile than it was ten years ago.  Also new-home starts have been increasing but at more sustainable rates.  All reflected in a gradual improvement in the number of homes on the market. 

As home buyers and sellers, how does this affect you?  If you are selling your home, it’s important to price your home right, keep it in good repair and aggressively market your property.  If you are a buyer, the low inventory levels reduce the number of possibilities and tend to keep prices up, so act when you see something you like and you feel it’s priced right. 

The report also recommends that “in circumstances like these, where the market is tricky to navigate, both buyers and sellers can benefit by aligning themselves with a professional agent—a local expert who can cut through the noise and advocate on their behalf.”

Sources: RIS Media, Brand Report: Home Sales Tumble 12 Percent as Prices Remain at Record Levels, October 16, 2018; THE WALL STREET JOURNAL, The Soft but Stable Housing Market, page A2, October 15, 2018.

Poll Reveals Most Annoying Neighbors

A National Holiday created in 2003, National Good Neighbor Day was celebrated this year on September 28^th – did you know that? We all know and appreciate good neighbors, but what about the other end of the spectrum – the not-so-good neighbor? You might build or buy a home that’s a perfect sanctuary, but you have little control over what happens around it, especially when it comes to neighbors. Whether your dwelling is urban, suburban or on a private island, if you’re human, you’re bound to be irritated by things your neighbors do.

In a recent poll, ImproveNet, an online home improvement site, set out to identify the cities in America where neighbors roil each other most, and a laundry list of the most common complaints.  They surveyed residents from 24 of the biggest cities in America, and, inevitably, there were winners and losers. Atop the list of most annoying cities are Dallas, Miami and Austin. New York was 6^th on the list. Cities where neighbors are least annoying include Minneapolis, Portland and Atlanta.

Without question, noise is the leading offense. Loud music is the top culprit in that category. People also cite loud adults, kids, pets and parties as top ten issues. Loud talking and shouting is the second most annoying thing that neighbors do!

General grumpiness also made the top ten, along with parking issues and dog poop. Other modes of annoyance include smells (tobacco, pets, cooking) and filth (overflowing garbage, dirty yard, dirty home exterior) and boundary disputes.

The poll also asked respondents, “Did you confront anyone about it?” Results were close to an even split—56% have confronted a neighbor. For those who have, face-to-face is the preferred method, followed by calling the police, phone call, through an association, or an attorney.

          This poll certainly should makes us stop and consider if we are good neighbors.  It is worth the effort, it will only make our community a better place to live.

Source: ImproveNet Poll, October 1, 2018, Methodology: In August 2018, 2,500 adult residents of 24 cities were surveyed. Results are based on a sample of at least 100 residents from each city.

COMMERCIAL MARKET ON THE NORTH FORK- More than what meets the eye

Over the years that we have been doing business on the North Fork we have been involved in a number of very large and small commercial transactions.  The North Fork is a resort area with wonderful natural resources, vineyards and farms, and creek, bay, and sound front shorelines that attract visitors, who see what we see and want to stay.  This supports the residential real estate market, but the commercial ventures are what sustain the level of business that makes everything work. Without the jobs created by the commercial activities – farms, vineyards, breweries, food establishments, restaurants, service businesses, shops, Tanger outlets, boating, fishing, etc. – we would not flourish, we would not see our real estate values sustained, and we would see a decline in business, property values, population and all the related activities.

In recent years we have seen a slow but steady level of growth in the commercial real estate market.  But in the last year or so, the growth has accelerated.  It’s all good – new businesses, new ideas, make our communities flourish and bring jobs and prosperity to the community.  Hopefully, our younger people will be able to find good jobs with the new businesses and stay in the community.

Buying or leasing commercial space is not the same as buying a home.  The investment metrics are pretty cut and dry, but the vision and passion of the entrepreneur is what drives a deal and eventually makes for success.  Often, a new idea meets with skepticism, and push back just because it’s different.   It has happened that someone, who may want to open a restaurant, or build senior housing, or other type of business venture, meets with months and years of bureaucratic red tape. Unfortunately, good, competent, sincere, business people go away, rebuffed and discouraged, having spent precious time and money to no avail.

               If we are to continue to sustain our local economy, it must grow.  We must embrace new ideas, new businesses that support our way of life, but not restrict growth or be afraid of change. Local legislation should be supportive, not restrictive or punitive.  It’s time for a breath of fresh air to fill the lungs of all our elected and appointed officials.  Listen to your constituents! You can and should protect our way of life but not by closing the door to new fresh ideas or restrictive town code. Do what is right.  Go forward not backward.  

BALANCING ACT: HIGHER HOME PRICES AND HIGHER MORTGAGE RATES

With high home prices and increasing home mortgage rates, is it better to wait to buy and hope that home prices will fall, or buy now because mortgage rates are still low and but are predicted to go up.  There are some unknowns – will prices continue to go up because of low inventory and high demand or have prices peaked and will they begin to soften over the winter and into 2019 when the new tax changes hit middle and upper income New Yorkers’ pockets.

Depending on which scenario you buy into, it appears that buying now may be a better strategy than waiting, because the mortgage rate increase over time would amount to paying higher dollars overall in interest than you would save even if there was a decline in prices.  

An example with a set of assumptions makes it easier to see.  For the statisticians among my readers, I’m keeping this simple.

           
           Assumption: Purchase a home for $500,000 with a $400,000 30-year fixed rate mortgage at 4.5% today(current rates) versus purchasing a home next year with a 5% price increase and a 5% mortgage interest rate (predicted rate increase.)

               
           The monthly payment is $2,027 at 4.5% on $500,000 purchase with 20% down, versus $2,255 at 5% on $525,000 or $228 more each month.  The total interest you would pay for the 4.5% loan is $329,600 and for the 5% loan $391,680  -  $62,080 more interest over the 30-years, plus $25,000 more in purchase price.  If prices drop 5%, the interest paid would still be $25,000 more over the life of the loan.

Without a crystal ball, we don’t know exactly what rates will be next year, but they certainly will not be lower.  We don’t know what prices will be next year, they may continue to rise, a likely scenario, but perhaps modestly.  One thing is clear - rising interest rates will impact your overall cost the longer you wait to buy.

If you’re planning to buy a home on the North Fork, don’t bet on prices falling, because they would have to fall significantly to offset predicted increases in interest rates.  Act on what you know now, take advantage of the low mortgage rates today and lock in a fixed rate.  The North Fork is a good investment and a great place to live.

Whether you are buying or selling the team at Beninati Associates has the experience and expertise to help you. Call us at 631  765 5333 or visit our office at the corner of Horton’s Lane and Main Road in Southold. 

AN OFFER YOU CAN REFUSE...BUT WAIT!

            Your realtor calls to say there is an offer on your home and you are thrilled. Then when the Realtor describes the offer, your excitement deflates into disappointment, you may even be insulted by the offer - it's not enough!  Or perhaps the buyer’s terms are challenging:  he also want to postpone the closing for four months, he wants all your furniture, or your boat at the dock!   Your immediate response is no - you can’t see how it will work.

            The key is to remain calm, and have an open  discussion with your realtor as to whether a counter-offer should be made. Sometimes the offer is so low  and unless there are material defects that have come to light, a counter-offer is truly not appropriate.  But in most cases, a counter keeps the conversation going and often with good will on both sides, a deal can be made. It’s important to remember that a buyer generally presents terms most favorable to her, with the expectation of a counter-offer from the seller.  

            A skilled real estate agent will help you craft a good counter.  Your counter-offer should give the purchaser a sense of what is important to you and what is not. Although the price is probably the most important part of the offer, it’s also necessary to look beyond the price and consider conditions that will impact  the net return to the seller. For example, a delayed closing will require the seller to carry expenses of the house longer, a lower cash offer, may be a better bet than a higher offer with questionable contingencies.  If the buyer’s financial qualifications are shaky or the offer has any questionable terms or conditions, you and your Realtor should sort out the risk you can live with and shape a counter‑offer that delivers something that works for you and the buyer.  Finding that middle ground is the “art” in the deal.  You may have to go back and forth more than once, and there will probably be compromises on both sides, but with a lot of patience and skill, you and your agent can create a scenario that will work for you and the buyer.

            When choosing a Realtor to represent you, consider the experience and entire skill set of the agent.  This is where the rubber meets the road – your agent is the deal-maker, and all the glossy brochures and pretty pictures and the size of the firm, will make no difference if the deal cannot be brought to fruition.  We are skilled negotiators at Beninati Associates, we have lots of experience and we drive your deal home!!!  For professional advice on all aspects of buying or selling real estate, call us at 631-765-5333, email broker@beninatiassociates.com or visit our headquarters at the corner of Horton’s Lane and Main Road in Southold.

ON LINE HOME ESTIMATES CAN SKEW-UP YOUR HOME’S REAL VALUE

Many home buyers are familiar with home value estimates from real estate web portals such as realtor.com, Zillow and Trulia (same company), and others.  However, when it comes to online home value estimates, the No. 1 caveat for home buyers is that these estimates are not a substitute for formal appraisals, comparative market analyses and the in-depth expertise of real estate professionals. Solely or too heavily relying on just one price estimate will likely skew the views of a particular property’s true market value.  And if you rely on these estimates to make an offer on a property, it will likely cause you to lose the deal.

Online home value estimates are based on information on the internet. In real estate, access to property details and values is easier due partly to low-cost immense computing power. The most popular sources of home value estimates online are those that use automated valuation models (AVMs). These estimates have varying levels of accuracies because they depend on the data available to them.

For example, Zillow’s “zestimates” for North Fork properties often reflect inaccurate values of homes, both on and off the market.  The reason is due to the fact that our market has a wide range of prices and types of homes but not a large number of homes and transactions. A statistically valid model is difficult if not impossible to create without additional input. 

               Over the past several years, I have seen homes have 30% to over 100% variances with the true value and the “zestimate” and in most cases the “zestimate” is below market value. Most recently an impeccable home marketed at close to a million dollars, had a “zestimate” of $732,000. When I researched the 7 homes used to calculate the “zestimate” included was a home sold at $329,000 which was a small home in disrepair.  When this home was removed from the array used by Zillow, the new “zestimate” increased over 20% to $889,000. When another home valued at $450,000 was also removed, the “zestimate increased to $992,000 – virtually, the asking price.

When you are looking at these online valuations, it’s important to know that these estimates have varying levels of accuracies and should not take the place of appraisals and realtor comparative analyses based on the local market.  

We are happy to prepare a current, detailed comparative market analysis for any home you wish to buy or sell in our marketplace. Call us at 631 765 5333 or visit us at our office on the corner of Horton’s Lane and Main Road in Southold.

Sources consulted: RISMedia.com and the Center for REALTOR® Development (CRD).