Suffolk County NY Real Estate News - Septermber 2014

In our Suffolk County NY Real Estate News for September 2014:

Suffolk County NY Home Sales Outlook Stronger

Economists are more optimistic about the outlook for Suffolk County NY home sales over the next two years due to stronger job creation.

The annual pace of existing home sales nationwide will likely rise to 5.25 million units in the first three months of 2015 from 5.09 million in the current quarter, according to the Reuter's poll median forecast.

In May, economists expected much slower gains, with 5.1 million resales expected in the first quarter of next year.

Suffolk County NY home sales outlook is looking stronger due to stronger job creation

Americans signed more contracts in July to buy previously-owned homes than in any month in almost a year, suggesting the housing market was pulling out of its slump more quickly than expected.

The National Association of Realtors (NAR) said last week that its Pending Home Sales Index, based on contracts signed last month, rose 3.3 percent to 105.9, the highest level since August 2013.

Low mortgage rates and improving labor market dynamics should remain conducive to gradual growth in the Suffolk County NY home sales sector.

A sharp increase in mortgage rates pushed sales of existing homes lower in the second half of 2013 but borrowing costs have been more stable in recent months and Suffolk County NY home sales have recovered some of the lost ground.

Investors and economists polled by Reuters generally expect the Federal Reserve will begin to slowly increase its benchmark interest rate around the middle of next year after holding it near zero since 2008.

The median forecast put the 30-year mortgage rate at 5.25 percent in 2016, down from 5.68 percent in the May poll. Last week, the 30-year rate averaged 4.28 percent, according to the Mortgage Bankers Association.

Economists don't believe a slow rise in mortgage rates will hurt Suffolk County NY home sales, as slow increases in rates are generally considered a symptom of an improving economy. At the same time, slowly rising rates may also help to bring home price appreciation back down to more sustainable levels.

Speaking of mortgage rates and how they may affect Suffolk County NY home sales…

 

Suffolk County NY Mortgage Rates Remain Low

Suffolk County NY mortgage rates remain much lower than anyone expected they would be by this time when the Fed announced it would start cutting back on its purchases of mortgage bonds.

Mortgage News Daily reports that average 30-year fixed mortgage rates are down to around 4.11 percent. One year ago those same rates were 4.61 percent, down about 50 basis points year-over-year.

Mortgage refinancing tends to pick up anytime mortgage rates drop by 50 bps from recent levels, however most homeowners who were looking to refinance did so when rates were below 4 percent in 2012 and 2013.

We would not be surprised to see rates drift even lower in the coming few days or weeks as they pull lower due to global events, European debt, etc. These are the largest rate indicators right now that are affecting Suffolk County NY mortgage rates.

Suffolk County NY mortgage rates were well above 6 percent during the housing market's 2006-2007 peak. Freddie Mac data going back more than four decades shows 30-year rates hit an all-time low of just 3.31 percent in November 2012.

Trying to decide whether to lock in current Suffolk County NY mortgage rates or let them float a while longer? Seems odd to say floating is an option when we're near the best pricing of the year, but it might be a consideration for aggressive borrowers. If you're close to closing, or have tight debt ratios/cash to close, lock 'em up, and don't look back!

 

Ideal Time to Buy a Suffolk County NY Home?

If you've been waiting to buy a Suffolk County NY home when the time was just right, that time may be now.

Potential homebuyers who have been willing to wait for better deals are starting to be rewarded for their patience, as sellers drop listing prices to meet buyers' more value-focused expectations.

Redfin Chief Economist Nela Richardson says, "Two market developments in July are spurring this change in housing activity as the market transitions from the summer to the fall buying season.”

1 – Suffolk County NY Home Price Slowdown

Home price growth was mostly flat in July for the first time in five months.

As Senior Financial Reporter Trey Garrison said last week, home price growth has slowed across the board, and Capital Economics says the slowdown will likely meet the company's forecast for inflation to slow to 4% in 2015.

Just about everyone was a little surprised by the consecutive month-on-month declines in house prices during April, May and June on the new monthly Case-Shiller national measure. Echoing that message, the Case-Shiller 20-City measure of house prices fell during the latest two months.

2 – End of Seller's Market?

The second market development is a shift in pricing power from sellers to a more balanced market. That shift has been nearly nine months in the making from when sales began to first decline last November.  

Back in October, sellers were starting to lose their dominance in the market, with 72% of surveyed agents describing now as a good time to sell compared to 86% in the second quarter of 2013.

Look for these two trends to drive an unusual surge in home sales this fall. We also look for prices to continue to flatten, and to potentially decline month over month in September or October. If that happens, it will be the first three-month price decline since the fall 2012. Stay plugged in right here and we'll keep you posted on trends as we move through the fall Suffolk County NY home buying season and into the holidays.

Suffolk County is one of 62 counties in New York. The county is in the New York metro area. We can help you find real estate in any of these areas of Suffolk County: Babylon, Bellport, Centereach, Cold Spring Harbor, Commack, Dix Hills, Farmingdale, Farmingville, Greenlawn, Half Hollow Hills, Hauppague, Holbrook, Holtsville, Huntington, Islandia, Islip, Lake Grove, Lake Ronkonkoma, Lindenhurst, Melville, Oakdale, Patchogue, Sayville, and Smithtown. Just click the "Search for Suffolk County NY Real Estate" link at the top or bottom of this page.

As a family grows, often the needs of the family change, which is why many homeowners consider remodeling. By completing a Suffolk County NY home remodeling project, you have the benefit of staying in the home you love. But before you decide to take on a home remodeling project, here are a few questions you'll want to consider.

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To get more tips on Suffolk County NY home remodeling and ways to save money by doing-it-yourself, check out our other articles by clicking on the Suffolk County NY Home Improvements link to your right under Suffolk County NY Real Estate Categories.
Suffolk County is one of 62 counties in New York. The county is in the New York metro area. We can help you find real estate in any of these areas of Suffolk County: Babylon, Bellport, Centereach, Cold Spring Harbor, Commack, Dix Hills, Farmingdale, Farmingville, Greenlawn, Half Hollow Hills, Hauppague, Holbrook, Holtsville, Huntington, Islandia, Islip, Lake Grove, Lake Ronkonkoma, Lindenhurst, Melville, Oakdale, Patchogue, Sayville, and Smithtown. Just click the "Search for Suffolk County NY Real Estate" link at the top or bottom of this page.

We recently told you about FICO score changes that were being made that could make getting a mortgage easier for Suffolk County NY home buyers.

Well, not so fast.

Suffolk County NY homebuyers not likely to benefit from new FICO changes

What nobody mentioned about the score, dubbed FICO Score 9, is that most Suffolk County NY home buyers aren't likely to see any direct benefit from it any time soon, very possibly not for years.

That's because the two dominant financing sources in the mortgage market — Fannie Mae and Freddie Mac — aren't planning to use the new score in evaluating loan applicants for the foreseeable future. And major banks and mortgage companies aren't jumping to adopt it either.

None of this detracts from the merit or potential value to consumers of FICO's new score. The company says that by separating out medical debt-collection issues — which are commonplace negatives in millions of consumers' credit files — from other types of collection actions, the FICO 9 model will more fairly rank the actual risks posed by some applicants compared with others. For borrowers whose sole major negative credit file account is an unresolved medical debt, Fair Isaac estimates that the new model will increase scores by a median 25 points.

FICO 9 also is designed to more fairly treat applicants who have limited accounts on file with the credit bureaus — often young, first-time Suffolk County NY home buyers or consumers who have made minimal use of credit cards and other forms of personal credit.

Suffolk County NY Home Buyers Not Likely To See Any Help

So on the surface, the advent of the new score is a big deal. But here's the real world: New FICO score models only matter in the mortgage market if lenders choose to use them to evaluate applicants. And, based on discussions with leaders in the mortgage field, FICO 9 is a long way off from adoption. It's not likely to help many Suffolk County NY buyers any time soon, despite the hype.

Among other reasons, it can cost substantial sums of money to retool complex automated underwriting systems, especially at Fannie and Freddie. Lenders have to weigh the costs and benefits.

Will the relatively small improvements be worth the expense and hassles? And with all the other regulatory changes mandated by recent financial reform legislation, do we have the time and manpower to devote to analyzing the effects of FICO 9?

The sobering answers for Suffolk County NY home buyers appear to be no.

But stay tuned. As with anything else, these things are subject to change. And if and when they do, we'll let you know right here.

Check out our other articles and news affecting Suffolk County NY home buyers when it comes to mortgages by clicking on the Suffolk County NY Mortgage Info link to your right under Suffolk County NY Real Estate Categories.

Suffolk County is one of 62 counties in New York. The county is in the New York metro area. We can help you find real estate in any of these areas of Suffolk County: Babylon, Bellport, Centereach, Cold Spring Harbor, Commack, Dix Hills, Farmingdale, Farmingville, Greenlawn, Half Hollow Hills, Hauppague, Holbrook, Holtsville, Huntington, Islandia, Islip, Lake Grove, Lake Ronkonkoma, Lindenhurst, Melville, Oakdale, Patchogue, Sayville, and Smithtown. Just click the "Search for Suffolk County NY Real Estate" link at the top or bottom of this page.

Young, first-time Suffolk County NY homebuyers are becoming an increasingly rare site these days in the housing market.

According to the Census Bureau, the homeownership rate for the 35-and-under crowd fell to a 22-year low in the second quarter. This has some parents wondering whether they can, or should, help their kids buy a home.

Should You Help Children Become First-Time Suffolk County NY Homebuyers?

Many first-time Suffolk County NY homebuyers are getting help from their parents

Parents have helped their children for decades with down payments and even loans. But recent economic and mortgage-market realities have made the question more acute. Whether you should step in is a question only parents can answer. Here are some considerations if you do decide to help.

Down Payment Assistance:

There are potential tax implications to consider. Individuals can currently make tax-free gifts of up to $14,000 per recipient. That means Mom and Dad could give as much as $56,000 to their child and a spouse before hitting the IRS's annual cap on tax-free giving. Make sure your child is married to qualify for that limit. Live in boyfriends/girlfriends don't qualify.

Anything above those limits requires reporting to the IRS. But you can certainly give more. The good news is you won't have to pay taxes until you bust through the lifetime gift exclusion, which now sits at $5.34 million, well above most people's worry limit.

Lenders will have specific guidelines for how to document and source gift funds. They'll also want to see in writing that this is a "no strings attached" donation, and not a loan to be repaid.

Depending on the type of loan and gift amount, children may need to contribute some of their own money to the cause to become first-time Suffolk County NY homebuyers.

Co-Signing:

Parents can also co-sign on a mortgage with their child, although we don't recommend it. Some loan types, like VA home loans, have occupancy restrictions, but there are plenty of options for co-borrowers who don't actually plan to live in the property full time.

Helping with a down payment is one thing. Co-signing on a loan exposes parents to significantly more risk when it comes to their credit and financial profile. A child who misses a mortgage payment or winds up in default could wreck their parents' credit for years.

No one expects to lose a job, get divorced or face some medical crisis. Anything that affects your child's ability to make good on their obligation means the full responsibility falls to you. That may or may not be financially feasible for some parents.

Parents as the Lender:

Parents with the liquidity for an all-cash purchase can opt to draw up their own mortgage and repayment plan, likely with the help of an attorney and a financial planner.

There are federal guidelines regarding interest rates on loans like this, which is all the more reason to consult financial and legal experts. This kind of arrangement can generate interest income for parents, while getting kids into a loan with a lower rate than they'll ever find on the market. It could be the only way for the children to become first-time Suffolk County NY homebuyers.

The Simplest Approach:

Although not necessarily feasible, paying all-cash is certainly the simplest way to go. No credit review, no checking where the down payment came from. All cash sales accounted for almost a third of all home purchases in June.

No matter which route you take, if helping your children become first-time Suffolk County NY homebuyers, we strongly recommend you seek legal counsel and advice when structuring any agreements.

Check out some of our other articles on becoming first-time Suffolk County NY homebuyers by clicking the Suffolk County NY Home Buying Tips link to your right under our Suffolk County NY Real Estate Categories.

Suffolk County is one of 62 counties in New York. The county is in the New York metro area. We can help you find real estate in any of these areas of Suffolk County: Babylon, Bellport, Centereach, Cold Spring Harbor, Commack, Dix Hills, Farmingdale, Farmingville, Greenlawn, Half Hollow Hills, Hauppague, Holbrook, Holtsville, Huntington, Islandia, Islip, Lake Grove, Lake Ronkonkoma, Lindenhurst, Melville, Oakdale, Patchogue, Sayville, and Smithtown. Just click the "Search for Suffolk County NY Real Estate" link at the top or bottom of this page.

Reasons buying a Suffolk County NY home now is a smart move
Thinking of buying a Suffolk County NY home? You may be better making the decision sooner rather than later!

If you qualify for a mortgage and choose not to buy now, you will be kicking yourself a year from now.

Thanks to very low inventory, Suffolk County NY home prices are projected to increase by 6.3 percent through April 2015, according to a recent study by Corelogic, a leading global property information, analytics, and data-enabled services provider.

Just how much could that increase cost you? More than you might think. On a $300,000 house today, the same house will cost you $318,000 a year from now.

4 Reasons Why Buying a Suffolk County NY Home Now is a Smart Move

#1 – Buying a Suffolk County NY home will only become more expensive because of low inventory and rising demand. With a shortage of housing and rental units available, Suffolk County NY housing prices and rents have increased, leading to affordability issues. The good news is that this supply and demand issue will solve itself once more housing units are built to accommodate the population growth and young families looking at buying a Suffolk County NY home. The bad news is that it could take a while, and prices will climb until then. So now might be a good time to buy, before prices peak.

#2 – Buying a Suffolk County NY home will certainly cost more, even if prices don't increase, because of the Fed planning to taper off bond-buying in October. The Fed is now buying $25 billion per month, down from $85 billion at the peak. The end of the program, which was aimed to keep interest rates low, is expected to result in higher interest rates, and any increase in interest rates could create even less favorable conditions for buyers.

Rising rates can have just as big an impact on affordability as does rising prices due to low housing inventory. When mortgage rates increase, borrowers experience greater difficulty qualifying when they are wanting to buy.

While you've already missed the bottom of the market with home prices, interest rates are still very low. Don't risk rates going up, which can ultimately cost you big on your home's price tag.

#3 – Buying a Suffolk County NY home will continue to become less affordable due to the current economy's flat wages. If home prices continue to increase, housing could in theory become less affordable if your take-home pay doesn't keep up with its growth. Can you afford to wait?

#4 – Buying a Suffolk County NY home now rather than later will have you beating others to the punch who procrastinate and wait til later to buy. The pent-up demand of younger professionals, who moved back in with their parents during the recession, is about to explode. And as these young people move out and form new households of their own, they will drive up housing demand.

While the competition helps the overall home values in the area, it also inflates prices to the point where buying Suffolk County NY homes is no longer affordable for a large percentage of potential home buyers. It's only expected to get worse as more and more young professionals feel ready to buy, so it's a smart move to buy now and avoid the potential price gouging altogether.

Stay abreast of all the news that affects buying a Suffolk County NY home right here at our website. More articles can be found in the Suffolk County NY Real Estate section, or the Suffolk County NY Real Estate News section, both to your right under Suffolk County NY Real Estate Categories.

Suffolk County is one of 62 counties in New York. The county is in the New York metro area. We can help you find real estate in any of these areas of Suffolk County: Babylon, Bellport, Centereach, Cold Spring Harbor, Commack, Dix Hills, Farmingdale, Farmingville, Greenlawn, Half Hollow Hills, Hauppague, Holbrook, Holtsville, Huntington, Islandia, Islip, Lake Grove, Lake Ronkonkoma, Lindenhurst, Melville, Oakdale, Patchogue, Sayville, and Smithtown. Just click the "Search for Suffolk County NY Real Estate" link at the top or bottom of this page.
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