Area Foreclosures and Your Town
June 7, 2010 by admin · Leave a Comment
| The Long Island area foreclosures are up and most people know this. However, what you don’t know is that your town could be one of the hardest hit in the nation! The Federal Reserve Bank of New York did a report recently analyzing the data by the zip code level.
What they found was that Suffolk and Nassau county had very high markets…and we’re not talking A’s or B+’s either. In towns like Central Islip, Mastic and Shirley, the report found that instances of mortgage defaults were extremely high. |
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What’s happening to Long Island Real Estate?
In many towns, investors are on the prowl. They’re looking for deals and they’re finding them. In towns that are heaviest hit by mortgage defaults and increased bank owned homes, investors are buying up properties and renting them. This has many people concerned about how this will impact home values.
It’s well-known by homeowners that having a majority or a high number of rentals in a given area does not mold well for home values. High concentrations of owner-occupied properties lend well to home values in general. But with the Long Island real estate market undergoing a typhoon of increased foreclosure sales and short sales, the landscape of owner-occupied homes is changing.
According to the report by the New York Fed, twenty percent of homes in Suffolk County, that are not necessarily distressed (meaning the homes are not in default), have a negative equity position – they are worth less than what is owed on the mortgage. In Nassau county, that number is 14 percent.
Many of these negative equity homes had loans provided that were very low money down. When there’s very little money put down, any dip in the value will result in the home being worth less than what is owed.
Could that be the next problem with these low money down loans? From 2007 through the middle of 2009, I believe, any homeowner that purchased a home with little money down, better not find themselves in a position where they must sell within the next 3 to 7 years.
That could be a real mess. After 2009, I think the FHA 3.5% down buyers are probably going to be okay in that if they can hang on to their homes (not get divorced, not lose their job, etc.), the drop in their value will not be as significant as it was in the years 2007, 2008 and most of 2009.
The overall decline in home values has slowed dramatically due to increased demand as a result of the home buyer tax credit and low (incredibly low) mortgage rates. Hopefully, the market will remain strong, people will not flood the market with more homes for sale, and the recovery to a more normal and stable market will being taking place in 2011.
Until then, should you have any questions about how I can help you sell or buy your home via a short sale, please call me at (631)831-9048.
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By Thomas McGiveron, LSA
