From wine tastings to a varsity softball game.  There’s no shortage of events around Smithtown this weekend.

T.G.I.F!! Five Fun Things to Do Around Smithtown This Weekend is a post from: TheLenardTeam.com

The numbers for Smithtown over the last few weeks have not brought good news for many home sellers prompting questions about whether people increasingly are turning away from the dream of homeownership.  Inventory is rising while median price continues to slide in each quartile (the full range of prices for all residential homes in Smithtown divided up into four quarters) of the market. While I have read many articles on the web predicting a major reduction in home ownership in the U.S., my experience in Smithtown is not all bad news for would-be sellers.

The Numbers:

13 homes went into contract in Smithtown in the last 30 days.

19 homes were put into contract in the previous 30 days between May 5th and June 5th.  9 homes were placed under contract in the 30 days prior to that.

41 homes found buyers during the height of Smithtown’s spring real estate market.

According to data from MLS, 99 new homes were introduced to the market over the total mentioned time period.  That is a relationship of a little more than 40% of homes sold.

There were at least 98 homes on the market prior to the start of our spring market effectively doubling the existing inventory.  If Smithtown were to have had a healthier absorption rate to set up the 2011 spring market, I believe prices would have faired much better.  A larger point is that buyers ARE out there.  My own experience has confirmed this.

The Silver Lining:

According to local mortgage broker, Dawn Sullivan of All Shores Mortgage, “Most potential first time buyers that I sit with for guidance lately end up coming to the conclusion that it makes better economic sense to buy now than continue to rent.”   Indeed, when I look at economic factors, the continuation of super low finance rates fuels the desire for people, especially first-time homebuyers to take the plunge into ownership. Ms. Sullivan continues, “When running numbers on these lower purchase prices at interest rates like 4.5% on a thirty year fixed rate, with as little as 3.5% down payment, these potential buyers tend to be pleasantly surprised with the monthly payments that they are looking at.”  Basically, the decision in the minds of would-be buyers comes down to the perception of throwing away money on rent indefinitely or, for near the same amount per month, have at least opportunity to build equity in the years to come.

There is another motivating factor for serious buyers which should not be under appreciated; it is remains a major lifestyle decision to own your a home.  Smithtown and the surrounding communities do not have a robust rental culture the way certain other places in the country do.  People interested in living in Smithtown, do not want to rent a sketchy basement apartment if they do not have to.  So, if they qualify for a mortgage (FHA still requires only 3.5% down as the minimum), the fundamentals still point in the direction of buying which leads me to conclude that we should not give up on homeownership just yet in our community.  

Conclusion:

The high inventory remains a challenge to prices but people still want to take advantage of historically low interest rates and own a home.  Prices will spring back once there is an extended period of inventory that is more in check with demand.

Have Buyers Given Up on Owning in Smithtown? is a post from: TheLenardTeam.com

A Family Moves Up

I was recently contemplating a situation where a family who had outgrown their home, sold this charming little house and subsequently purchased in a neighborhood of much larger homes. They were trading up from a small three bedroom with a single bath to a gracious four bedroom with one and one half baths. The property size of the new home was ample and level; more than enough space for a pool if they wished to put one in (an impossiblity in their old yard). In terms of total square footage and surrounding neighborhood, there really was no comparison.

Bigger House And Greater Value

What piqued my interest was price. To reserve their privacy, I will withhold what they sold for and what the purchase price was. Sufficed to say, the spread between the little house they moved from and the large home they bought was surprising to me. It seems that for the value, they could not  have done better and this got me thinking.

Price As A Coiled Spring

As prices have been drifting downward almost unabated for more than five years, it seems that that the spread between price ranges must also constrict as a function of percentage. At some point, the buying public will have to take notice of this as well. Why would they buy a cute little three bedroom one bath home when they can get a much bigger home that could easily accomodate the growing family for (relatively speaking) not much more? In other words, as prices decline this spread begins to resemble the space between closing coils of a spring. And at some point, perceived value will drive up demand for the “better” home.  So, like a spring, perhaps price will rebound with it.

Of course other factors in our local economy will be necessary before we begin a more robust recovery, but in the meantime, I will keep watching and waiting to see if the market catches up and agrees with this observation.  One thing is certain, when prices eventually do turn around, the home they moved up to will appreciate at a far greater pace than the home they just left behind.

Can There Be Such a Thing As a Spring Effect? is a post from: TheLenardTeam.com

Home Price Hedging Causes Pain for Smithtown Sellers is a post from: TheLenardTeam.com

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