All Things Real Estate: A recap of events of 2019 and also the relationship of land vs. location

What a year it has been with all its ups and downs and crazy turmoil, tragedies as well as its positive and happy times too. To start off the year, Jan. 2, Tim Cook, CEO of Apple reported international sales of I-phones to China were down, which rocked international stock exchanges. Nancy Pelosi is re-elected by Congress on Jan. 3, a second time as Speaker of the House.

On Jan. 3, a docuseries on R. Kelly, R & B singer’s purported sexual abuse of women, premieres on Lifetime TV. Golden State and Sacramento hit for (41) 3 pointers to set a new NBA record for three-pointers and Stephen Curry hits for pointers, (10) 3 pointers; but Golden State sneaks by Sacramento, to win 127-123.

Japan’s Emperor, Akihito with Empress Michiko abdicate his rein and gets permission to step down and allow his son to take over Japan as the oldest ruling monarchy, which hasn’t happened in 200 years.

President Trump announces the shutdown of our government and the border wall. On Jan. 15, a witness in the El Chapo Guzman trial, claims former Mexican President Enrique Pena accepted a 100 million bribe from the drug cartel head.

British Prime Minister, Theresa May’s Brexit deal with the European Union, overwhelmingly fails with her UK Parliament with the greatest defeat in its democratic history. Unfortunately, due to this critical defeat, she resigned on May 24.

Swedish teenager, Greta Thunberg holds strikes to protest Global Warming takes place around the Globe and she continues her crusade throughout the year.

March 21 New Zealand Prime Minister Jacinda Arden announces a ban on military-style weapons, 6 days after the Christ Church terrorist attack. Justin Trudeau, Prime Minister of Canada (the 2nd youngest ever elected, and (whose father, Pierre Trudeau was also Prime Minister from, 1968–1979 and then again, 1979-1984) proposed a ban on single-use plastics by 2021.

On June 11, comedian Jon Stewart addresses Congress in a very heated speech to Congress for the lack of funds to 1st responders into the 911 World Trade Tower tragedies and to extend benefits to them.

June 15, Babe Ruth’s sports jersey sells for an unprecedented sum of 5.64 million dollars, the highest amount in the history of sports memorabilia.

Oct. 15, Turkey launches airstrikes on Kurdish forces in Northern Syria after President Trump makes a decision to pull back our forces. Oct. 13, U.S. athlete, Simone Biles becomes the most decorated gymnast in history when she wins her record 25th medal on the balance beam at the world championships in Stuttgart, Germany.

Oct. 26, a raid by US Special Forces kills ISIS founder Abu Bakr al-Baghdadi in Syria. Oct. 27, Tiger Woods scores a last-minute 3-stroke win over Hideki Matsuyama at the inaugural Zozo Championship at Accordia Golf and Country Club to tie Sam Snead’s record 82 PGA victories. Dec 11, climate activist Greta Thunberg is named Time magazine’s Person of the Year.

Dec. 12, England’s general election, Boris Johnson’s won a landslide election as well as The National Party in Scotland. Who can forget the most recent event on December 18, 2019, when President Trump was impeached by the House of Representatives!

However, I just want to convey some information about the relationship between land values in Long Island compared to Hainesport, N.J., where my nephew, Ross Berkey resides, where I had traveled to visit him and his family and friends for a holiday party on Dec. 21. He told me that he had bought the ½ acre plot of land 16 years ago for $6000, to build a brand new home, as I was falling off my chair due to the shock of what he had paid!

Even 16 years ago, there were very few communities on Long Island in an excellent school district (as his was), where one could pay that pittance of an amount of money, let alone for that size of land!

I went on to have a discussion as to what his real estate taxes were and he responded $9,200. It blew me away, considering his colonial styled home is 3,700 square feet without a finished basement; which he is currently completing. It’s 4 bedrooms and 3 full and (2) ½ baths, huge family room, eat-in kitchen, large dining room, and office space.

What’s surprising, the current market value based on current comparable sales is approximately $625,000! OMG, when compared with a similar home on Long Island or around the North Shore’s Gold Coast, a comparable home with land that size would be at the lowest price point in a fair school district around $850,000 upwards of almost $2,000,000 and the killer is, the taxes would be from $15,000 to $35,000 per year.

This leads me to believe that the land in Hainesport, N.J., although more costly today than 16 years ago is not even close to what the cost would be for a ½ an acre here; which would go for anywhere from $600,000 to well over 1,500,000 depending on what town or village it might be located within.

So my nephew’s home is more expensive than the land that it sits upon; whereby our land value here on Long Island is usually more expensive than the home it was built upon. Absolutely shocking, but then again, when you consider the main reason why, it’s the scarcity of available buildable land here compared with his town and many areas of New Jersey, as well as across the U.S., where construction is booming very well.

So the correlation to buildable land is directly related to the availability of the housing inventory, which presently is at 5.4 months whereby normal inventory is 6-7 months; as well as interest rates which are at a 50+ year low.

From my research, it’s still somewhat of a seller’s market below $1,200,000, if your real estate taxes aren’t above $10,000-20,000, (but slows as you approach $20,000 and above) due to our wonderful S.A.L.T. tax, (which effected all the Blue “wealthier States” whereby you can only deduct a maximum of $10,000 as an offset on your income taxes for primary residences only (not investment properties, which is unlimited).

However, Supply and demand economics will always play a role in real estate, no matter what, as well as every other commodity; however, there might be an exception due to pollution in the case of real estate or some glitch, such as “tariffs” but for the most part it has generally worked throughout history. However, something needs to be done in New York to seriously lower real estate taxes, maybe a V.A.T. tax like they have in some areas in Europe and Israel or a “Fair Tax”, which is a book written a while ago about how to change our system to make it fairer?

Not sure it would suffice for the wealthy, but I would be agreeable to any solid, pragmatic and workable plan to keep more of our New Yorkers from becoming expatriates especially our millennial and Gen Z’s, who are leaving by droves or living in mom and dad’s home, until they have enough savings to exit one of the most expensive states in the U.S.

If you’re wealthy how many more homes and properties do you really need, cars, jewelry, etc.; it’s conspicuous consumption to the nth degree, while our country is falling apart and behind! Anyone have any thoughts on this dilemma, please email or write and let me know what you think!
Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck. He has earned designations as a Graduate of the Realtor Institute and also as a Certified International Property Specialist. He can be reached by cell: (516) 647-4289 or by email, at: [email protected] to answer any of your questions or concerns.

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Philip A Raices

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