Demand for homes has never been higher, especially for those 400,000-plus families and individuals who have exited New York City as well as a multitude of others who have left major cities since March 2020. They are all seeking out less dense populations on Long Island, Westchester, upstate and around the United States due to the severity and the current spiking of Covid-19 as well as getting more for their money, superior schools without paying for private education, and a more peaceful, tranquil, safe and enjoyable atmosphere and life.
This is a monumental mindset change and a possible once in a lifetime moment for homeowners and those sellers who see the amazing opportunity to get an excellent price on their homes, condos, and coops and the possibility, due to the lowest inventory in 30 years (supply is currently 17 percent lower in 2020 compared with 2019) of potentially having an emotional bidding war by hungry buyers. According to a report in the Real Deal magazine, by Jonathan Miller of Miller Samuel, “the spring market was kicked down the road because of the shutdown. Samuel, who wrote the report, tracks all the statistics on real estate in New York City and Long Island.
The Hamptons median sale prices were up 9 percent over the first quarter to $1.080 million ,an increase of 27 percent over the same quarter in 2019. Also, another reason for such a large exodus from New York City and other urban areas across the country is due to the fact that a majority of schoolchildren are doing their education online as well as 100 million (a little less than one third of the U.S. population) have been forced to work from home since March.
The other factor that has truly moved and escalated our real estate market is the lowest interest rates in the past 50 years. Rates for a conventional mortgage are being approved and provided to those with consistent, stable, and steady income, pristine credit, and low debt-to-income ratios. As of this column here are the rates as per Bankrate.com:
CURRENT CONVENTIONAL FULL DOCUMENTATION LOANS:
30-Year Fixed 3.060% APR 3.360%
20-Year Fixed 3.020% 3.280%
15-Year Fixed 2.570% 2.870% 1
10-Year Fixed 2.570% 3.180%
Adjustable Rate Loans
10/1 ARM 3.09% 3.94%
7/1 ARM 3.03% 3.970%
5/1ARM 3.11% 4.07%
Current Jumbo Mortgage Rates
30 YR fixed-Jumbo 3.110% 3.22%
15 YR fixed-Jumbo 2.580% 2.640%
Current Government Loan Rates
30 YR Fixed VA 2.930% 3.100%
30 YR Fixed FHA 2.910% 3.590%
Those whose jobs and businesses have been greatly affected due to our current pandemic are having a much more difficult time getting mortgage approvals and deals are being lost. Banks are becoming much more critical and careful in whom they are lending to and worry about whose job or business will be next to be cut or fail through no fault of their own. I absolutely believe and candidly feel our government (the House and Senate need to get their act together!) must step up to the plate and put their “big boy” and “big girl” pants on and have some serious constructive, positive and successful dialogue and conversations and pass the next stimulus program(s). This critical action will alleviate or at least minimize the tragic effects on our economy and those in most need who are out of a job while assisting and saving the hundreds of thousands of restaurants, small businesses and of course the airline industry, too. (They just laid off 16,000 people.)
Major bankruptcies are occurring weekly. The overwhelming fact that life, as we know it for the foreseeable future, has changed (but I hope not forever) and those who have been able and capable of pivoting and re-creating their businesses will be the new success stories. Many of them are out there right now searching, analyzing, deciding, and making offers and purchasing their next place to call home. While interest rates are so extremely low, this is the moment in time to pull the trigger and really consider selling, investing, and purchasing homes, HOA’s, condos, co-ops, and investment properties.
As they say, some watch it happens, some think it might happen and then there are those who make it happen. Most important, the demand is here and people want out of the cities and their intense and in many situations highly infected populations and are migrating to the burbs. So, Mr. & Mrs. Seller, could you find or create a better time to downsize and cut your expenses? I doubt it! I surely wouldn’t want you to wait and then call me and have to say, Phil, you were right! It’s I should have, I could have, but I didn’t do it!
Think of the massive equity you have built up in your home. Waiting could be detrimental to it, so why not cash out today and list your home while the market is hot? I know you feel comfortable, roots in the community, kids, friends, and local relationships nearby and this is your life, your comfort zone and I get it and agree. For those in that environment, absolutely stay put. But for everyone else grab the cash and run, for all we need is one major event. I do not think, however, the presidential election will have a major effect on the value or the sales of homes locally or around the U.S. except for the effects of what the Covid-19 pandemic has done and will be doing this winter and next spring in those populated and crowded cities. Don’t be a Monday morning quarterback. It’s time!
Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck. He has 39 years experience in the Real Estate industry and has earned designations as a Graduate of the Realtor Institute (G.R.I.) and also as a Certified International Property Specialist (C.I.P.S). Just email or snail mail (regular mail) him with your ideas or suggestions on future columns with your name, email, and cell number and he will call or email you back. For a “free” 15 minutes consultation, he can be reached by cell: (516) 647-4289 or by email: [email protected] to answer any of your questions or concerns.