Looking back on last year’s real estate performance with all the craziness and sadness of the Covid-19 pandemic, which is still with us and getting worse every day, it was one of the only silver linings to come out of the tumultuous situation as well as the insane and quite remarkable and amazing increase in our stock market.
But who really benefited? Those families and individuals who bought and who were fortunately still employed had the income, credit and had the qualifications to be approved for financing made out well before and during 2020. The appreciation or loss of value ranged from a decrease of 2.1 percent to an increase of 23.6 percent, depending on the class of property (as per One Key MLS of Long Island) in and around the Long Island area right through to the Hamptons.
Average prices and appreciation of homes comparing 2019 and 2020:
Dec-2019 $665,718 vs. Dec-2020 $725,641 (9 percent increase year over year)
Dec-2019 $487,737 vs. Dec-2020 $598,314 (22.7 percent increase)
Queens County: Dec-2019 $801,844 vs. Dec-2020 $816,618 (1.8 percent increase)
Average prices and appreciation of Condos:
Dec-2020 $742,592 vs. Dec-2019 $698,426 (6.3 percent increase)
Dec-2019 $373,390 vs. Dec-2020 $395,291 (5.9 percent increase)
Dec-2019 $574,387 vs. Dec-2020 $562,142 (2.1% decrease)
Average prices and appreciation for coops:
Dec-2019 $280,726 vs. Dec-2020 $286,192 (1.9% increase)
Dec-2019 $163,453 vs. Dec-2020 $202,057 (23.6% increase)
Dec-2019 $319,176 vs. Dec-2020 $325,479 (2 percent increase)
Those 400,000-plus families who left New York City to go out to Long Island and other states had a voracious appetite for purchasing their “next place to call home” or possibly long-term stay or vacation home. The Covid-19 pandemic will surely be the defining factor in whether or not those recent expatriates will eventually make their move back to the Big Apple.
The city could be an amazing buy right now, if you can pinpoint certain factors concerning rents, return on investment (ROI), and calculating future events, which is never an easy task when you don’t have a guaranteed crystal ball assisting you. But then again, isn’t everyone’s good or bad luck really equal to their timing of whenever and whatever investment or purchase of real estate that they are contemplating in determining their risk factor? This in effect separates the men from the boys and the women from the girls, right?
History shows us that it does repeat itself time and time again, but this pandemic has thrown everyone a huge curveball. It is radically different than the implosion of the 2008 market, which was caused by serious financial issues creating a bubble in inventory and the economic problems that followed. Unless you stayed true to some kind of a plan and weren’t scared off by beginning to have some fear (fantasized expectations appearing real) or FOMO (fear of missing out) by pulling the trigger too early or too late in anticipating future events presumably produced less than stellar results. I have found that the more knowledge that one possesses and continues to absorb will always go a long way in making the most crucial and critical decisions more prudently and with greater accuracy no matter what type of investment one anticipates making. It is much more to one’s advantage having more knowledge as opposed to less, so doesn’t that make sense?
So based on the results of last year, doesn’t it make more sense to hold on as long as possible to potentially gain greater appreciation and a more lucrative windfall? Or will that course of action hit you smack in the face when prices flatten and possibly decrease, as more purchasers leave the market because of the excessive price appreciation going forward that has occurred not only in 2020 but for the last nine years? Could we be at the top as this had been the longest economic expansion in our country’s history until the Covid-19 Pandemic came to our shores?
Trying to gamble on greater price increases is like what I call playing with fire because I already see the trickle-down effect on the buyer’s psychology as they are becoming a bit fearful of prices even though the extra maybe only a few pennies to a few dollars a day more when analyzing the cost of the mortgage. However, for those purchasers figuring out their mortgages, don’t go by the monthly nut that you will have to pay.
My method is to break down your monthly cost by the day. Once you know that amount and feel a bit or somewhat uncomfortable in your pursuit of purchasing, then step back and think about what expenses you can minimize or eliminate in your daily, weekly, or monthly cost of living that will enable you to save and make up the difference so that the mortgage amount is affordable. How about that cable or cell phone bill? Check out other options and ask for discounts. Search out other companies and you can tell them you are moving your service to one of their competitors who offers a better deal.
Check out [email protected] for $20 + tax per month and consider purchasing an Amazon fire stick that has tons of free movies and regular programming. Maybe one fewer Starbucks, vanilla cinnamon shortbread or cherry Mocha Latte, one less slice of pizza, or just maybe fewer daily take-out orders delivered to your home. Instead, if you really want to save a small bundle of cash to be able to afford that extra amount needed to pay that little bit larger mortgage, then begin buying cold cuts and add some baby pre-washed spinach, tomatoes, carrots, mushrooms, and some sliced cheeses like I do and prepare in advance a healthy daily salad before leaving for your office or in your home at lunchtime. The savings and health benefits will be great and you could probably accumulate an extra $100 plus per month if you are smart about it!
So the bottom line is what is more important: finding that extra money to purchase your first home, condo, or co-op or all those extra cable channels, eating out or ordering in? You have to decide where your priorities are and do your best to discipline yourself and your first home will be possible with the methods to potentially save the necessary money.
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 of 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). For a “FREE” 15 minute consultation, a value analysis of your home, or to answer any of your questions or concerns he can be reached by cell: (516) 647-4289 or by email: [email protected] Just email or snail mail (regular mail) him with your ideas or suggestions on future columns