What Does Climate Change Have to Do With Real Estate?

In March of ’07, in “The Climate Has Changed,” I discussed the challenging real estate market that had recently emerged.  I explained that market changes, like climate changes, are cyclical.  Now, four years later, I’m here to tell you that the climate is changing again—for the better.

The first quarter of this year has given us new hope.  To recap, there is a definite sense of momentum in our local market.  That momentum is being fueled by some pretty powerful forces:  Mortgage rates remain remarkably low, excess inventory is gradually being absorbed, and unemployment on Long Island fell to 7.1% in March from February’s figure of 7.7%. 

Locally, our stats have been improving.  Home affordability levels have continued to trend up, putting more homes in reach of more families.  The number of contracted sales has been encouraging, considering the fact that there is no federal tax credit stimulating sales this year.  In addition, consider these factors:

• Pent-Up Demand:  As Dorothy Aschkar, President of the Multiple Listing Service of Long Island wrote in the April issue of Realtor magazine, “Coming off one of the worst winters we have had in decades, I believe there is a pent-up demand of buyers, who are finally digging themselves out of their driveways and are beginning to search for a new home.”  

I agree with Ms. Aschkar.  This pent-up demand explains the increased level of activity in general, and the higher level of attendance at open houses.   All this bodes well for future sales. 

• Shifts in Attitude:   Sellers are being more realistic about listing prices and price adjustments, and in turn, buyers are being more realistic about what to expect in concessions and price negotiations.  The result is that buyers and sellers are no longer so far apart, which makes more sales more likely. 

Looking Forward: What’s on the Horizon?

The local market should continue to improve over the next few months.  The fundamentals seem to be in place.  Also, this may be one of those times when Long Island benefits from a very unique factor: being right next door to New York, one of the greatest cities in the world, where prices have held up better than in most places. 

My gut instinct tells me that our market is well on its way to stabilizing.  Once that happens, we can begin to work our way up.  Remember, it’s all cyclical.  Meanwhile, if you need help understanding how all this affects the value of your home, or your plans to buy, sell, lease, or relocate, contact me.

A note from Michael: As always, I am committed to keeping you abreast of market conditions.  As a nationally recognized real estate expert with decades of professional experience, I’ll continue to provide updated information.