Impact of foreclosures on first time purchasers

BY PHILIP A. RAICES

It’s very obvious that our real estate market is still very strong. My last open house in Seaford had 17 participants on a Sunday and the very next day I had 7 qualified offers. In the 42 years that I have been involved in real estate, I had never experienced that many offers simultaneously in a 24-hour period. What is still quite amazing is that the final offer was way above our asking price.

Demand has not cooled off and as long as inventory is as low as it is, I do not see things changing; and the market will continue until either demand cools off or an unfortunate catastrophe occurs (I hope not). Anything is possible the way things and events are occurring in our world, and even international incidents or major local issues could have an effect causing the housing market to slow or moderate.

According to Bankrate.com, it appears that some economists and experts believe there may be 1-2 more interest rate hikes before the end of 2023. But predictions are generally never 100% accurate. Our economy is still chugging along and appearing very resilient, growing at 1% per year. We do have the best economy compared to all other global economies. What is quite surprising is that job openings have declined, and that should have caused unemployment to increase, but it hasn’t. This economic environment is different from past scenarios and that is why it has been extremely hard to accurately predict what will happen in the future.

However, what I have noticed is that there are still many cash and large down payment purchasers. There are those who have earned substantial sums of money in the stock market or in their businesses over the last 4 years and have decided to move a portion of their profits into either a first-time primary or move-up residence and or investment property.

According to FinMasters, Ruchi Gupta, foreclosures are slowly increasing and were 0.23% in 2022, which appeared low, but were higher than in 2021 (0.11%) and 2020 (0.16%).

In 2020 government intervention was one of the reasons that kept the rate lower than it probably would have been. A total of 31,557 properties in the U.S. had foreclosure filings in January 2023, which was a 36% increase year over year. New Jersey had the highest foreclosure rate, with 1 foreclosure for every 2,271 homes. Cleveland metro area has the highest foreclosure rate of 0.40%, more than 316% above the national average. But Detroit saw the highest increase (807%) in foreclosure filings compared to the previous year. The highest foreclosure rate in the last 20 years was in 2010, at 2.23%. As ARMs come due on residential and especially commercial properties, there will be many more foreclosures and short sales, due to the higher costs of borrowing. I suggest one sell now to at least walk away with the tremendous equity that has been built up over the last few years. Call me for a free value analysis without any obligation.

The competition between firsttime buyers and investors is fierce. However, currently, end users should be able to outbid investors/fix and flippers, because, the profit potential has narrowed locally as the cost of materials and labor has skyrocketed. I always say, “If it doesn’t make sense in the brain, then it doesn’t make any cents in the pocketbook.”

But one of the critical and crucial issues is that if a first-time buyer qualifies for a grant, a full inspection needs to be performed in order for a mortgage commitment to be approved. However, due to all foreclosures being winterized, then an inspection becomes impossible and the buyer cannot move forward. I propose a simple change in the regulation that when a purchaser is allowed to pay $550 or whatever rea- sonable amount is agreed upon. All winterized foreclosed properties could have their utilities to be temporarily turned back on so a full and thorough inspection could be completed. In this fashion, a mortgage commitment and grant can be approved. The $550 can either be credited back to the purchaser by the bank upon closing. However, if the buyer doesn’t move forward for any reason(s), the money can still be used to winterize the home again. Most important, there should be more time allowed for individuals and families to purchase and restrict investors during a waiting period before they could purchase. This will allow more buyers to secure the “American Dream” and build roots within the community, develop relationships with neighbors, and gain new potential long-term friends and connections. I believe it is a healthier environment than being in a rental situation, worrying about increased rents over the long run and concerns that the landlord might sell or not renew your lease, leaving you in a situation of having to move once again. Homeownership enables a family to hopefully be in a stable position for 15-30 years while gaining appreciation and a buildup of equity over that time period; as their mortgage is paid down and the benefits of tax deductions contribute to long-term wealth.

Currently, foreclosures are still more favorable to the investor, because they will purchase without an inspection and more important, pay outright for the purchase without financing. Their only purpose is to earn income and build their bank accounts; whereby an end user grows their family and involvement in the community. I believe this is far more important and impactful for the betterment and growth of the local community than the reason why an investor buys. Making it easier for an end user to purchase by allowing a full inspection and for those who receive first-time homeowner grant money will always be a better path to pursue as long as the government changes its position and the regulations in allowing it to happen.

Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck. He has 40 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.) and in 2022 has earned his National Association of Realtors “Green Industry designation for eco-friendly construction. He will provide you with “free” regular updates of sold and new homes in your town via the Multiple Listing Service of Long Island (MLSLI) or go to https://WWW. Li-RealEstate.Com and you can “do it yourself (DYI) and search on your own. For a “FREE” `15 minute consultation, as well as well as a “FREE printout or digital value analysis of what your home might sell for in today’s market without any obligation or “strings” attached. He can also provide a copy of “Unlocking the Secrets of Real Estate’s New Market Reality, and our Seller’s and Buyer’s Guides for “Things to Consider when Selling, investing or Purchasing your Home.

You can email or snail mail (regular mail) him with your request or ideas, suggestions or interview you for a specific topic and a Q & A for a future column with your name, email and cell number. He will email or call you back and respond to your request ASAP as long as he has your complete name, cell, email and/or full home or business address. Again, for a “FREE” 15 minute consultation, he can also be reached by cell: (516) 647-4289 or by email: Phil@ TurnKeyRealEstate.Com to answer any of your questions and concerns in selling, investing, purchasing, or leasing residential or commercial property.

BY DENNIS MAMMANA

Week of July 30 -- Aug. 5, 2023

As August arrives, the full moon will overwhelm our night sky with its light. But once the moon leaves the early evening sky later in the week, you might enjoy getting out and searching for Draco, the dragon.

Now, Draco isn’t one of the top 10 stellar groupings that people can name, but I’m always surprised when I mention it that folks chuckle as if I were making it all up.

I admit that I’ve been known to do just this from time to time because, well, it helps to keep me amused. But I’m not making anything up; Draco is real, and you should have little trouble finding this celestial dragon in a reasonably dark sky.

To locate it, first identify the seven stars of the Big Dipper low in the northwestern sky shortly after dark. Draw an imaginary line among these stars and you’ll trace a “bowl” of four stars and a bent “handle” of three more. British skywatchers know this grouping as the Plough, while Germans and Scandinavians know it as the Great Wagon.

If you follow the two stars at the end of the Big Dipper’s bowl -- these are known as the “pointer stars” -- from the bowl’s bottom to its top, and extend that line about five times the separation of these two stars, you’ll point directly toward Polaris, the North Star.

From this important star emerge the handle and bowl of the Little Dipper.