May is my favorite month. In part because it plays host to my favorite holiday, which happens to be Memorial Day, and features weather that serves as the appetizer for summer’s impending arrival.
And as the warmer days arrive, it is time to celebrate another rite of spring—the first of the year’s two annual home buying seasons. (The second is in the fall, if you were curious).
If the positive housing trends percolating since late last year continue, this season will be a welcome respite from a cold past. Statistics indicate a favorable direction for the home sales pendulum, which is swinging towards higher sales activity. This has been illustrated in multiple year-over-year comparisons showing slow and steady improvement in the numbers of homes sold. Those same stats note that home prices have bottomed out and are likely on the rise, however modest, as you read this.
The most obvious area seeing improvement has been the Hamptons, fueled by Washington or Wall Street bonuses, it’s all up to your interpretation. This positive trend can be seen in the growing coffers of the East End’s Community Preservation Fund, which was established to protect open space via a two percent real estate transfer tax on qualified real estate transactions. Since its inception, its ebb and flow has been used as a valuable indicator of real estate activity.
And it is not only the Hamptons market that is showing signs of life. Much like the tulips, daffodils and crocuses, the real estate market is beginning to grow as the positive effects of government programs, such as the homebuyer tax credit, begin to have an impact. At the time of this column’s writing, there was no indicator as to whether this program would be extended beyond its current June deadline.
The result has been more people dipping their toes into the market to take advantage of the low interest rates, though it remains a mystery at this point how long they will remain at these low levels.
We are starting to see the development community work in sync with civic groups and government to enable developments that will meet the needs of the region from a housing perspective as well as the need to bolster the region’s economic strength.
Though for every positive yin, there’s a negative yang as this market is still capable of a misfire or two.
Even though we are trending in a positive direction, in reality it is the only direction the market can go. After all, starts for single-family homes last year barely broke 1,000, an 80 percent decline from just five years ago. Also, market factors such as short sales and foreclosures need to be addressed before true market growth can take place. And let’s not forget potential tax increases in all forms being sought to cover record budget holes at nearly every level of government.
Given the Memorial Day holiday, the current market could best be described by words once spoken by Winston Churchill noting, “Now is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”