Dan's Papers - June 5, 2009

In early May, the Suffolk County Consortium ran a half page ad in a local paper for its 2009 Home Assistance Program for first-time home buyers. According to the Consortium, its commitment is "to help make the 'American Dream' of home ownership a reality for first time Suffolk County homebuyers."

So with the help of the program will it make it any more possible to buy a home on the East End? It depends on the type of home you're buying.

In its first quarter newsletter on Hampton Markets, Town & Country Real Estate reports the median home sales price was $698,461 - nearly a 29% decrease from exactly a year ago. However, if first-time homebuyers are in the market for a lower ticket price co-op or a condo, there are some opportunities. So is it still possible to buy in the Hamptons or even Sag Harbor? Maybe, thanks to the County's 72-h program.

According to the Suffolk County Tax Act, when property owners neglect to pay their taxes, the county pays all other municipalities owed and takes title to the property. The 72-h provision of New York State General Municipal Law allows the county to transfer property to another town for certain purposes, such as affordable housing.

County Executive Levy's latest initiative is to transfer 7.92 acres of land (a 3 acre parcel and 4.6 acre parcel) to the town of Southampton purely for affordable housing purposes through the county's 72-h program. A good portion of the land that will be provided to the town is in Sag Harbor. The land will be used to build affordable housing, such as co-ops for families and for first-time homebuyers who might be eligible for the Home Down Payment Assistance Program.

Last year, the Home Down Payment Assistance Program helped 99 homebuyers. Since its inception, the program assisted more than 1,000 owners. For 2009, Levy has allocated $1 million in HOME Investment Partnership Funds provided by U.S. Department of Housing and Urban Development (HUD) to help out first-time and eligible homebuyers with up to 75% of a down payment for a home.

Here's the tricky part for this market: The maximum appraised value of the home cannot exceed $380,000. The maximum the county can tribute is $14,000 or $12,000, depending on the applicant's income.

So the million dollar question is: can the program favorably impact East End real estate sales? Hard to say at this point, thanks to the economy.

If you read the RGE Monitor's Newsletter by Nouriel Roubini (who's known in the press as Dr. Doom, and who has accurately predicted the economic mess we're in), you may have come across this tidbit about housing, "...with historically low mortgage rates and falling home prices, affordability is at an all time high, yet demand for housing continues to show weakness. The only activity on the demand side can be explained by purchases of foreclosed homes." On an even brighter note, the article continues that any sort of recovery is likely to be hampered because of a weak job market "and uncertainty around future income. Moreover, deflation in the housing sector, though slower than in the past months, is likely to continue to push buyers to postpone purchase activity."

With the County's help, there's no doubt that some first-time home buyers could have a slice of that American Dream, but it's doubtful that these purchases will have a substantial impact on the East End housing market, especially in towns such as East Hampton, Riverhead, Southampton, Southold and Shelter Island, where the median price for homes is close to $600,000.