Issue #11 - Week of June 5, 2009

Estate Of Mind

Downpayment Assistance? In the Hamptons?

By Rebeca Schiller

Illustration by Amelia Persans

In early May, the Suffolk County Consortium ran a half page ad in a localpaper for its 2009 Home Assistance Program for first-time home buyers.According to the Consortium, its commitment is "to help make the 'AmericanDream' 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 ahome on the East End? It depends on the type of home you're buying.In its first quarter newsletter on Hampton Markets, Town & Country RealEstate 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 themarket 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, thanksto the County's 72-h program.

According to the Suffolk County Tax Act, when property owners neglect to paytheir taxes, the county pays all other municipalities owed and takes title to theproperty. The 72-h provision of New York State General Municipal Law allowsthe county to transfer property to another town for certain purposes, such asaffordable housing.County Executive Levy's latest initiative is to transfer 7.92 acres of land (a 3acre 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 portionof the land that will be provided to the town is in Sag Harbor. The land will beused to build affordable housing, such as co-ops for families and for first-timehomebuyers who might be eligible for the Home Down Payment AssistanceProgram.Last year, the Home Down Payment Assistance Program helped 99homebuyers. Since its inception, the program assisted more than 1,000 owners.For 2009, Levy has allocated $1 million in HOME Investment Partnership Fundsprovided by U.S. Department of Housing and Urban Development (HUD) to helpout first-time and eligible homebuyers with up to 75% of a down payment for ahome.Here's the tricky part for this market: The maximum appraised value of thehome cannot exceed $380,000. The maximum the county can tribute is $14,000or $12,000, depending on the applicant's income.So the million dollar question is: can the program favorably impact East Endreal 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 inthe press as Dr. Doom, and who has accurately predicted the economic messwe're in), you may have come across this tidbit about housing, "...withhistorically low mortgage rates and falling home prices, affordability is at an alltime high, yet demand for housing continues to show weakness. The onlyactivity on the demand side can be explained by purchases of foreclosedhomes." On an even brighter note, the article continues that any sort of recoveryis likely to be hampered because of a weak job market "and uncertainty aroundfuture income. Moreover, deflation in the housing sector, though slower than inthe past months, is likely to continue to push buyers to postpone purchaseactivity."With the County's help, there's no doubt that some first-time home buyerscould have a slice of that American Dream, but it's doubtful that these purchaseswill have a substantial impact on the East End housing market, especially intowns such as East Hampton, Riverhead, Southampton, Southold and Shelter Island, where the median price for homes is close to $600,000.