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Homeownership harder to attain, retain in Levittown

John Reid can do tricks with doves, rabbits and playing cards. He can transform balloons into a princess with a quick turn of his hands.

But, it seems, he cannot do any magic to save his home.

The 31-year-old self-employed magician lives in Levittown with two turtles and six doves, in an original Levitt house that still has cabinetry from the 1950s and an unfinished second floor. The paint on the shutters is peeling and the house looks tiny compared to so many of its neighbors, which, in many cases, now have garages, dormers and new siding.

Reid bought the house in 2003, for $240,000. Three years later, when he was ready to build up his business and do some work on his home, he refinanced. It was 2006, and real estate was king, so the bank approved him for a mortgage that valued the house at $428,000.

Now, Reid, whose business has slowed along with the Long Island economy, is in foreclosure, unable to make payments on the adjustable-rate mortgage, which recently shot up to $4,300 a month. A real estate agent in October told Reid the house was then worth $250,000. Experts say the value has since sunk further.

It is unclear whether President Barack Obama's plan announced yesterday to help millions of Americans refinance their mortgages could help homeowners like Reid, or those homeowners who are "upside down" - meaning that the mortgage debt on their homes is higher than their value.

Reid's story reverberates across Levittown, the iconic American suburb synonymous with the dream of home ownership. Beyond the confines of a historic hamlet, the story speaks to Long Island at the beginning of 2009, as the sharp fall in home prices has put many residents and business owners on an unstable roller coaster, with experts predicting further declines.

" Levittown symbolizes New York and Long Island as a whole. We're the white-collar worker, the blue-collar worker and everybody in between," said Ann Torcivia, who heads Friends Travel in Levittown and is president of the community's Chamber of Commerce. "If we're hurting, that means the rest of the Island is in bad shape."

Across the Island, no community has been spared, as residents grapple with a recession that's resulting in job cuts, foreclosures and bankruptcies. In Levittown, declines in home values are among the steepest in the county, coupled with one of the highest rates of foreclosure on Long Island.

Newsday chose Levittown to see how the community is faring in the recession because of its historic status as the region's first suburb but also because of the community's long-standing role as a place where first-time home buyers have put down roots.

Experts say that house after house on block after block in the diverse, middle-class community are now "upside-down."

"The American dream? This isn't what they had in mind," Reid said.

Tough market

The result is an economic stalemate in Levittown, as some homeowners lose their houses to foreclosure, others can't sell when they want to and buyers in a tight credit market can't buy. It's a scenario that disrupts the typical real estate market cycle and puts everyone on hold, experts say.

Those who would want to trade up can't. Those who want to buy their first home can't. Those who need a way out because they've lost their jobs or have to move can't. And as it trickles through a first-time home buying community like Levittown, it then spreads into neighborhoods of all types, Islandwide.

"We haven't seen the prices come down to a point where demand meets the supply," noted Martin Cantor, who heads Dowling College's Long Island Economic and Social Policy Institute. "Once that happens, then you'll see people buying. But while that's happening, there will be a lot of real financial losses to people who bought homes on the high side and took out mortgages that they shouldn't have. I think Levittown will have more of a decrease in market value than other communities will."

For now, home prices in Levittown are declining at about the same pace as Nassau and Suffolk counties generally. Levittown's median home price fell more than 12 percent between 2006 and 2008, from $400,000 to $350,200, according to data from the Multiple Listing Service of Long Island.

The Nassau County Assessor's office estimates that the median full market value of Levittown homes fell by 17.8 percent between last year's assessment, for the 2009-2010 tax roll, and this year's, for the 2010-2011 roll, which was just released.

The assessor uses past sales patterns and other analysis to predict home values for when the tax roll is released, so full market values should reflect market conditions now and in the immediate future, said Jeanette Duncan-Williams, Nassau County's chief deputy assessor for valuation.

Levittown's drop is one of the highest percentage drops in the county, said Duncan-Williams, who noted that the latest valuations attempt to predict where the market is headed in the coming months.

Financial fallout

A closer look at real estate data for Levittown reveals a potentially bigger problem. A quarter of the 370 Levittown home sales recorded by MLS in 2006 closed with 100 percent financing - sometimes even more to accommodate closing costs, a Newsday analysis found. Nearly 70 percent of the 2006 home sales included financing of 85 percent or more.

As a result, more than two-thirds of the home buyers who bought in 2006 and 2007 are now upside-down - unable to sell their house for the amount of their mortgage. That's likely to worsen, since experts say home prices may fall until 2010. Some of those relatively recent buyers are already in foreclosure - as more than half of the 2008 foreclosures in Levittown came from home sales that happened in 2006 or later.

That worries longtime Levittown resident Pamela Kenefic-Cardile. Kenefic-Cardile, 60, is one of the lucky ones, since her home is still worth slightly more than the $243,000 adjustable-rate mortgage she took out in 2005. But she's still preparing to declare bankruptcy, thanks to the $40,000 in credit card debt she has accumulated trying to make ends meet. She's hoping to find a way out of the adjustable-rate mortgage too; the monthly payment is $2,700 - virtually impossible on her $40,000 salary.

"I've been struggling trying to pay everything and then it just went out of control," she said.

The foreclosure rate in Levittown is already far higher than it is across the Island as a whole. New foreclosures in the community - properties that are scheduled for auction - have doubled in the past two years, from 31 in 2006 to 63 in 2008, according to PropertyShark.com, which estimates that one in every 284 households in Levittown faced a foreclosure sale at auction in 2008.

That's about the same as Nassau County, but far higher than Suffolk County's ratio, as one in every 299 Nassau County households and one in every 478 Suffolk households faced a foreclosure sale in 2008, according to PropertyShark.

Also, Levittown posted 130 initial foreclosure filings, or lis pendens, in the first eight months of 2008, a 50 percent increase over the past two years, according to Newsday research. That ranks Levittown 30th out of the 204 Long Island communities Newsday analyzed.

Waiting for a comeback

There is, however, a silver lining or two. The number of homes on the market in Levittown is on the decline, according to real estate broker Rich Dallow, with The Dallow Agency, a Weichert Realtors franchise. That's a sign supply and demand may be evening out a bit, he said.

And experts noted that once a comeback does begin, Levittown's price declines could be a welcome mat for first-time home buyers who couldn't afford it in the boom years.

"When it [the market] was going up, I said this is going to be the demise of Levittown. Houses would have been $750,000 if it had kept going up," said Richard Claiborne, a sales agent with Century 21 American Homes. "Now, it's affordable to start at the Levittown level again and it's a great opportunity for first-time home buyers."

Christopher Niedt, the academic director of the National Center for Suburban Studies at Hofstra University, noted that economic stimulus and housing programs offered by the federal government now are reminiscent of Levittown's start.

"It was, in fact, government action that played a large role in the expansion of suburban places like Levittown," Niedt said. "Now, we're looking at trying to figure out a way to restore Levittown as a place where the American dream can be achieved. ... In some ways, we've come full circle."

Levittown Housing Prices Through the Years

1947 $6,990

1951 $9,000

1960 $14,400

1970 $23,900

1980 $42,700

1990 $162,600

2000 $189,700

2006 $405,188

2007 $387,111

2008 $355,731

SOURCES: Newsday Research, U.S. Census Bureau, Multiple Listing Service of LI

Housing and Levittown

Median Home Price

Levittown

2008: $350,200

2006: $400,000

Nassau County

2008: $410,000

2006: $470,000

Number of Home Sales via Multiple Listing Service

Levittown

2008: 310

2006: 370

Nassau County

2008: 8,464

2006: 10,560

Average

Assessment

decrease from 2009-2010 roll

to 2010-2011 roll:

Levittown:

17.8 percent

Nassau County:

15 percent

Percent of Home Sales using

95 percent financing or higher:

Levittown

2008: 29 percent

2006: 42 percent

Foreclosures

(properties

scheduled

for auction):

Levittown

2008: 63

2007: 47

Nassau County

2008: 1,531

2007: 1,166

Lis Pendens

(first eight months

of each year)

Levittown

2008: 130

2006: 87

Long Island

2008: 11,594

2006: 5,212

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