Foreclosures

Foreclosures take bite out of LI real estate recovery

(NEWSDAY.com) - Developer Michael Dubb dug two holes this month — breaking ground on sales models for Long Island’s first major home construction project since the meltdown of last September.

Back then, he wouldn’t have dared to approach lenders to build 289 townhomes on 50 acres in Medford, but during the summer he snagged a $24-million loan.

“It’s safe to go back into the water,” Dubb said.

Since the economy crashed a year ago under bad lending and mortgage investments, residential and commercial real estate prospects are looking up for some, such as buyers and business tenants, but may get worse for others, such as sellers and commercial landlords.

Pent-up demand and government aid helped break stalemates in sales, but the other half of the story shows foreclosures rising and real estate values shriveling.

That means property owners, whether they’re in the market or not, are worse off than last September, said Larry Longua, a clinical associate professor at New York University’s Schack Institute of Real Estate.

“The wealth effect is gone,” he said.

Median prices for home closings fell from $402,000 last September to a five-year low of $350,000 in January, according to data from the Long Island Board of Realtors, which also covers Queens.

The median clawed up to $385,000 last month, and real estate agents said open-house traffic and deals have revved up.

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