Long Island Real Estate Market Cooling Off As Inventories, Mortgage Rates Rise
If you want to buy a house in Nassau County, N.Y. (the west end of Long Island, outside New York City), you have plenty to choose from these days. The number of homes on the market in the region rose by more than half — 58 percent — from the end of 2004 to the end of 2005, according to Friday’s edition of Newsday.
The likely explanation for this significant sign of Long Island’s real estate cooldown is, like many other markets across the U.S., homeowners trying to sell their homes at prices they would have gotten in a boom. While there has been (and will most likely not be) a catastrophic bursting of the real estate bubble, the boom has ended and buyers aren’t paying what they would have even six months ago.
The latest data from the Long Island Multiple Listing Service, released Friday, shows 14,679 residential listings in the last month, compared with 9,423 in December 2004. The trend is reaching into the Island boroughs of New York City as well. In Queens, 6,522 properties were listed as of Friday, compared with 3,975 a year ago.
“It’s a glut of housing right now, and if interest rates go up, the glut will continue” said Martin Cantor, chief economist of Sustainable Long Island, a local economic advocacy group.
Prices across the area continued their upward march, however. It is a pattern that is happening in the nation’s hottest markets — Arizona, California, Florida real estate and more — despite the increase in inventory and seeingly more opportunities for first-time buyers to tip the scales in their favor. Prices rose by 10.3 percent over the year in Nassau County, to a median price of $482,000. In Suffolk County, on the eastern end of the island, they rose 10.5 percent to a median price of $400,000.
“I think you’re seeing the turn of the housing market, and I think you’ll see much more of the turn by spring,” said Pearl Kamer, the chief economist of the Long Island Association, one of the region’s largest business groups.
The biggest evidence is the inventory. Queens had 64.1 percent more homes on the market last month than in December 2004, at which time the residential inventory had fallen by 5 percent compared with December 2003. Another important point is underscored by these figures — the fact that the jump in number of homes for sale represents an increase from incredibly low levels.
“You’re comparing it to a time when there was no inventory. We were at an all-time low,” said Dorothy Herman, president and CEO of Prudential Douglas Elliman.
The increase in available homes means significant changes ahead for the New York real estate market, as sellers will soon have to price their homes more competitively. When that happens, gradually, buyers may be able to wield considerably more leverage. That tide has yet to turn completely, as prices continue to rise at a modest pace. Right now, in fact, may be a Goldilocks housing market of sorts. In other words, just right.
“At the moment, it’s a good market for buyers, it’s a good market for sellers,” said Christopher Armstrong, the president of the Multiple Listing Service and broker-owner of Century 21 Princeton Properties, which has offices in Holbrook, Bayport and Ronkonkoma.
Analysts concur that if mortgage rates stay where they are, the housing market will continue to surge forward. However, economists have predicted, based on the Federal Reserve’s recent history of raising prime interest rates, that mortgages (currently at 6.25 percent or lower across most of the country) could rise near or above 7 percent in the next 12 months. If that happens, the story could change again and even result in price declines.
Right now, it’s a lot of hypotheticals. Whether you are in the market for a Florida home loan or a mortgage in any other state, or looking to sell your property, stay on top of the ever-shifting trends and be sure your home is worth the price tag.
