In December, Long Island had the fewest homes for sale in 40 years, which kept prices elevated

Last month, homeowners on Long Island found themselves hesitant to list their homes due to high mortgage rates. The data from OneKey MLS reveals that the number of for-sale listings reached its lowest point in 40 years by the end of December.

In a notable trend, the end of last month saw a mere 2,250 homes for sale in Suffolk County, the lowest count recorded at the conclusion of a month since at least 1980, based on data from OneKey MLS. Simultaneously, Nassau County reported a listing total of 1,735 homes, marking the lowest on record since December 1983. This decline in available homes underscores a significant shift in the local real estate market.

OneKey MLS CEO, Richard Haggerty, attributes the low inventory of homes to rising mortgage rates and the aftermath of the heightened sales activity in 2020 and 2021. Homeowners appear hesitant to list their homes, reluctant to trade in the historically low mortgage rates from previous years for higher debt. This reluctance contributes to the current scarcity of available homes in the market.

Richard Haggerty expresses optimism, anticipating that signals from the Federal Reserve planning to cut its benchmark interest rate this year will encourage more homeowners to list their homes, potentially increasing the supply in the housing market.

In December, Nassau and Suffolk counties witnessed the lowest number of homes for sale in at least 40 years, as reported in a recent study. Additionally, there was an 8.5% increase in the median home price to $705,000 in Nassau County compared to December 2022, and a 9.6% rise to $595,000 in Suffolk. Despite mortgage rates affecting affordability, the shortage of listings has sustained competition among homebuyers.

Richard Haggerty, CEO of OneKey MLS, is optimistic about the real estate landscape in 2024, expressing a belief that the current trend may not persist. He anticipates sellers becoming more active, attributing their previous reluctance to the desire for a stable interest-rate environment. According to Haggerty, sellers might have been waiting for signs of consistency, and with the expectation of a more stable interest-rate environment, they are likely to feel more confident making a move. While he acknowledges that the improvement won't happen overnight or substantially, the perceived stability in interest rates seems to be a motivating factor for potential sellers.

In Nassau County, the median sale price for homes in the past month reached $705,000, reflecting an 8.5% increase compared to December 2022. It's worth noting that this figure represents a decrease from the record high of $735,000 recorded in September. Real estate market observers often measure changes in home prices on a year-over-year basis to account for seasonal variations in the housing market.

Suffolk County experienced a median sale price of $595,000 in December, marking a 9.6% increase compared to the same month in the previous year. Notably, the median in Suffolk reached its peak at $600,000 in both October and November before slightly adjusting in December. These fluctuations provide insights into the dynamic nature of the local real estate market.

The noteworthy price appreciation in Suffolk County, despite a substantial increase in mortgage rates during the fall, underscores the resilience of the local real estate market. In December, the average rate for a 30-year fixed home loan reached 6.82%, as reported by Freddie Mac. This marked a peak at 7.79% in late October. Comparatively, two years prior, in December, the average stood at 3.1%. As of January 11, the latest recorded rate was 6.66%. The contrast over this period highlights the impact of fluctuating mortgage rates on the real estate landscape.

According to Richard Haggerty, the CEO of OneKey MLS, he believes that the interest rates did not deter buyers due to the low inventory. The scarcity of available homes meant that when a property came on the market at a competitive price, it was quickly and eagerly snapped up by buyers. This dynamic suggests that despite rising interest rates, the demand driven by limited inventory maintained a robust real estate market.

The hesitation among sellers to enter the market contributed to a decline in sales activity in December. With fewer homes listed, there were only 1,779 closings across the Island last month. This represents a notable 17% decrease compared to December 2022 and marks the lowest number of closings since December 2011. The reluctance of sellers to engage in transactions appears to have impacted the overall sales volume in the local real estate market.

Richard Haggerty reflects on the real estate landscape in 2023, describing the initial sales activity as starting from a rather bleak standpoint. Despite some mitigation as the year progressed, there was a lack of substantial improvement in the overall market conditions. This sentiment highlights the challenges and nuances that characterized the real estate dynamics throughout the year.

Buyers searching for homes in specific areas face a significant reduction in options compared to the past. For instance, in the Town of Huntington, last Friday saw only 53 available homes, which is less than half the number (122) that was present in January 2019. Melissa Stark, an associate broker and sales manager for Daniel Gale Sotheby’s International Realty in Huntington and Northport, highlights the notable decline in housing inventory in this specific region.

Melissa Stark notes a scarcity of available standing inventory, emphasizing that when a property becomes available and is deemed attractive, it swiftly disappears from the market. This dynamic underscores the competitive nature of the current real estate landscape, where quality listings are in high demand and quickly acquired by eager buyers.

Following a subdued December, Melissa Stark observes increased activity this month. The resurgence in homebuyer activity is attributed to slowly declining mortgage rates, motivating prospective buyers to resume their property searches. This shift suggests that the evolving interest rate environment is influencing buyer behavior in the local real estate market.

Melissa Stark notes a significant return of buyers to the market as mortgage rates show a downward trend. Buyers who were on the sidelines, particularly during December, are now entering the market with increased enthusiasm, marking a resurgence in activity during the initial weeks of January. The observed shift suggests that the evolving interest rate landscape is playing a pivotal role in reinvigorating buyer interest in the real estate market.

Jonathan Chandler, a real estate agent at Compass covering both Nassau and Suffolk, reports that there remains a robust demand with plenty of buyers actively searching for homes, even in the face of elevated mortgage rates. This indicates a resilient buyer market where the demand for housing continues despite challenges posed by higher borrowing costs.

Jonathan Chandler shares a recent experience, noting a strong buyer presence with 15 to 20 attendees at an open house in Wheatley Heights. The seller is reportedly contemplating multiple offers shortly after the property was listed. In a competitive market, Chandler emphasizes the importance of being proactive. For buyers unable to stand out through higher bids, he advises being among the first to submit an offer or view a property, underscoring the ongoing necessity for assertiveness in the current real estate landscape.

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