Long Island median home prices hit record high at $700,000

Long Island home prices surged to a record high in the third quarter as homebuyers felt the pressure to boost their offers this summer.

The median sale price on Long Island — excluding the East End — rose to $700,000 for the first time among deals that closed during the July to September period. That was 9.4% higher than the same figure a year earlier, according to new data from real estate brokerage Douglas Elliman and appraisal firm Miller Samuel.

Rising home prices have been driven by an inadequate number of homes for sale to meet demand, said Jonathan Miller, CEO of Miller Samuel. Prices have climbed even as mortgage rates doubled in 2022 and have remained above 6% this year.

"When interest rates rise at the steepest ascent in five decades, we would expect prices to fall," Miller said. "That hasn’t happened because inventory is still distorting housing market metrics in a big way."

One example: 59.1% of deals that closed in the third quarter sold for above asking price. That was the second-highest percentage in the 20 years the companies have collected data and was barely below the all-time high in the second quarter of 2022.

"To have 6 out of 10 sales close above the last asking price tells you that supply remains significantly imbalanced on Long Island, in the sense that supply is not adequate to meet demand," Miller said.

In the Hamptons, the median sale price rose 8.5% to more than $1.5 million compared with the same time frame a year ago. That was shy of the record level achieved in the second quarter of nearly $1.9 million.

On the North Fork, the median price during the third quarter was essentially the same from a year ago at $999,999.

Philip V. O’Connell, executive managing director at Brown Harris Stevens overseeing its Hamptons and North Fork offices, said he was surprised at the level of sales activity at this point in an election year.

"What would typically happen around mid-August is the market would slow to a trickle and it wouldn’t pick up again until the middle of December," O’Connell said. "This election cycle, our activity picked up substantially in mid-August and has continued. This is not something that typically would happen during an election cycle."

While there still aren’t enough properties to show buyers, O’Connell said the number of deals above $5 million in the Hamptons rose 77% compared with the year-earlier period, according to a separate third quarter report from Brown Harris Stevens.

"The number of transactions over $5 million tells me that there’s a lot of confidence in the market," he said.

Throughout Long Island, the number of homes for sale has started to tick up. At the end of September, there were about 5,100 houses and condos on the market, excluding the East End, which was 13% higher than at the same time a year ago.

But there are still fewer than half as many listings as there were in the third quarter of 2019 before the pandemic and less than one-fifth as many as when inventory hit an all-time high in mid-2008.

"That is about as straightforward as it gets in dissecting why housing prices seem to be defying gravity," Miller said.

Angela Prince, a real estate broker who leads a team of agents at Weichert Realtors in Bay Shore, said she rarely had a deal that didn't go above asking price among homes she listed on the South Shore.

"Almost everything I’ve listed in the last year or two has gone over asking [price]," Prince said.

The recent rally in prices has led some sellers to get too aggressive in their pricing, which has led to more price cuts this fall, she said. 

The third quarter marked the first time in three years that Long Island, excluding the East End, had more closed sales than in the same quarter the year before. The number of sales increased 0.5% to 6,465 in the third quarter. 

However, it has become common for agents to advise clients to make a strong offer if they want a house, so some deals may go for more than list price even if there isn’t a competing offer, Prince said.

"Buyers that have been looking for a long time — they’re done losing. If they love a house, a lot of them are going to come in strong right out of the gate and that alone will drive up the price," Prince said. "Now you may have two of them coming in super strong, because they’re both in the same position, and now you have a bidding war."

By Jonathan LaMantia

jonathan.lamantia@newsday.com@jonlamantia

Jonathan LaMantia covers residential real estate and other business news on Long Island. He previously covered the business of health care for Crain's New York Business.