Long Island median home price rose nearly 10% in the first quarter
The median home price on Long Island rose nearly 10% during the first quarter, as the region’s shortage of for-sale listings deepened, boosting competition among buyers.
The median sale climbed to $630,000, or 9.6% higher than the same figure a year ago, according to a report published Thursday by real estate brokerage Douglas Elliman and appraisal firm Miller Samuel. The companies report sales separately for the Hamptons and the North Fork.
In the Hamptons, the median sale during the winter months sold for $1.8 million, or 32.4% more than the same figure in the first quarter of 2023. On the North Fork, the median price increased 6.4% year over year to $995,000.
It was just a year ago when it appeared higher mortgage rates had finally gotten the best of the Long Island real estate market. In the first quarter of 2023, the median price among homes on Long Island, excluding the East End, fell about 1%, marking the first time that figure had fallen compared with the previous year in a decade.
WHAT TO KNOW
- The median home price on Long Island, excluding the East End, increased 9.6% in the first quarter compared with the same period a year ago, according to a new report.
- Median prices rose to $1.8 million in the Hamptons and $995,000 on the North Fork.
- Real estate brokers said too many buyers competing for too few homes have driven up prices.
But through last spring and summer prices began rising again.
Now, Long Island homebuyers appear in for another challenging spring market even as it has gotten far more expensive to take out a mortgage.
The average 30-year fixed rate reached 7.1% last week, according to Freddie Mac, the first time that measure had surpassed 7% since December. Three years ago, the average was about 3%.
Long Island remains in a distorted market in which prices have continued to rise even as buyers’ monthly payments have ballooned because of higher prices and interest rates, said Jonathan Miller, CEO of Miller Samuel.
“The conditions we’re looking at are not intuitive,” he said. “The idea that prices are at or near record levels when mortgage rates are more than double what they were during the pandemic era was certainly not forecast by economists five years ago.”
Above asking price
Competition for houses has helped fuel higher prices. Miller said about half, 48.6%, of homes sold in the first quarter sold for above the seller’s last asking price, which suggests there were multiple bidders vying for the deal. Before the pandemic, only about 20% of homes sold for above asking price.
More listings are needed to provide relief to buyers, but over the past year the opposite has happened. The number of homes for sale on Long Island, excluding the East End, dropped nearly 12% to about 3,900 at the end of March.
Meanwhile, the number of sales on Long Island, excluding the East End, dropped 3% in the first quarter compared with the same period a year ago.
The supply crunch requires buyers to adjust their search criteria if they want to find a home, said Amy Girimonti, owner and broker of Prime Properties Long Island in Huntington.
It's not uncommon to see a house sell for at least $50,000 above its list price, she said, so a buyer whose lender approves them to spend up to $700,000 may have to view homes priced around $600,000 if they don’t want to get outbid, she said.
“If you’re stepping into the market for the first time, that’s something to be aware of,” Girimonti said. “Most homes are not selling at the list price — they’re selling above.”
Todd Bourgard, CEO of Douglas Elliman Long Island, Hamptons and North Fork, said the brokerage has seen a strong start to the traditionally busy spring real estate season, but lower mortgage rates are needed to bring more sellers into the market.
“People that are locked in at 3% and 4% are hesitant to sell their homes when they will end up with a mortgage at 7%,” he said.
In the more expensive Hamptons and North Fork markets, more listings have started to become available and that has benefited sales. The number of Hamptons sales in the first quarter increased 33% year-over-year, while North Fork sales climbed 18% compared with a year ago.
The number of homes for sale on the East End remains well below historical averages for this time of year. That presents a challenge for buyers who are only looking within a narrow price segment of the market, said Robert Nelson, executive managing director at Brown Harris Stevens, which publishes its own market report on the region.
“If you’re a buyer right now out there looking, you’re still having a hard time finding the property that works for you,” Nelson said.
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.
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