Long Island home prices surged 60% since 2012

Long Island homebuyers today have to spend more, move faster and choose from a vastly smaller roster of listings than a decade ago, according to a new report from real estate brokerage Douglas Elliman and appraisal firm Miller Samuel.

The median sale price for a Long Island home rose 60% over the past decade to $560,000 last year compared with $350,000 in 2012, according to the data, which excludes the Hamptons and North Fork and wasn't adjusted for inflation.

In Nassau County, the median sale price rose 60% to $640,000 over the decade, and in Suffolk increased by about 62% to $490,000, excluding the Hamptons and North Fork. It took 54 days on average between the time a home went on the market and when a sale closed, which is down by more than half from the 128 days it took a decade ago.

The median price of a single-family home sold last year on Long Island, excluding the Hamptons and North Fork, was $580,000, or about two-thirds higher than a decade ago. The median price for condos, which make up about one-eighth of the Long Island home sales market, rose 52% to $365,000 in the past decade. There were 4,430 condo sales last year, which was nearly 73% more than back in 2012.

Buyers and sellers have now become accustomed to higher prices and a competitive market for real estate. But two years ago, when COVID-19 arrived in New York, unemployment spiked and businesses closed, it was hard to see that Long Island was about to experience a real estate boom, said Ann Conroy, CEO of Douglas Elliman Long Island.

"Everything we thought would be a negative for the housing market — it was the exact opposite," she said. "There was a tremendous amount of buyer demand. People were coming from areas outside of the Island. They were migrating from New York City, so we did get a new flow of buyers as well."

That rush to buy homes on Long Island continued unabated in 2021, when the Island set a record for the number of homes sold, at 33,161, even as sales toward the end of the year didn’t keep up with the previous year’s pace.

"There was some feeling of how could the market go any further ahead than it did in 2020, coming out of the blue after lockdown ended, when it was off to the races for buyers," said Jonathan Miller, CEO of Miller Samuel. "That continued throughout 2021 to the point where sales activity in 2021 would likely have been higher if not for the collapse in listing inventory."

That severe shortage of listings is the defining characteristic of the current market, Miller said. An analysis of homes for sale showed there were 3,862 available across the Island at the end of last year. Back in 2012, that figure, which represents a snapshot in time, was 14,574.

At last year's pace of sales, it would take only 1.4 months to sell all the homes currently on the market. In 2012, there was 9.4 months of supply, given how quickly homes were selling. A balanced market between buyers and sellers is around six months' supply, Miller said.

"Even if inventory doubled or tripled overnight, theoretically, it would still be low," he said.

In the Hamptons, the median sale price was $1.35 million last year, or 61.7% higher than in 2012. On the North Fork, the median price rose 86% to $800,000 in 2021 compared with prices a decade ago, when the median was $430,000.

Despite the runup in prices, Miller sees no signs of a bubble. The current surge in prices hasn’t been paired with financial engineering to help buyers qualify for loans, as was the case before the housing crisis in 2008.

"You have to have more than a pulse or be able to fog a mirror to get a mortgage" in this market, Miller said. "Bank underwriting is tighter than typical conditions, so we’re not looking at a banking crisis on the other side of this."

Mortgage rates are moving higher this year, with the rate for a 30-year fixed mortgage averaging 3.55% for the week ending Feb. 3. As housing payments get more expensive, some prospective buyers could exit the market and allow for the number of listings to grow — but not enough to drive down prices anytime soon.

"If the economy continues to improve and rates don’t spike, which they’re not expected to, and credit conditions don’t change, I think we’re at this level for a while," Miller said. "For people waiting for prices to correct, I think that’s going to be a long wait."

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.