Long Island home market hasn't turned buyers' way this spring
They're baaaaack ... Long lines at open houses are common again this spring, agents and buyers say. This line of more than two dozen people formed outside an open house in Westbury in late April. Credit: Larry Matarasso
Long Islanders looking to buy a house who hoped they might be able to wait out the hot market sparked by the pandemic may have longer to wait.
The arrival of spring, which local real estate agents often bill as the busiest time for the market, hasn’t produced sufficient new listings to satisfy the demand for homes, and a key indicator of the pace of the market suggests the level of competition is right back where it was last year.
That combination is disheartening for potential buyers. Meanwhile, sellers who didn't cash in last year could benefit — if they can find someplace to move and are willing to give up a historically low interest rate.
"The housing markets in Nassau and Suffolk counties are nearly as tight as they were a year ago,” said Michael Simonsen, CEO of Altos Research, a San Francisco-based firm that tracks housing data across the country.
In the fall, Simonsen shared research with Newsday that showed about one-third of Long Island houses on the market had lowered their prices after listing, which was the largest percentage since 2019. By early May, that percentage had fallen to about one in five homes that had cut their price since listing.
“The market cooled considerably last fall … but this spring that trend has largely reversed,” he said.
Starting in March, the number of contracts signed began to rise after a very slow winter. That follows the normal seasonal trend, with sales picking up in the spring, but this year there weren’t enough houses hitting the market to match that bump in demand.
Jamie Gorman, a real estate agent at Charles Rutenberg Realty in Plainview, said the spring season hasn’t delivered the new listings she expected, and there were about half as many homes for sale in Plainview as she would expect at this time of year.
“I’ve shown buyers homes who have put in 15 offers and haven’t gotten them,” Gorman said. “They’re qualified buyers. There’s always somebody higher.”
When Gorman’s client Jamie Salzer, 48, started renting a townhouse in Woodbury in November 2021 with her two daughters, she thought their stay would be short-term. The previous month she had sold her co-op apartment in Forest Hills, where she had lived for 20 years, for $515,000.
But despite being equipped with a 50% down payment, Salzer hasn’t been able to find a house in the Syosset and Plainview areas near her parents in the past 18 months. She has been looking for three-bedroom homes in the $700,000 to $800,000 range.
"I searched every day and every other weekend I would be at an open house until I started realizing just how inflated everything was," she said. "There's just no way that I'm willing to spend close to a million dollars for a home that was worth $700,000 pre-COVID."
Salzer made about five offers during her search but lost out to other bidders. With the hope that prices would come down, she took a break in her search toward the end of last year.
"A year later, I'm not finding anything in that range," she said, noting she has started looking at properties priced around $900,000 but those have gone for over asking price as well.
Salzer has faced more competition because she's looking for a home that's been updated in the last five to seven years and won't require major renovations, such as a kitchen remodel.
"I can't take on a project like that. I'm a single mom. I have little ones and a full-time, demanding job," said Salzer, who works in financial reporting for an insurance company in Manhattan.
Salzer said more homes have hit the market than last year, but prices haven't budged. She is evaluating whether it makes sense to buy a home on Long Island at all and has started looking in Florida.
"I'm definitely not optimistic," she said "I'm ready to throw in the towel."
The slide back to a more challenging market this spring is evident when looking at months of supply, a metric real estate industry observers use to understand the dynamic between buyers and sellers. It shows how long it would take to sell all the homes on the market given the pace that listings are becoming pending sales.
At the end of April, there were 4,844 homes on the market across Long Island and 2,216 sales in contract that had not yet closed, which is equal to 2.2 months of supply. Five to six months of inventory has historically been viewed as evidence that buyers and sellers are on even negotiating footing. Long Island would need more than double the current number of listings to reach that level.
In the months before the pandemic, there were more than 10,000 houses on the market. In 2008, during the subprime mortgage crisis, inventory peaked above 32,000.
The housing market was jolted last year when mortgage rates surged above 7% for the first time in 20 years and months of supply climbed. It hit 3.5 months in January, not because there was a bevy of new listings, but because so few buyers were striking deals.
But in April, the measure was back around two months, which is on par with the past few years since the pandemic set off a boom in Long Island real estate. Some agents noted while this spring remains competitive, there aren't quite as many offers on attractive properties as there had been in the past few years.
“If you have a conga line outside an open house, it used to be you’d get about 10 or 12 offers,” said Anna Niola, a real estate agent at Douglas Elliman in New Hyde Park. “We’re seeing about five or six now.”
Danielle Aglio, a real estate agent at eXp Realty, held an open house last weekend for a five-bedroom cape in Bellmore listed at $629,000. She said about 60 people walked through and on Tuesday she was helping the seller review a handful of offers, including some at or above the asking price. Setting the right price is critical in the current market, she said.
“I try to price it so it’s the most enticing, so you get the most amount of people in the door and create that bidding war,” she said. “If the house is listed too high from the start, you can always reduce it but once you do, you’re really putting the power in the buyers’ hands.”
Even for more expensive homes, buyers find themselves facing competition. Christine Willcocks, 54, set out last fall to relocate to Cold Spring Harbor from Westchester County with the goal of moving in before her youngest daughter starts ninth grade in September.
Willcocks, a single mom and regional account manager for a California-based biotech company, said she hoped to find a home that had been on the market for a while that she would be able to renovate and make her own. But when she found homes that needed work, she lost out to all-cash buyers.
“That happened to me twice,” she said.
After losing out on those two homes, Willcocks returned to a four-bedroom Colonial in Cold Spring Harbor that was listed at nearly $1.3 million, which she had previously tried to buy with an offer below asking price that wasn’t accepted.
She increased her offer closer to the asking price and made the deal in February. Willcocks expects to close in mid-June.
She said she is happy she trusted her gut to move quickly during the winter rather than waiting for more listings to emerge in the spring.
“I felt uneasy, and I said I really want to get into a deal now before the spring buyers come out,” she recalled telling her agent, Margaret Burkett of Douglas Elliman. “I felt like I would have been competing against more people, and I don’t think I was competing against anyone on the house, which is unusual for the market.”
Home sales have started to pick back up as mortgage rates have leveled off this year. The average 30-year fixed rate was 3.22% during the first week of 2022. It peaked at 7.08% in late October and matched that level in early November.
This year, the average has fluctuated between 6% and 6.75%. For the week ending Thursday, the average was 6.35%, according to Freddie Mac.
Sales have “picked up because rates have calmed down and we’re heading into the period it should be busiest,” said Larry Matarasso, a senior mortgage consultant at CrossCountry Mortgage in Jericho. “When the rates jumped in October and November of last year that really hurt the real estate and mortgage industry. That rapid rise scared people and kind of paralyzed the whole industry … My phones are busier than they were a few months ago.”
Home prices have largely leveled off after several years of steep increases, but higher interest rates mean some buyers might be facing higher monthly costs than if they had bought a year ago.
In Nassau County, the median sale price in April was $660,000, which was down 1.3% from the median in April 2022. In Suffolk, the median sale price was $545,000, or 0.9% higher than a year ago.
Jenny Caputo, a manager at a behavioral health nonprofit, and her husband Sal, a police officer, have firsthand experience with the frustrations of the real estate market over the past year. Their current stat line: More than 50 houses viewed, three offers accepted and three deals that fell through.
The couple, both 34, were married in July and began their search in October for a house near Long Beach, where Jenny grew up and where her parents live. Last fall, a homeowner in Harbor Isle, a hamlet that borders Island Park, accepted their offer of around $600,000 for a three-bedroom house that they loved despite its need for a new roof. But when the seller received the contract, she decided she no longer wanted to sell, and the deal was off.
In December, they found a different house in Harbor Isle for around $625,000 but an inspection revealed a crack in the foundation. “The seller was like, ‘Take it or leave it, and by the way we got a higher offer.’”
Then in February, they had an offer of about $570,000 accepted on a house in Long Beach, but at the last minute, Caputo said, the seller’s attorney added a clause to the contract requiring the couple to waive the appraisal contingency. If the house didn't appraise, they would have been responsible for coming up with the extra cash not covered by their mortgage.
“That was essentially signing a blank check,” Caputo said.
The couple walked away from the deal, and after paying more than $2,000 for three inspections, they are still searching for a home this spring. Caputo estimates about two-thirds of the open houses the couple has visited have lines, and they often see the same people from week to week.
“It’s just been so demoralizing,” she said, “because I feel like we’re in a really good position. We have a full 20% down payment. We have excellent credit, both have been in our jobs for years, virtually no debt. We should be a shoo-in to buy a house at this stage of things, and it’s hard to understand how a $650,000 house is essentially considered a good deal.”
To be clear, this spring’s market is not expected to be as strong as in 2021, for example, when home prices increased more than 15% compared with the previous year. Mortgage rates have remained stubbornly above 6%, fewer deals are happening and agents said sellers who are too aggressive in their pricing compared with recent comparable sales will be disappointed.
Median prices are not likely to keep up with the pace of price growth in 2022, when prices hit record highs in July, with Nassau’s median at $720,000 and Suffolk’s at $575,000.
“In the spring of last year, home prices went up very quickly between March and June,” said Daryl Fairweather, chief economist at Redfin. “It’s not going to match that pace.”
The relief valve for the market would be a greater supply of homes, but Jeffrey Jimenez, a real estate agent at eXp Realty who often works in the Mastic-Shirley area, said he doesn't see that happening anytime soon.
"I don’t think we will see any softening in market until we have a substantial amount of inventory come back,” he said. “I have no idea when that will happen. I’m seeing a lot of people who want to sell but are like, 'Where am I going to go?'"
Update: This article, originally published May 11, has been updated to reflect new data on April home sales released by OneKey MLS on Friday.
Long Islanders looking to buy a house who hoped they might be able to wait out the hot market sparked by the pandemic may have longer to wait.
The arrival of spring, which local real estate agents often bill as the busiest time for the market, hasn’t produced sufficient new listings to satisfy the demand for homes, and a key indicator of the pace of the market suggests the level of competition is right back where it was last year.
That combination is disheartening for potential buyers. Meanwhile, sellers who didn't cash in last year could benefit — if they can find someplace to move and are willing to give up a historically low interest rate.
"The housing markets in Nassau and Suffolk counties are nearly as tight as they were a year ago,” said Michael Simonsen, CEO of Altos Research, a San Francisco-based firm that tracks housing data across the country.
In the fall, Simonsen shared research with Newsday that showed about one-third of Long Island houses on the market had lowered their prices after listing, which was the largest percentage since 2019. By early May, that percentage had fallen to about one in five homes that had cut their price since listing.
“The market cooled considerably last fall … but this spring that trend has largely reversed,” he said.
‘There’s always somebody higher’
Starting in March, the number of contracts signed began to rise after a very slow winter. That follows the normal seasonal trend, with sales picking up in the spring, but this year there weren’t enough houses hitting the market to match that bump in demand.
Jamie Gorman, a real estate agent at Charles Rutenberg Realty in Plainview, said the spring season hasn’t delivered the new listings she expected, and there were about half as many homes for sale in Plainview as she would expect at this time of year.
“I’ve shown buyers homes who have put in 15 offers and haven’t gotten them,” Gorman said. “They’re qualified buyers. There’s always somebody higher.”
When Gorman’s client Jamie Salzer, 48, started renting a townhouse in Woodbury in November 2021 with her two daughters, she thought their stay would be short-term. The previous month she had sold her co-op apartment in Forest Hills, where she had lived for 20 years, for $515,000.
But despite being equipped with a 50% down payment, Salzer hasn’t been able to find a house in the Syosset and Plainview areas near her parents in the past 18 months. She has been looking for three-bedroom homes in the $700,000 to $800,000 range.
I searched every day ... until I started realizing just how inflated everything was. There's just no way that I'm willing to spend close to a million dollars for a home that was worth $700,000 pre-COVID.
—Jamie Salzer
Credit: Jamie Salzer
"I searched every day and every other weekend I would be at an open house until I started realizing just how inflated everything was," she said. "There's just no way that I'm willing to spend close to a million dollars for a home that was worth $700,000 pre-COVID."
Salzer made about five offers during her search but lost out to other bidders. With the hope that prices would come down, she took a break in her search toward the end of last year.
"A year later, I'm not finding anything in that range," she said, noting she has started looking at properties priced around $900,000 but those have gone for over asking price as well.
Salzer has faced more competition because she's looking for a home that's been updated in the last five to seven years and won't require major renovations, such as a kitchen remodel.
"I can't take on a project like that. I'm a single mom. I have little ones and a full-time, demanding job," said Salzer, who works in financial reporting for an insurance company in Manhattan.
Salzer said more homes have hit the market than last year, but prices haven't budged. She is evaluating whether it makes sense to buy a home on Long Island at all and has started looking in Florida.
"I'm definitely not optimistic," she said "I'm ready to throw in the towel."
A tough spring for buyers
The slide back to a more challenging market this spring is evident when looking at months of supply, a metric real estate industry observers use to understand the dynamic between buyers and sellers. It shows how long it would take to sell all the homes on the market given the pace that listings are becoming pending sales.
At the end of April, there were 4,844 homes on the market across Long Island and 2,216 sales in contract that had not yet closed, which is equal to 2.2 months of supply. Five to six months of inventory has historically been viewed as evidence that buyers and sellers are on even negotiating footing. Long Island would need more than double the current number of listings to reach that level.
In the months before the pandemic, there were more than 10,000 houses on the market. In 2008, during the subprime mortgage crisis, inventory peaked above 32,000.
The housing market was jolted last year when mortgage rates surged above 7% for the first time in 20 years and months of supply climbed. It hit 3.5 months in January, not because there was a bevy of new listings, but because so few buyers were striking deals.
But in April, the measure was back around two months, which is on par with the past few years since the pandemic set off a boom in Long Island real estate. Some agents noted while this spring remains competitive, there aren't quite as many offers on attractive properties as there had been in the past few years.
“If you have a conga line outside an open house, it used to be you’d get about 10 or 12 offers,” said Anna Niola, a real estate agent at Douglas Elliman in New Hyde Park. “We’re seeing about five or six now.”
Danielle Aglio, a real estate agent at eXp Realty, held an open house last weekend for a five-bedroom home in Bellmore listed at $629,000. Credit: Newsday/ J. Conrad Williams Jr.
Danielle Aglio, a real estate agent at eXp Realty, held an open house last weekend for a five-bedroom cape in Bellmore listed at $629,000. She said about 60 people walked through and on Tuesday she was helping the seller review a handful of offers, including some at or above the asking price. Setting the right price is critical in the current market, she said.
“I try to price it so it’s the most enticing, so you get the most amount of people in the door and create that bidding war,” she said. “If the house is listed too high from the start, you can always reduce it but once you do, you’re really putting the power in the buyers’ hands.”
Even for more expensive homes, buyers find themselves facing competition. Christine Willcocks, 54, set out last fall to relocate to Cold Spring Harbor from Westchester County with the goal of moving in before her youngest daughter starts ninth grade in September.
Willcocks, a single mom and regional account manager for a California-based biotech company, said she hoped to find a home that had been on the market for a while that she would be able to renovate and make her own. But when she found homes that needed work, she lost out to all-cash buyers.
“That happened to me twice,” she said.
After losing out on those two homes, Willcocks returned to a four-bedroom Colonial in Cold Spring Harbor that was listed at nearly $1.3 million, which she had previously tried to buy with an offer below asking price that wasn’t accepted.
She increased her offer closer to the asking price and made the deal in February. Willcocks expects to close in mid-June.
She said she is happy she trusted her gut to move quickly during the winter rather than waiting for more listings to emerge in the spring.
I felt uneasy, and I said I really want to get into a deal now before the spring buyers come out.
—Christine Willcocks, with her daughters Carrie, Bridget, Lindsey
Credit: Christine Willcocks
“I felt uneasy, and I said I really want to get into a deal now before the spring buyers come out,” she recalled telling her agent, Margaret Burkett of Douglas Elliman. “I felt like I would have been competing against more people, and I don’t think I was competing against anyone on the house, which is unusual for the market.”
Home sales have started to pick back up as mortgage rates have leveled off this year. The average 30-year fixed rate was 3.22% during the first week of 2022. It peaked at 7.08% in late October and matched that level in early November.
This year, the average has fluctuated between 6% and 6.75%. For the week ending Thursday, the average was 6.35%, according to Freddie Mac.
Sales have “picked up because rates have calmed down and we’re heading into the period it should be busiest,” said Larry Matarasso, a senior mortgage consultant at CrossCountry Mortgage in Jericho. “When the rates jumped in October and November of last year that really hurt the real estate and mortgage industry. That rapid rise scared people and kind of paralyzed the whole industry … My phones are busier than they were a few months ago.”
'Take it or leave it'
Home prices have largely leveled off after several years of steep increases, but higher interest rates mean some buyers might be facing higher monthly costs than if they had bought a year ago.
In Nassau County, the median sale price in April was $660,000, which was down 1.3% from the median in April 2022. In Suffolk, the median sale price was $545,000, or 0.9% higher than a year ago.
Jenny Caputo, a manager at a behavioral health nonprofit, and her husband Sal, a police officer, have firsthand experience with the frustrations of the real estate market over the past year. Their current stat line: More than 50 houses viewed, three offers accepted and three deals that fell through.
The couple, both 34, were married in July and began their search in October for a house near Long Beach, where Jenny grew up and where her parents live. Last fall, a homeowner in Harbor Isle, a hamlet that borders Island Park, accepted their offer of around $600,000 for a three-bedroom house that they loved despite its need for a new roof. But when the seller received the contract, she decided she no longer wanted to sell, and the deal was off.
In December, they found a different house in Harbor Isle for around $625,000 but an inspection revealed a crack in the foundation. “The seller was like, ‘Take it or leave it, and by the way we got a higher offer.’”
Then in February, they had an offer of about $570,000 accepted on a house in Long Beach, but at the last minute, Caputo said, the seller’s attorney added a clause to the contract requiring the couple to waive the appraisal contingency. If the house didn't appraise, they would have been responsible for coming up with the extra cash not covered by their mortgage.
“That was essentially signing a blank check,” Caputo said.
The couple walked away from the deal, and after paying more than $2,000 for three inspections, they are still searching for a home this spring. Caputo estimates about two-thirds of the open houses the couple has visited have lines, and they often see the same people from week to week.
“It’s just been so demoralizing,” she said, “because I feel like we’re in a really good position. We have a full 20% down payment. We have excellent credit, both have been in our jobs for years, virtually no debt. We should be a shoo-in to buy a house at this stage of things, and it’s hard to understand how a $650,000 house is essentially considered a good deal.”
What the future holds
To be clear, this spring’s market is not expected to be as strong as in 2021, for example, when home prices increased more than 15% compared with the previous year. Mortgage rates have remained stubbornly above 6%, fewer deals are happening and agents said sellers who are too aggressive in their pricing compared with recent comparable sales will be disappointed.
Median prices are not likely to keep up with the pace of price growth in 2022, when prices hit record highs in July, with Nassau’s median at $720,000 and Suffolk’s at $575,000.
“In the spring of last year, home prices went up very quickly between March and June,” said Daryl Fairweather, chief economist at Redfin. “It’s not going to match that pace.”
The relief valve for the market would be a greater supply of homes, but Jeffrey Jimenez, a real estate agent at eXp Realty who often works in the Mastic-Shirley area, said he doesn't see that happening anytime soon.
"I don’t think we will see any softening in market until we have a substantial amount of inventory come back,” he said. “I have no idea when that will happen. I’m seeing a lot of people who want to sell but are like, 'Where am I going to go?'"
Update: This article, originally published May 11, has been updated to reflect new data on April home sales released by OneKey MLS on Friday.
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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