Long Island real estate market sees fewer deals fall through than rest of the U.S.
Long Island had the fewest number of canceled home purchase agreements in the nation. Shown is a home under contract in Patchogue last year. Credit: Newsday/Steve Pfost
Long Island homebuyers deliver on their promises.
Buyers in Nassau and Suffolk counties backed out of deals to purchase homes at the lowest rate among the 50 largest U.S. metropolitan areas, according to a report from Redfin.
Nationwide, the number of home purchase agreements that were canceled in June was equal to almost 15% of all pending home sales. That was the highest rate of any June since 2017, when Redfin started tracking the stat.
But locally the rate of canceled deals was just 3.8%. That was essentially the same rate as last year, when Long Island — which Redfin peculiarly describes as the Nassau County metro area — also had the lowest rate of cancellations among the 50 most populated areas.
Among the largest metropolitan areas, Florida cities saw the highest rate of buyers backing away from deals. Orlando led all metros with a rate of 20.8% followed by Jacksonville (20.5%) and Tampa (20.5%). Next was Las Vegas (20.2%) and San Antonio (19.9%).
While it doesn’t happen often, there are times locally where buyers or sellers have a change of heart after signing a contract, usually for family or job-related reasons, said Deirdre O’Connell, CEO of Daniel Gale Sotheby’s International Realty in Cold Spring Harbor.
She said some of the reasons fewer contracts might fall through on Long Island include the size of buyers’ deposits and the area’s tight market.
As opposed to some other parts of the country, it is customary to conduct inspections before signing contracts, which makes it less likely issues will arise after the contract is signed.
"We’ve always been a pretty steady market," O’Connell said. "When we had the Great Recession or when COVID halted [sales], we never fell as low as the lowest low, and we’ve never enjoyed the highest of the highs that some of these other markets go into," she said, mentioning Florida, Nevada and Texas.
One factor that might contribute to a lower rate on Long Island is the time it takes for buyer and seller to sign contracts in New York, said Andrew Russell, owner and founder of RCG Mortgage in Hauppauge.
Local buyers have more time to weigh housing costs before getting to contract that they don’t need to back out later, he said. Closing deals takes longer here because New York law requires real estate attorneys to oversee closings, while states such as Florida and Texas do not.
Intense competition for houses locally also may make buyers think twice before considering other options.
"It’s a herculean effort to get into contract here, so once you’re in contract, they’re going to hold on to that thing with their dear life to make sure that they close," Russell said.
Jonathan Miller, CEO of Manhattan appraisal firm Miller Samuel, questioned whether Long Island truly has so few canceled deals.
"That number seems unusually low," said Miller, who recently published an analysis of the Redfin report. "We just had a quick run up in housing prices and mortgage rates and we have a tremendous share of bidding war activity [on Long Island], so the idea that canceled deals are nominal when they don’t appear to be in most metro areas — it’s inconsistent with my experience."
Other areas that saw low rates of canceled deals included San Francisco (5.2%), Montgomery County, Pennsylvania, which includes the suburbs of Philadelphia (6.6%), and San Jose (6.8%).
More buyers may be getting cold feet across the U.S. because of elevated mortgage rates, as well as uncertainty about the presidential election and whether the Federal Reserve will soon begin lowering borrowing costs, said Chen Zhao, who leads Redfin’s economics research.
"We’re starting to hear our agents tell us a lot of buyers and sellers are not wanting to firm up their plans until they really see what’s going to happen with the election," she said. "When you have all of these different forces sometimes you see people have cold feet and want to pull out of deals."
In addition, rising homeowners’ insurance rates and greater difficulty finding a willing insurer in Florida and other U.S. states might also be contributing to buyers reconsidering, Zhao said.
Long Island homebuyers deliver on their promises.
Buyers in Nassau and Suffolk counties backed out of deals to purchase homes at the lowest rate among the 50 largest U.S. metropolitan areas, according to a report from Redfin.
Nationwide, the number of home purchase agreements that were canceled in June was equal to almost 15% of all pending home sales. That was the highest rate of any June since 2017, when Redfin started tracking the stat.
But locally the rate of canceled deals was just 3.8%. That was essentially the same rate as last year, when Long Island — which Redfin peculiarly describes as the Nassau County metro area — also had the lowest rate of cancellations among the 50 most populated areas.
WHAT TO KNOW
- Long Island bucked a national trend, with few real estate deals falling through after contracts are signed relative to other states.
- Local experts said the area's competitive market and the length of time it took to reach the contract stage could lead to fewer people backing out than in other states.
- Orlando, Jacksonville and Tampa were among the areas with the highest rates of canceled deals.
Among the largest metropolitan areas, Florida cities saw the highest rate of buyers backing away from deals. Orlando led all metros with a rate of 20.8% followed by Jacksonville (20.5%) and Tampa (20.5%). Next was Las Vegas (20.2%) and San Antonio (19.9%).
While it doesn’t happen often, there are times locally where buyers or sellers have a change of heart after signing a contract, usually for family or job-related reasons, said Deirdre O’Connell, CEO of Daniel Gale Sotheby’s International Realty in Cold Spring Harbor.
She said some of the reasons fewer contracts might fall through on Long Island include the size of buyers’ deposits and the area’s tight market.
As opposed to some other parts of the country, it is customary to conduct inspections before signing contracts, which makes it less likely issues will arise after the contract is signed.
"We’ve always been a pretty steady market," O’Connell said. "When we had the Great Recession or when COVID halted [sales], we never fell as low as the lowest low, and we’ve never enjoyed the highest of the highs that some of these other markets go into," she said, mentioning Florida, Nevada and Texas.
One factor that might contribute to a lower rate on Long Island is the time it takes for buyer and seller to sign contracts in New York, said Andrew Russell, owner and founder of RCG Mortgage in Hauppauge.
Local buyers have more time to weigh housing costs before getting to contract that they don’t need to back out later, he said. Closing deals takes longer here because New York law requires real estate attorneys to oversee closings, while states such as Florida and Texas do not.
Intense competition for houses locally also may make buyers think twice before considering other options.
"It’s a herculean effort to get into contract here, so once you’re in contract, they’re going to hold on to that thing with their dear life to make sure that they close," Russell said.
Jonathan Miller, CEO of Manhattan appraisal firm Miller Samuel, questioned whether Long Island truly has so few canceled deals.
"That number seems unusually low," said Miller, who recently published an analysis of the Redfin report. "We just had a quick run up in housing prices and mortgage rates and we have a tremendous share of bidding war activity [on Long Island], so the idea that canceled deals are nominal when they don’t appear to be in most metro areas — it’s inconsistent with my experience."
Other areas that saw low rates of canceled deals included San Francisco (5.2%), Montgomery County, Pennsylvania, which includes the suburbs of Philadelphia (6.6%), and San Jose (6.8%).
More buyers may be getting cold feet across the U.S. because of elevated mortgage rates, as well as uncertainty about the presidential election and whether the Federal Reserve will soon begin lowering borrowing costs, said Chen Zhao, who leads Redfin’s economics research.
"We’re starting to hear our agents tell us a lot of buyers and sellers are not wanting to firm up their plans until they really see what’s going to happen with the election," she said. "When you have all of these different forces sometimes you see people have cold feet and want to pull out of deals."
In addition, rising homeowners’ insurance rates and greater difficulty finding a willing insurer in Florida and other U.S. states might also be contributing to buyers reconsidering, Zhao 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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