Long Island homebuyers see highest rate of price cuts since 2019
Sumita Lamba was able to purchase her Huntington home for $15,000 below the asking price. Credit: Newsday/Steve Pfost
Long Island homebuyers haven’t had much to celebrate in the 2 1/2 years since the pandemic started.
Home prices reached record highs and mortgage rates shot upward this year at the fastest pace since 1981, reducing the number of Long Islanders who can afford to purchase.
But for the buyers that remain, the market appears to be shifting in their direction.
The percentage of Long Island houses on the market that have dropped in price since they were initially listed is the highest it has been in three years, according to an analysis conducted for Newsday by Altos Research, a San Francisco-based real estate data company.
Among Nassau County houses for sale on Nov. 11, 35% had cut their price at some point compared with 27% at that time a year ago. In Suffolk, 32% of listings dropped their price, compared with 24% a year ago.
While that's a recent high for Long Island, markets in central Florida, Texas and Arizona have seen well over half of all listings drop their price at some point, said Michael Simonsen, CEO of Altos Research.
“You’re starting to see a lot more reductions,” said Angela Prince, a real estate broker at Prince and Associates Realty Group in Bay Shore.
The increase in price reductions shows homeowners and realtors are adjusting to the new market dynamic, she said. But she noted that if a seller picks the right initial price to drum up interest, buyers will still have a hard time negotiating the price down.
“You’re still not the only one. Maybe you’re not one of 20 [bidders] anymore. Maybe you’re one of three,” Prince said. “If people come in way too low under asking [price] and the house is priced accordingly, they’re not getting the house right now.”
Buyers would be in better position if not for Long Island’s significant lack of houses on the market, which has continued to lead to sellers receiving multiple offers, said Mary Alice Ruppert, an associate broker who leads a team of agents at Coach Realtors in East Islip. The supply of homes for sale was the lowest it had been in at least 20 years last January and has shown only modest improvement since then. The number of listings across the Island in October was just 2.5% higher than it had been a year earlier, despite the drastic rise in interest rates slowing the pace of sales.
The average rate for a 30-year fixed mortgage was 6.61% for the week ending Nov. 17 compared with 3.1% a year earlier. That contributed to a 26% decline in the number of Long Island home sales in October, compared with the previous year.
“The environment is a little bit better for buyers because I would say the competition has reduced some,” Ruppert said. She said one of her agents recently helped a couple sign a contract after losing out on house after house for six months. “That to me was a clearer picture that there was probably less competition for the property they were going for.”
But some sellers are unwilling to consider the changing market dynamic, she said.
"Everybody remembers what their house is worth on the highest possible day. Everybody remembers that number," Ruppert said. "The challenge that we're seeing now is there are sellers who still are trying to capture a market that has already passed us."
Cory Knopf, an associate broker at Compass in Oceanside, said she sees the increase in price reductions as a sign that sellers and their Realtors were reaching for prices that were unrealistic, not that there is a lack of demand from buyers.
“Most houses we see coming down were priced ridiculously high for what they were,” she said.
Buyers who want to come away satisfied with their purchase need a well-defined plan, said Andrew Shubert, 61, who recently bought a house in Oceanside with the intention of retiring there.
The Shuberts had lived for the past 21 years in their 1926 center-hall colonial in Woodmere — their third house in the Five Towns. “We enjoyed it for the time we were there, but frankly it was too much room and too much upkeep at this point,” he said.
Shubert prefers colonials and wanted the house to be tucked away on a quiet street with at least three bedrooms and two bathrooms. The Shuberts decided on an 1,845-square-foot contemporary colonial that had modern updates and a more open floor plan. The couple closed for $695,000 last month, which was $5,000 above the most recent list price. But when it first hit the market, the house had been listed for $729,000.
The seller "had a previous buyer who was in contract fall through and then lowered the price,” Shubert said. The deal came after the couple looked at 35 houses over the past 10 months on Nassau’s South Shore.
“We were not prepared to do the bidding stuff. That was silly,” he said. "If we liked the house, we put our best foot forward and it was always below the ask.”
The Shuberts have now listed their Woodmere home for $1.25 million and are looking for a buyer. “Unfortunately, our timing wasn’t that great, but we’ve been working on this for a while. We’re going to go through with the plan.”
Shubert said the family’s various moves over the years helped them learn what’s important when buying a home.
“People just rush in and see a beautiful home and, go, ‘I’ll get used to it.’ No, you won’t,” Shubert said. “After having homes, you realize you don’t get used to it, so there’s certain criteria you have to establish.”
After significant price growth over the past three years, Long Island's pandemic era real estate boom appears to be waning.
The market has cooled as mortgage rates more than doubled in the past year. The median price of homes that went into contract in Nassau County last month, $650,000, was 1.6% lower than it had been in October 2021 — the first time that stat has declined from the previous year since April 2020, according to OneKey MLS. The median pending sale in Suffolk, $532,000, increased by just 0.5% compared with the previous year.
The leveling off in prices comes after several years of signficant gains in values for homeowners. The median price among sales that closed in October, $675,000, was 26.2% higher than the median in October 2019, pre-pandemic. In Suffolk, the median price of $550,000 last month was 35.8% higher than it was in October 2019. During that time, the pandemic ushered in an era defined by historically low mortgage rates, a rise in remote work and a demand for more space at home that led New York City residents to migrate to less dense areas, including Long Island, according to a recent report by economists at the Federal Reserve Bank of New York.
One of those buyers was Sumita Lamba, who managed to limit her competition to buy a house in Huntington that fit her budget. Lamba, 46, set out to move to Long Island to a house with outdoor space from her one-bedroom condo in Manhattan in the spring. “I realized my apartment was too small,” she said. “It didn’t suit my needs anymore.”
After looking in several areas, she settled on Huntington and was determined to find a home with two bathrooms and a backyard where her French bulldog Monty could run around. She closed in August on a four-bedroom, two-bathroom house on a cul-de-sac in Huntington for $15,000 below its asking price.
Unlike some other buyers over the past few years who have had to make snap decisions about putting offers on houses during the same weekend they first viewed them, Lamba was able to see the house three times before submitting her offer.
“I feel like I got a little lucky because [the sellers] were an older couple. They weren’t doing any open houses, so I don’t think they had as many people as they probably could have had in the house.”
Greg McBride, chief financial analyst at Bankrate, said homebuyers might now have more time to deliberate than they would have during last year’s frenzy.
“If you’ve been priced out, or buying now means stretching too much, you can do a lot worse than just walking away and staying where you are for another year or two to be on more solid financial footing when you do go back into the market,” McBride said. “On the other hand, if you haven’t been priced out, now is a much better time to buy than it was six months ago. You now have the ability to do your homework before taking the plunge. There’s no need to make the biggest financial decision of your life under duress.”
For some properties, particularly those at price points first-time homebuyers can afford, there is still plenty of competition. Joe Carbonaro, a real estate agent with Re/Max Integrity Leaders in Smithtown, held an open house last weekend for a three-bedroom cape in Levittown he is marketing for $524,000. Carbonaro said 52 sets of buyers checked out the house across Saturday and Sunday.
"It was the correct price to get people through the door," Carbonaro said. "Even before that, I can tell by the number of times my phone rings."
When Godson Michel, 30, closed on his new home in late September, he felt as if he was sealing a deal that was decades in the making. He paid $500,000 to buy a five-bedroom high ranch in North Amityville, a house he can see from the window of his childhood bedroom. In 1997, Michel’s father, who emigrated to the U.S. from Haiti a decade earlier, had tried to buy the house across the street from his own as an investment property. A bank had been selling the house for an attractive price but he couldn’t secure a co-signer he needed to complete the deal.
“He regretted it and was really down and out on himself for not being able to land the house,” Michel said. “Then years later, it’s up for sale. … He was super ecstatic and proud of me being able to finish off something that he wanted to do way back when.”
It didn’t come for free. Michel was one of about eight bidders on the house and paid $70,000 above the asking price, narrowly beating out an all-cash buyer. He believes he won out because he knew the neighbor well.
“That personal connection definitely helped,” said Michel, founder and president of Blue Surge Marketing Agency in Lindenhurst. “If that relationship didn’t exist, I don’t think the deal would have gone through, he probably would have opted for the cash buyer.”
By the time Michel secured a 5.7% interest rate for a 30-year fixed FHA loan, he said his monthly payment increased by about $700 compared with what he expected to pay based on a rate around 4% when he first started looking at homes. “It was super frustrating,” he said. “I knew if I waited even longer, the rates would go up again.”
Economic uncertainty has been paralyzing for buyers who are unsure how interest rates might change from week to week, said Shaan Khan, an associate broker at Charles Rutenberg Realty in Plainview. They fear they'll find their dream house only for a last-minute mortgage rate spike to push the cost of a mortgage beyond their reach. When rates are more stable, he believes demand will pick up again.
“Maybe you don't have the competition you had six months ago. But with the uncertainty about interest rates, it makes it difficult to plan and decide on the timetable,” he said. “What I've been finding is many folks are waiting to see where things settle.”
Long Island homebuyers haven’t had much to celebrate in the 2 1/2 years since the pandemic started.
Home prices reached record highs and mortgage rates shot upward this year at the fastest pace since 1981, reducing the number of Long Islanders who can afford to purchase.
But for the buyers that remain, the market appears to be shifting in their direction.
The percentage of Long Island houses on the market that have dropped in price since they were initially listed is the highest it has been in three years, according to an analysis conducted for Newsday by Altos Research, a San Francisco-based real estate data company.
What to know
- A steep increase in mortgage rates has made Long Island homes less affordable, but it has also reduced competition among buyers.
- About one-third of local homes on the market in early November had dropped their price at some point since they were initially listed — the largest percentage in the past three years, according to data from Altos Research.
- There are still too few homes on the market for buyers, and homes that hit the market at the right price are still generating multiple offers, agents said.
Among Nassau County houses for sale on Nov. 11, 35% had cut their price at some point compared with 27% at that time a year ago. In Suffolk, 32% of listings dropped their price, compared with 24% a year ago.
While that's a recent high for Long Island, markets in central Florida, Texas and Arizona have seen well over half of all listings drop their price at some point, said Michael Simonsen, CEO of Altos Research.
“You’re starting to see a lot more reductions,” said Angela Prince, a real estate broker at Prince and Associates Realty Group in Bay Shore.
The increase in price reductions shows homeowners and realtors are adjusting to the new market dynamic, she said. But she noted that if a seller picks the right initial price to drum up interest, buyers will still have a hard time negotiating the price down.
“You’re still not the only one. Maybe you’re not one of 20 [bidders] anymore. Maybe you’re one of three,” Prince said. “If people come in way too low under asking [price] and the house is priced accordingly, they’re not getting the house right now.”
Buyers would be in better position if not for Long Island’s significant lack of houses on the market, which has continued to lead to sellers receiving multiple offers, said Mary Alice Ruppert, an associate broker who leads a team of agents at Coach Realtors in East Islip. The supply of homes for sale was the lowest it had been in at least 20 years last January and has shown only modest improvement since then. The number of listings across the Island in October was just 2.5% higher than it had been a year earlier, despite the drastic rise in interest rates slowing the pace of sales.
The average rate for a 30-year fixed mortgage was 6.61% for the week ending Nov. 17 compared with 3.1% a year earlier. That contributed to a 26% decline in the number of Long Island home sales in October, compared with the previous year.
“The environment is a little bit better for buyers because I would say the competition has reduced some,” Ruppert said. She said one of her agents recently helped a couple sign a contract after losing out on house after house for six months. “That to me was a clearer picture that there was probably less competition for the property they were going for.”
But some sellers are unwilling to consider the changing market dynamic, she said.
"Everybody remembers what their house is worth on the highest possible day. Everybody remembers that number," Ruppert said. "The challenge that we're seeing now is there are sellers who still are trying to capture a market that has already passed us."
Buying in a changing market
Cory Knopf, an associate broker at Compass in Oceanside, said she sees the increase in price reductions as a sign that sellers and their Realtors were reaching for prices that were unrealistic, not that there is a lack of demand from buyers.
“Most houses we see coming down were priced ridiculously high for what they were,” she said.
Buyers who want to come away satisfied with their purchase need a well-defined plan, said Andrew Shubert, 61, who recently bought a house in Oceanside with the intention of retiring there.
The Shuberts had lived for the past 21 years in their 1926 center-hall colonial in Woodmere — their third house in the Five Towns. “We enjoyed it for the time we were there, but frankly it was too much room and too much upkeep at this point,” he said.
Shubert prefers colonials and wanted the house to be tucked away on a quiet street with at least three bedrooms and two bathrooms. The Shuberts decided on an 1,845-square-foot contemporary colonial that had modern updates and a more open floor plan. The couple closed for $695,000 last month, which was $5,000 above the most recent list price. But when it first hit the market, the house had been listed for $729,000.
The seller "had a previous buyer who was in contract fall through and then lowered the price,” Shubert said. The deal came after the couple looked at 35 houses over the past 10 months on Nassau’s South Shore.
“We were not prepared to do the bidding stuff. That was silly,” he said. "If we liked the house, we put our best foot forward and it was always below the ask.”
The Shuberts have now listed their Woodmere home for $1.25 million and are looking for a buyer. “Unfortunately, our timing wasn’t that great, but we’ve been working on this for a while. We’re going to go through with the plan.”
Shubert said the family’s various moves over the years helped them learn what’s important when buying a home.
“People just rush in and see a beautiful home and, go, ‘I’ll get used to it.’ No, you won’t,” Shubert said. “After having homes, you realize you don’t get used to it, so there’s certain criteria you have to establish.”
End of the boom?
After significant price growth over the past three years, Long Island's pandemic era real estate boom appears to be waning.
The market has cooled as mortgage rates more than doubled in the past year. The median price of homes that went into contract in Nassau County last month, $650,000, was 1.6% lower than it had been in October 2021 — the first time that stat has declined from the previous year since April 2020, according to OneKey MLS. The median pending sale in Suffolk, $532,000, increased by just 0.5% compared with the previous year.
The leveling off in prices comes after several years of signficant gains in values for homeowners. The median price among sales that closed in October, $675,000, was 26.2% higher than the median in October 2019, pre-pandemic. In Suffolk, the median price of $550,000 last month was 35.8% higher than it was in October 2019. During that time, the pandemic ushered in an era defined by historically low mortgage rates, a rise in remote work and a demand for more space at home that led New York City residents to migrate to less dense areas, including Long Island, according to a recent report by economists at the Federal Reserve Bank of New York.
One of those buyers was Sumita Lamba, who managed to limit her competition to buy a house in Huntington that fit her budget. Lamba, 46, set out to move to Long Island to a house with outdoor space from her one-bedroom condo in Manhattan in the spring. “I realized my apartment was too small,” she said. “It didn’t suit my needs anymore.”
After looking in several areas, she settled on Huntington and was determined to find a home with two bathrooms and a backyard where her French bulldog Monty could run around. She closed in August on a four-bedroom, two-bathroom house on a cul-de-sac in Huntington for $15,000 below its asking price.
Unlike some other buyers over the past few years who have had to make snap decisions about putting offers on houses during the same weekend they first viewed them, Lamba was able to see the house three times before submitting her offer.
“I feel like I got a little lucky because [the sellers] were an older couple. They weren’t doing any open houses, so I don’t think they had as many people as they probably could have had in the house.”
Greg McBride, chief financial analyst at Bankrate, said homebuyers might now have more time to deliberate than they would have during last year’s frenzy.
“If you’ve been priced out, or buying now means stretching too much, you can do a lot worse than just walking away and staying where you are for another year or two to be on more solid financial footing when you do go back into the market,” McBride said. “On the other hand, if you haven’t been priced out, now is a much better time to buy than it was six months ago. You now have the ability to do your homework before taking the plunge. There’s no need to make the biggest financial decision of your life under duress.”
For some properties, particularly those at price points first-time homebuyers can afford, there is still plenty of competition. Joe Carbonaro, a real estate agent with Re/Max Integrity Leaders in Smithtown, held an open house last weekend for a three-bedroom cape in Levittown he is marketing for $524,000. Carbonaro said 52 sets of buyers checked out the house across Saturday and Sunday.
Joe Carbonaro of Re/Max says 52 sets of buyers viewed this Levittown house over a two-day open house. Credit: Debbie Egan-Chin
"It was the correct price to get people through the door," Carbonaro said. "Even before that, I can tell by the number of times my phone rings."
Unfinished business
When Godson Michel, 30, closed on his new home in late September, he felt as if he was sealing a deal that was decades in the making. He paid $500,000 to buy a five-bedroom high ranch in North Amityville, a house he can see from the window of his childhood bedroom. In 1997, Michel’s father, who emigrated to the U.S. from Haiti a decade earlier, had tried to buy the house across the street from his own as an investment property. A bank had been selling the house for an attractive price but he couldn’t secure a co-signer he needed to complete the deal.
“He regretted it and was really down and out on himself for not being able to land the house,” Michel said. “Then years later, it’s up for sale. … He was super ecstatic and proud of me being able to finish off something that he wanted to do way back when.”
Godson Michel, 30, in front of the home he purchased in North Amityville Credit: Rick Kopstein
It didn’t come for free. Michel was one of about eight bidders on the house and paid $70,000 above the asking price, narrowly beating out an all-cash buyer. He believes he won out because he knew the neighbor well.
“That personal connection definitely helped,” said Michel, founder and president of Blue Surge Marketing Agency in Lindenhurst. “If that relationship didn’t exist, I don’t think the deal would have gone through, he probably would have opted for the cash buyer.”
By the time Michel secured a 5.7% interest rate for a 30-year fixed FHA loan, he said his monthly payment increased by about $700 compared with what he expected to pay based on a rate around 4% when he first started looking at homes. “It was super frustrating,” he said. “I knew if I waited even longer, the rates would go up again.”
Economic uncertainty has been paralyzing for buyers who are unsure how interest rates might change from week to week, said Shaan Khan, an associate broker at Charles Rutenberg Realty in Plainview. They fear they'll find their dream house only for a last-minute mortgage rate spike to push the cost of a mortgage beyond their reach. When rates are more stable, he believes demand will pick up again.
“Maybe you don't have the competition you had six months ago. But with the uncertainty about interest rates, it makes it difficult to plan and decide on the timetable,” he said. “What I've been finding is many folks are waiting to see where things settle.”
How they got the house
A shortage of homes for sale and intense competition since the pandemic started have made life difficult for homebuyers but that is starting to change. Here's how three Long Islanders who spoke to Newsday landed their deals.
- Have a plan. Andrew Shubert, 61, and his wife recently purchased a house in Oceanside after a 10-month search. They had certain criteria — they preferred colonials with at least two bathrooms and wanted to live on a quiet street — and skipped homes that weren't a match. They refused to be pulled into bidding wars and bought a house from a seller who had dropped her price after an earlier deal fell through.
- Seize your opportunity. Sumita Lamba, 46, managed to buy a home in Huntington for $15,000 below the asking price, in part because the seller didn't want to hold an open house, reducing her competition.
- Use your personal connections. Godson Michel, 30, bought his first home on the street where he grew up in North Amityville and was able to beat out an all-cash buyer because his longtime neighbor wanted to sell him the home.
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.
