Long Island homebuyers turned out in force last month, defying the usual winter holiday slowdown as record-low interest rates gave the housing market a boost.
The number of single-family homes going into contract jumped year-over-year by 16.5% in December, the sixth straight month of annual gains, the brokerage Douglas Elliman and the Manhattan-based appraisal company Miller Samuel said in a report to be released Tuesday. The figures include sales in Nassau County and western Suffolk County, outside the East End.
Last month's gains were modest in comparison with July through October, when annual increases in pending sales ranged from 23% to 41%.
The Island’s housing market "is still super competitive, but it’s definitely gotten a little less competitive," said Jovanni Ortiz, a real estate agent with Douglas Elliman in Garden City. "There are a lot of qualified buyers looking, especially people looking to leave the city, in many cases because they're looking for more space."
In addition, low interest rates "have played an outsized role in the housing recovery," said Jonathan Miller, president and CEO of Miller Samuel. The average mortgage rate was 2.67% last week, down 1.05 percentage point from a year ago, mortgage giant Freddie Mac reported.
"The question is whether mortgage rates will continue to remain low, and what will affordability look like with the chronic lack of supply?" Miller said.
The spring COVID-19 lockdown also created a months-long spike in delayed sales, Miller said. From March until mid-June, real estate agents were banned from doing in-person work.
The strength of the 2021 housing market will depend in part on whether interest rates stay low, Miller said. Other factors include the pace of COVID-19 vaccinations, and whether companies continue to let employees work remotely, which benefits suburban markets such as the North Shore of Nassau County, he said.
Last month’s supply of newly listed homes lagged behind the pace of sales, ticking up just 2.4% compared with the previous December, the new report shows.
Homeowners who are considering selling face a conundrum, Ortiz said. "The hesitation for them sometimes is, ‘well, where are we going to go?’ " he said. "They see what the buyers are dealing with [on Long Island], so in many cases, those people are leaving the state and going to less competitive areas."
The biggest gain in sales activity was in the $600,000 to nearly $1 million price range, where new contract signings soared by 79% annually, the Douglas Elliman report showed. At the top of the market, the number of homes selling for $1 million or more increased by nearly 40% year-over-year. In the largest segment of the market — sales between $400,000 and almost $600,000 — the number of pending sales grew by nearly 49%, the report shows.
The pace was less frenetic for lower-priced homes. In the $300,000 to nearly $400,000 price range, pending sales grew by 7.3% annually. And sales of homes priced under $300,000 dropped by 32%, compared with the previous December.
On the East End, the number of homes going into contract last month rose by 40% in the Hamptons and by 65% on the North Fork, the report shows.
The disparity between the strong demand at the top of the market and the weaker market for lower-priced homes is due in part to the worse economic conditions faced by lower-wage workers, Miller said.
During the pandemic, he said, "lower wage earners…have been hit harder than mid-tier and upper-tier salary positions."
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