Long Island’s supply of homes hit a record low at the end of last year, driving up prices, especially for the least expensive properties.
Homes on the Island, excluding the East End, sold for a median price of $455,000, up 5.6% from a year earlier, the brokerage Douglas Elliman and the appraisal company Miller Samuel reported.
In Nassau County, the median price for a closed home sale increased annually by 2.9%, to $535,000, the companies reported. In Suffolk County, not including the East End, the median price jumped year-over-year by 6.9%, to $395,500.
The increases came as listing inventory fell to 8,944 in the last three months of 2019, down 6.6% from a year earlier and the scarcest supply since at least 2003, the report released last week showed. By contrast, in spring 2008, inventory hit a peak of more than 26,000 — nearly three times the current level, Miller Samuel figures show.
Low interest rates and a strong economy are giving buyers reason to move ahead with purchases, said Ann Conroy, CEO of Douglas Elliman’s Long Island division.
“Their biggest problem is, of course, getting the house of their dreams, since the inventory truly is limited,” Conroy said. “The minute something comes on the market, someone buys it.”
It would take 3.5 months to sell all the homes listed for sale on the Island, Miller Samuel reported. A balanced market has a six- to eight-month supply, brokers say.
Long Island home prices have been making annual gains, or at least holding steady, for six straight years, Miller Samuel reported. Those gains are strongest for starter homes, leveling off for midpriced and high-end homes.
Separating the single-family market into five levels sorted by price, the bottom fifth of the market — homes priced around $300,000 — saw prices increase year-over-year by nearly 13%, Miller Samuel reported. The middle of the market — with values around $470,000 — saw annual price gains of 4.5%. At in the top fifth of the market, where homes sell for about $830,000, prices increased by only 1.2%.
Mortgage interest rates near record lows give the biggest boost to buyers at the low end and middle of the market, said Jonathan Miller, president and CEO of Miller Samuel. Borrowers paid an average of 3.6% for a 30-year mortgage, down 0.85 percentage points from a year earlier, mortgage giant Freddie Mac reported last week.
In addition, the new $10,000 cap on federal deductions for state and local taxes has “acted as a wet blanket to an already-challenged luxury market,” he said.
In the Hamptons, too, high-end homes took discounts at the end of last year. The median price in the Hamptons fell by 8.9% year-over-year, to $906,250, Miller Samuel reported. The Hamptons luxury market — the top 10% of sales by price, with a median price of $6.8 million in the fourth quarter — saw prices fall annually by more than 13%. On the North Fork, median prices increased by 3.2%, to $650,000, Miller Samuel reported.
At the current pace of sales, it would take more than 14 months to sell all the homes listed in the Hamptons, and almost seven months on the North Fork.
Like other luxury housing markets, Miller said, the Hamptons "suffers from oversupply."