Long Island has become a tale of two housing markets, with home buyers competing for starter houses while high-priced properties linger on the market, a new report shows.
The median home price on the Island, excluding the East End, was $425,000 in the April-to-June period, up 5.2 percent from a year earlier, the brokerage Douglas Elliman and appraisal company Miller Samuel are due to report Thursday.
Prices increased sharply for the most affordable homes, and fell at the top of the market. In the bottom fifth of sales ranked by price, homes sold for a median $220,000, up 12.8 percent from a year earlier.
By contrast, the top fifth of sales fetched a median price of $820,000, down 0.6 percent annually. For the Island’s luxury market – that is, the top 10 percent of sales – the median price fell by 6.7 percent annually, to $1.05 million.
The Hamptons was the only region to see a price decline, with a median price of $975,000, down 5.3 percent year-over-year. On the North Fork, the median price increased by 8.9 percent to $600,000.
The region with the biggest surge in values was the relatively affordable South Shore of Suffolk County, where the median price jumped by 9.4 percent annually, to $339,000.
Throughout Long Island – except for the Hamptons and the North Fork — homes sold in 5.1 months on average, at a 3 percent discount from their listing price, the report shows. Luxury homes, though, spent an average of 17 months on the market, and sold for a 6 percent discount.
Bargain-hunting millennial home buyers are getting into bidding wars for entry-level homes, brokers said.
“The first-time buyer is hot and heavy, even though interest rates are going up – that might be what’s motivating them, too, getting in before they go up further,” said Ann Conroy, president of Douglas Elliman’s Long Island division. The average mortgage rate was 4.52 percent last week, up 0.54 percentage points from a year earlier, home loan giant Freddie Mac reported.
“In our true luxury market, over $2 million, it’s much more challenging than it was, the pace is much quieter than it was,” Conroy said.
The federal tax overhaul is having an impact on the luxury market, she said. The measure imposes a $10,000 cap on deductions for state income and local property taxes, among other changes. For buyers, “it plays into the price they’ll pay for a home,” Conroy said.
Sales activity is slowing in several regions in the New York metropolitan area, especially in areas with high property taxes, as buyers grapple with how the tax overhaul will affect them, said Jonathan Miller, chief executive of Miller Samuel. “This boom still has some legs left, but I don’t think this growth can be sustained,” he said.
However, while many high-income home purchasers pulled back, a select group of the region’s wealthiest buyers splurged on oceanfront mansions. In the Hamptons, where many who work in Manhattan’s finance industry buy vacation homes, “there’s more of a cash market and less concern about the impact of the tax law,” Miller said.
In the Village of East Hampton, the median price surged by 76 percent annually, to $7 million, with 19 closed sales in the second quarter, a report to be released Thursday by the Corcoran Group shows.
“The number of deals at the very high end was surprising,” said Ernest Cervi, the East End executive managing director for the Corcoran Group. Some buyers hesitated as they assessed the impact of the new tax law, but for those who can afford it, he said, “if they still want to have a house at the beach,” they buy one.