Long Island’s supply of homes for sale dropped to the lowest level on record just as the spring selling season got underway, driving up prices as nearly four in 10 sales ended in bidding wars, a new report shows.
The median home price on Long Island was $525,000 in the first three months of 2021, up nearly 17% from a year earlier, the appraisal company Miller Samuel and the brokerage Douglas Elliman said in a report to be released Thursday. The number of sales jumped by 35% year-over-year, the companies reported. The report excludes East End sales.
What to know
- The median home price on LI was $525,000 in the first three months of 2021, up nearly 17% from a year earlier.
- In the luxury market the median price was $1.23 million, up nearly 25% from a year earlier.
- In nearly 40% of transactions in the first three months of 2021, the final sale price was higher than the last listing price.
The luxury market was even hotter, as affluent buyers from New York City continued to seek out spacious suburban homes during the pandemic. Looking at the top 10% of sales by price, the median price was $1.23 million, up nearly 25% from a year earlier, the new report shows.
In Nassau, the median home price was $600,000 in the first quarter, up 13.2% from a year earlier. Suffolk’s median price was $455,000, up 16.7% annually.
A 'strongly competitive market'
"It's a very, very strongly competitive market right now," said Rosa Arrigo, associate broker with Douglas Elliman in Franklin Square. "So far everything I've put on the market has sold at the open house or close to it…. It is a perfect time for a homeowner to put their home on the market, because they will get top dollar."
Nassau County and western Suffolk County had about 5,500 homes for sale at the end of the first quarter, the lowest level in nearly 18 years of tracking, Miller Samuel and Douglas Elliman reported. By contrast, the region had nearly five times as many listings — more than 26,000 — in spring 2008, when inventory peaked, said Jonathan Miller, president and CEO of Miller Samuel.
It would take 2.1 months to sell all the homes on the market at that pace of sales, compared with 4.3 months a year earlier, the report shows. A healthy market has a five- to eight-month supply, brokers say.
In nearly 40% of transactions in the first three months of 2021, the final sale price was higher than the last listing price, indicating that bidding wars forced up prices, Miller said.
Concern about prices rising too quickly
"There's a lot of concern about prices rising too quickly — and nationwide, not just Long Island," Miller said.
But, he said, the real estate market is not in a "bubble" like the one that preceded the housing crash of the late 2000s. That drastic run-up in prices — followed by a disastrous drop in values — was fueled by loose lending standards, he said. Lenders are now much stricter, he said. The recent spike in prices — on Long Island and elsewhere — is driven by fundamental forces such as low interest rates, high demand and a strengthening economy, he said.
The average mortgage rate was 3.04% last week, mortgage giant Freddie Mac reported.
"You're in the biggest sales period of the year, and you have the lowest inventory on record," Miller said of the spring housing market.
Combined with historically low mortgage rates, a stronger economy and rising vaccination rates, he said, "you put it all together and it's quite powerful…. One hope is that we see a little bit more inventory coming in as sentiment improves, and people are more willing to have total strangers go through their houses."