Long Island’s frenzied real estate market is starting to calm down.
The number of buyers signing contracts to purchase single-family homes jumped by nearly 23% last month compared with a year earlier — still a very busy market, but less elevated than in previous months, the brokerage Douglas Elliman and the appraisal company Miller Samuel said in a report to be released Thursday.
By contrast, the previous three months racked up bigger year-over-year gains in pending sales activity, with annual increases of 41% in July, 28% in August and 34% in September. The reports reflect sales on Long Island, outside of the East End.
Long Island homebuyers rushed into the market this summer after restrictions aimed at slowing the spread of COVID-19 were lifted. The state banned in-person real showings by real estate agents from March until June 10, leading to a surge of delayed buying activity once the prohibition was lifted. Mortgage rates at record lows — an average of 2.81% for a 30-year loan last week, according to mortgage giant Freddie Mac — also have added fuel to the market, brokers said.
That surge of pent-up demand is beginning to ease now that buyers have had a chance to catch up, brokers said.
Long Island’s housing market remains "brisk," but it’s starting to calm down, said Jonathan Miller, president and CEO of Miller Samuel: "The market activity peaked back in July and is slipping but still substantially above last year’s results."
In the Hamptons, the number of newly signed contracts for single-family homes increased by 102% last month compared with the previous October. The biggest jump was in the $5 million to $10 million range, where there were six sales in October 2019 and 22 last month, the new report shows. On the North Fork, the number of signed contracts for single-family homes soared from 31 in October 2019 to 78 last month, a 152% gain.
The East End market is getting a boost from city residents seeking "co-primary" homes outside of Manhattan, Miller said. Due to the COVID-19 pandemic, he said, many buyers "are looking at the market in the context of longer-term stays rather than vacation or getaway weekends."
Outside of the East End, Long Island’s market remained strongest at the top last month. The number of contract signings increased year-over-year by about 60% to 70% for homes listed for $500,000 to $999,999, and by nearly 73% for homes listed for at least $1 million, the report shows.
"You put your home on the market, you price it right, it’s selling," said Joyce Coletti, a real estate agent with Douglas Elliman in Long Beach. "You overprice your home, I promise you it’s not selling right now."
"When the COVID doors opened, it didn’t matter what your house was priced at, people were buying it anyway," Coletti said. "It put sellers in a very good position."
Now, Miller said, sellers "still have the advantage but they should not overplay their hand."
In some cases, brokers say, home sales are getting delayed or even derailed when mortgage lenders do not agree that a home is worth the price agreed to by the seller and purchaser. In those cases, brokers say, typically either the buyer comes up with a larger down payment to make up for the smaller loan amount, or the seller drops the price.
"Lending institutions are not behaving like they did during the housing bubble," Miller said. "Underwriting guidelines are still much tighter than they were during the housing bubble."