Long Island home prices hit winter freeze, fall for first time since 2013
The median home price on Long Island among sales that closed in the first quarter fell for the first time since 2013, according to a new report from real estate brokerage Douglas Elliman and appraisal firm Miller Samuel.
But after three years of steep price growth, it might not mean much for home seekers, who continue to encounter plenty of competition.
The median sale price among deals that closed from January to March was $575,000 on Long Island, which was 0.9% lower than the median during that time last year of $580,000.
The price dip from last year is small in comparison to the amount of equity most Long Island homeowners have gained since 2020. Last quarter’s median price was 27.8% above the comparable figure from the first quarter of 2020.
What to know
- The median home price for Long Island, excluding the East End, fell in the first quarter for the first time since 2013.
- The median dropped 0.9% to $575,000, which is only a tiny rollback of the increase in prices that has occurred since the pandemic started in 2020
- Home sales are still competitive. About 1 in 3 deals closed in the first quarter went for more than asking price.
“Even though prices slipped, the pricing is still much higher than before this roller coaster ride,” said Jonathan Miller, CEO of Miller Samuel.
While home prices typically fluctuate throughout the year, often peaking during the third quarter, the most recent period marked the first time in 10 years the median price showed a year-over-year drop, demonstrating the change in the market is not merely seasonal.
The median among single-family homes fell 0.8% to $595,000, while the median condo sale rose 5.1% to $378,250.
Long Island’s real estate market has been battered by rising mortgage rates that have added hundreds of dollars to potential homebuyers’ future monthly payments. The average 30-year fixed mortgage rate during the first quarter was 6.37%. During the same span in 2022, the average was 3.82%, according to mortgage giant Freddie Mac.
That rise is reflected in the significant drop off in the number of transactions that closed last quarter. Closed sales on Long Island, excluding the East End, fell by 33.7% to 4,520 in the first quarter compared with the same period a year ago.
While there are fewer sales closing, homebuyers have struggled to gain any negotiating power because of a shortage of homes on the market. There were 4,422 listings at the end of March on the Island, excluding the East End, which was the third-fewest in the 20 years since the firms have published the data.
There were about half as many homes on the market at the end of March as there were at the end of March 2020 before the pandemic fueled a surge in real estate sales.
“This is the exit from a boom, and typically in an exit we would have expected a surge in inventory and a drop in prices as a result. But that’s not what happened,” Miller said. “In fact, inventory remains stubbornly low."
Additional data in the report illustrates how there is still competition for homes but to a lesser extent than the record levels of last year.
Among sales last quarter, 1 in 3 sold for above asking price, according to the report. That can be an indication of multiple bidders competing to buy a home. During the same period in 2022, about half of all deals sold for above asking price. The metric peaked in the second quarter of 2022, when 59.5% of all sales went for more than the list price.
Rate reality sets in
Lines have returned to open houses this year and homebuyers appear to have figured in mortgage rates above 6% into their plans after an initial shock last year, said Todd Bourgard, Douglas Elliman's CEO of Long Island, Hamptons and North Fork.
Cory Knopf, an associate broker at Compass in Oceanside, said she hasn’t been able to detect much of a difference lately between this year’s market and that of the past few years, particularly for homes that are priced appropriately based on recent comparable sales.
“The only lull that I saw was right when the interest rates shot up and everyone kind of froze. That was the tiny little window where the buyer had a little more edge than the seller,” she said, describing last fall’s steep rise in mortgage rates. “We’re back to a seller’s market.”
Miller said that while conditions have eased for buyers compared with last year, he doesn’t expect to see a surge in the number of homes on the market that would bring prices down significantly.
“We’re coming out of the biggest housing frenzy of the modern era, and we’re not seeing a price correction. We’re coming back to something closer to reality,” he said. “I see this as the beginning of the next phase.”