Long Island home prices have surged to a record high, driven by low interest rates and scarce inventory, a new report shows.
Homes sold for a median price of $469,000 in the July-through-September period, up 4.2% from a year earlier, the brokerage Douglas Elliman and the appraisal company Miller Samuel reported Thursday. The number of closed sales fell by 1.3% annually. The figures exclude East End sales.
There were 13,244 homes listed for sale, up 13.7% from a year ago. Despite that rise, inventory remains about half what it was in spring 2008, when home buyers could choose from 26,145 listings, Miller Samuel figures show.
The luxury market was weaker, though. For the top 10 percent of sales — those selling for a median price of just over $1.1 million — the median price fell by 3.6% in the third quarter, compared with a year earlier, the new report shows.
“The market is strong, but it’s still soft at the top,” said Jonathan Miller, president of Miller Samuel. “The strength of the market is in the starter market.”
Low interest rates are helping first-time buyers make purchases, Miller said. However, he added, by drawing more buyers into the market and increasing competition, those low rates are pushing up prices in ways that could prove unsustainable when interest rates eventually rise.
“That’s not a good long-term trend we want to see in the market,” he said.
For more than six years, Long Island prices have risen or held steady each quarter, compared with the same period a year earlier, Douglas Elliman and Miller Samuel figures show.
Prices “are inching up, year after year,” Ann Conroy, president of Douglas Elliman’s Long Island division, said. “What truly helped us was the low interest rates…. People still can get their American dream.”
Mortgage giant Freddie Mac reported Thursday that the average mortgage interest rate was 3.75%, down 1.1 percentage point from a year earlier.
Long Island's strongest price growth was along Suffolk County's South Shore, where the median price grew by 6.7% annually, to $372,500. By contrast, along Nassau County's northern Gold Coast, the median price dropped by 5.5% year-over-year, to $850,000.
A similar trend played out in the Hamptons, where the median price increased by 5.5% year-over-year, to $857,000, while in the luxury market the median price fell by 11%, to $3.5 million.
In the luxury market, “the seller right now is saying, ‘you know what, I have to make this price a little more attractive,” Conroy said. “As that’s happening, we’re starting to see much more activity with the high-end buyers.”