Looking to buy a home on Long Island? Your options are pretty limited.
The number of homes listed for sale on Long Island (excluding the Hamptons) during the first quarter was lower this year than in any first quarter in the decade that Jonathan Miller, chief executive of appraisal firm Miller Samuel, has tracked the figure for Long Island.
Just 15,303 homes were on the market, according to the first quarter report he released Thursday in conjunction with Douglas Elliman Real Estate.
The report showed sales fell 14 percent quarter-over-quarter to 3,905, but stood 2.9 percent greater than the 3,795 recorded during the first quarter of 2012. (Generally, year-over-year statistics are better indicators of the market because it accounts for seasonal housing cycles.)
Long Island’s median sales price sank 2.6 percent on both an annual and quarterly basis, to $341,000. Broken out by county, the median sales price in Suffolk (excluding the Hamptons) was $295,000; in Nassau it was $388,000.
Whereas superstorm Sandy was cited as a big factor in a Hamptons market report released earlier this week, both Miller and Douglas Elliman chief executive Dottie Herman played down its affect on this report’s finding.
“People who want to live on the ocean, want to live on the ocean,” Herman said. “That’s never going out of style.”
Miller noted that even in the hardest-hit communities, in particular the South Shore of Nassau County, many would-be sellers are waiting out the rebuilding process before they list their homes. So while the number of South Shore sales fell by nearly a third to 107 in the first quarter, the median sales price of those homes slipped just 0.8 percent to $328,000.
However, in the long-term, the increased cost of home ownership in the area -- from increased premiums, flood-proof construction and potentially higher property taxes to compensate for lost revenue -- might yield a weaker real estate market.
Both Herman and Miller pointed to the inventory shortage as having the biggest impact on the market. Inventory on Long Island declined 24.8 percent year-over-year, leaving less than a year's worth of supply -- and that’s not because buyers are snapping up homes. Sales increased just 2.9 percent annually.
“What’s happening is fewer listings are coming on the market because you have a lot of people on Long Island with low or negative equity,” Miller explained. (A recent report found about one in 10 Long Islanders owes more on their home than it’s worth.)
Those owners, he continued, have no reason to sell because they can’t trade up, especially with today’s tight credit standards. That, in turn, impacts aggressive home hunters. Without as many suitable options for new purchases even they become reluctant to list their homes, which perpetuates the cycle.
“Inventory is falling far faster than sales are rising and it’s largely credit-related,” Miller said.
A 12.2 percent annual rise in newly pending home sales -- or homes that entered contract during the first quarter -- indicates that the inventory shortage could become even grimmer, which might finally apply some upward pressure on pricing.
That’s good news for Herman and her stable of agents, who have begun encountering bidding wars on particularly desirable properties. However, she noted that agents must be careful offers don’t outpace appraisals, otherwise the tight lending environment becomes an issue.
“Financing is still an issue on the Island,” she said, “it’s a little too tough to get credit.”