When Christine Hachman began looking for a place to live on Long Island, she figured the best her budget of $250,000 would get her was a condo or co-op, she says. But all that changed when she saw a two-bedroom, one-bathroom home listed in her target area of Patchogue for $250,000.
“I was looking at condos and co-ops, and was willing to settle for an apartment. When this house came onto the market, I was shocked,” says Hachman, 41, a buyer for a manufacturing firm.
She went up against nine other bids, eventually purchasing the move-in ready home for $265,000 in early September.
“I ended up going over my budget, but it’s OK because the taxes are low enough that it was affordable,” says Hachman, who pays $6,500 in annual property taxes. “This is an area everyone wants.”
According to the Multiple Listing Service of Long Island, the median sold price for homes in Nassau County in August, the latest available figure, was $568,550; in Suffolk County, it was $425,000. However, Hachman is one of the many home buyers who have discovered the influx of houses on the Long Island real estate market listed under $350,000.
Because interest rates are low, it is easier for people to buy a home and afford monthly mortgage payments, Long Island real estate agents say. Homeowners who have been considering selling — looking to downsize, get rid of rental properties, or move off the Island — are seeing that and putting their homes up for sale.
Overall inventory across the Island, excluding the Hamptons and North Fork, was 14,051 in the second quarter of 2019, the latest available figure, up 21.7% from the same time period last year, says Jonathan Miller, president and chief executive officer of Manhattan-based Miller Samuel Inc., a real estate appraiser firm that studies Long Island housing trends.
“The market has been unbelievable the last two years, specifically these last 12 months because interest rates have been so low,” says Dan O’Neil, an agent with Coldwell Banker Residential Brokerage in Smithtown. “Homes in the $300,000 range have been flying off the market. We’ve been seeing a lot more of them as well.”
Amy Pfister, a Douglas Elliman Real Estate agent based out of Sayville who helped Hachman find her home, says she noticed an uptick in homes being listed between $250,000 and $350,000 toward the end of spring. Not only is there a higher quantity, she says, but some houses are in better shape and in neighborhoods with top-rated school districts, easy access to public transportation and closer proximity to dining and shopping.
“In the last two years, anyone who was shopping under $300,000 wasn’t really able to get their hands on anything you could move into or in an area they might have desired,” Pfister says. “Now you can get something decent, that is move-in ready. Maybe not up-to-date, but in a neighborhood you want to be in, and you can do your updates as you go.”
Agents add that with the low interest rates, some residents might find that buying a home could be a more viable option than renting.
“The rental market on the Island is even more difficult than it is to find a house to buy. Rental prices have skyrocketed these last couple of years. Purchasing a home, if you put a certain amount down and have a certain credit score, you can get a mortgage for $2,500,” says O’Neil.
Agents cite Shirley, Mastic, Mastic Beach, Wyandanch, Port Jefferson Station, Rocky Point, Bay Shore, Islip, Patchogue and Central Islip as particular hot spots to find homes under $350,000.
Jonathan Valet, an agent with Millennium Homes in Bay Shore, notes that these homes often have “multiple offers” within days.
While inventory in the $250,000-to-$350,000 price range is up, it still can’t keep up with the number of interested buyers, says Annmarie Giovanniello, a real estate agent with Charles Rutenberg Realty in Plainview and the owner of Titan Appraisals, based out of Babylon. That means intense bidding wars, with many younger buyers unable to compete with cash offers from retirees who are trading higher-priced homes for smaller properties.
“I listed one property on Labor Day and by Wednesday I had seven offers,” says Giovanniello. “There are a ton of buyers. Typically, people looking in this price range end up looking for a long time … They could be looking for a year.”
Vincenzo Boscaino, an agent with House Hunt NY in Farmingdale, says he has sold six homes this year within the $280,000-to-$320,000 range, with most of them going to couples in their late 20s to mid-30s.
“A lot of young couples in their 20s and 30s can put down a little bit more of a down payment or have their parents help them out. They’re buying smaller $300,000 homes,” Boscaino says. “These are great starter homes.”
In the last year, Pfister has closed on about 10 homes in the $250,000-to-$350,000 range, with many sold to millennials or elderly couples and seniors who temporarily relocate to areas with warmer climates in the winter. While homes selling on the lower end of the spectrum might not necessarily be outfitted with the latest appliances or modern fittings, it’s possible to get a house with two or three bedrooms and one bathroom, a search of homes for sale on the Multiple Listing Service of Long Island website shows.
“In this price range, the biggest thing is that most people’s mortgage payment is less than if they were going to rent a one- to two-bedroom apartment,” Pfister says. “They will get a nice roof over their head with a reasonable amount of square feet and a yard.”
According to a July Newsday report, the average monthly rent for an apartment in the first three months of 2018 in a Nassau County building with multiple units was $2,257. It was $1,775 in western Suffolk and $1,654 in eastern Suffolk.
Investors also have taken advantage of the low prices, flipping homes and reselling them for a profit. Kevin Boone of Keller Williams Realty in Garden City says he recently sold a three-bedroom, one-bathroom home in Hempstead for $135,000 that was then renovated and resold for $330,000.
“If it’s in the $200,000 range, most of the time it’s an investor who fixes it up and puts it on the market for a higher price,” Boone says.
If a house between $250,000 and $350,000 is a value, one that is in that range and recently renovated is a steal. Boscaino’s firm recently flipped a home in Medford, selling it to Alissa and Frankie Warner for $310,000. The couple had looked at more than 30 homes on and off during the course of two years, with a budget of $350,000.
“For that price range on Long Island, you’re usually getting something really tiny or that has to be gutted,” said Alissa Warner, a 39-year-old office assistant. “We lucked out. They rebuilt the house from the foundation up and everything is brand-new. It’s perfect for us.”
While buyers are taking full advantage of the affordable home influx, the trend won’t last forever, says Miller. He notes that while inventory in Suffolk and Nassau counties has been rising, so have prices. In the second quarter, the median sales price for homes in the bottom 20% of the market was $280,000, an increase of 9.5% year-to-year, he says.
“Mortgage rates over the next year are likely to remain low. Low interest rates eventually lead to rising housing prices,” Miller says. “Over time, we don’t have enough inventory and with low rates, you’ll see higher demand and therefore higher prices. And that challenges affordability, even with low rates.” The average interest rate for a 30-year fixed rate mortgage is 3.75%; for a 15-year fixed mortgage, it is 3.06%.
With low list prices and many interested buyers, Boone advises clients to move quickly if they see something they like.
“You have a lot of hungry buyers out there. When they see something, they put the offer on the table and it’s gone,” says Boone.
Help for home buyers
With low interest rates and rising rental prices, Dan O’Neil of Coldwell Banker Residential Brokerage in Smithtown says that this is the “perfect time to buy a house” with governmental agencies offering myriad grants and financial assistance to first-time home buyers.
NYSAR Housing Opportunities Foundation grant
This $2,000 grant is applicable to eligible first-time home buyers who are working with a Realtor. Funds can be used toward closing costs and/or down payment assistance. Recipients are chosen through a monthly lottery and the money does not have to be repaid.
State of New York Mortgage Association Achieving the Dream program
This state program offers a 30-year fixed rate mortgage with a down payment as low as 3% for low-income first-time home buyers. Financing is available for up to 97% of the purchase price, and the loan can be used with a down payment assistance program.
This New York State program provides mortgage financing for first-time home buyers — including those who haven’t owned a home in more than three years — looking to purchase a home and pay for repairs, such as structural reconstruction and eliminating safety hazards. Financing is available for up to 97% of the appraised value or the purchase price after improvements, and there is no maximum repair amount.
What's for sale
This 1930 two-bedroom, one-bathroom ranch-style home is listed for $319,999, and just went into contract. It contains an updated kitchen and bathroom, built-in bookcases, a coffered ceiling and a one-car garage. The boiler and hot water heater were replaced within the last year. The house is on a .13-acre lot. Annual property taxes are $7,360. Listing agent: Annmarie Giovanniello, Charles Rutenberg Realty, 631-877-5085.
Built in 1926, this three-bedroom, one-bathroom Colonial contains an updated heating system and hot water heater. The asking price is $299,333. The kitchen features stainless steel appliances, and a deck and patio are in the back of the 21-by-100-foot property. Annual property taxes are $4,698. Listing agents: Mercy Ferrante (631-499-6400) and Nader Kassis (516-741-4333), Signature Premier Properties
This renovated raised ranch, built in 2001, contains three bedrooms and two bathrooms. It is listed for $319,999. Features include hardwood floors, a marble tile backsplash, cathedral ceilings and a new boiler. The house is on a .37-acre lot. Annual property taxes are $12,563. Listing agent: Dawn Bridges, Your Team D & G Realty, 631-399-8463.
This Cape, listed for $319,990, is on a 60-by-100-foot lot. It has four bedrooms and one bathroom. It is on a dead-end street. Annual property taxes on the 1955 home are $7,300. Listing agent: Emilia Pizzo, Daniel Gale Sotheby's International Realty, 631-754-3400.
This 1972 raised ranch is being offered for an asking price range of $299,000 to $329,000. It has three bedrooms and two bathrooms, and is on a .14-acre lot. The kitchen contains new appliances, and there is a finished basement. Annual property taxes are $7,422. Listing agents: Linda Stowell and Maria Mosqueda, Coach Realtors, 631-928-5484.
There are three bedrooms and two bathrooms in this raised ranch, which is listed for $299,900. The 2001 house is on a .59-acre lot. The kitchen contains granite countertops and stainless steel appliances as well as updated bathrooms. Annual property taxes are $10,827. Listing agent: Sandra Platero, Exit Realty Achieve, 631-543-2009.
Listed for $308,000, this ranch was built in 1945. The house is on a .25-acre lot, and contains two bedrooms and one bathroom. There is a fireplace in the living room and a two-car garage on the property. Annual property taxes are $7,334. Listing agent: Kim Borrelli, Coldwell Banker Residential Brokerage, 631-673-4444.
This Colonial is listed for an asking price range of $299,996 to $319,996. The house was built in 1959 and contains four bedrooms and two bathrooms. The kitchen has been updated. The .45-acre lot contains a detached two-car garage. Annual property taxes are $8,729. Listing agent: Laura Cochran, H & G Realty New York, 631-474-2000.