For those seeking a dream home on Long Island during the pandemic, the housing market is a nightmare.
Buyers have been rushing to see homes as soon as they hit the market, competing in bidding wars and repeatedly losing out. Even when buyers think they’ve finally secured a house and hire an inspector, sometimes the deal falls through when a higher offer comes in. With competition so keen, some buyers have been stretching their budgets, looking outside their favored communities and even waiving the right to inspect a house before committing to purchase it.
But brokers and those who have purchased homes during the pandemic say that with some speed, flexibility and patience, there are ways to get to the closing table without resorting to extreme measures such as waiving inspections or overspending.
"I haven't had a buyer who hasn't been frustrated at some point," said Jovanni Ortiz, a real estate agent with Douglas Elliman in Garden City. "They ask sometimes, ‘why is it so difficult for me to get a house? I've bid on so many different properties and still nothing's working. I'm a good buyer, what's going on?’"
Record-low interest rates, pent-up demand from the spring COVID-19 shutdown and an influx of New York City residents seeking suburban homes have sent a flood of buyers into the Long Island market just as the number of home listings has plummeted, due in part to sellers’ concerns about safety during the pandemic, brokers said.
The number of residential listings plunged by 37% in Suffolk County and 19% in Nassau County last month, compared with the previous October, the multiple listing service OneKey MLS reported. At the same time, the number of sales has spiked year-over-year by 25% in Suffolk and 19% in Nassau.
That leaves both counties with a two- to three-month supply of homes, much less than the six- to eight-month supply that brokers say creates a healthy market. The resulting competition among buyers has sent prices soaring in both counties, with year-over-year gains of 16% in Suffolk, to a median $470,000 last month, and 10% in Nassau, to $590,000, OneKey MLS reported.
The fact that rental prices are so high also is driving buyers into the market, agents said. "If you’re paying $2,200 a month for rent, why not buy a house and pay $2,600 a month and have your own home?" said Rafael Rodriguez, a real estate agent with Realty Connect USA in Hauppauge.
Tanya Lawrence, a real estate agent with Exit Realty Advantage in Baldwin, said if her clients spot a new for-sale sign, they’ll text her and she’ll aim to get them in for a tour before the listing goes online. "The inventory is so low, you want to catch a home as soon as you can, especially if you love it," she said.
Sometimes acting fast isn’t enough, though.
Stephanie Jimenez, 35, first fell in love with a home in March, when she and her husband, Edwin, 36, toured a three-bedroom house in Bay Shore with plenty of sunlight and room for the couple’s 4-year-old daughter, Emerald, to play. The home had gone into foreclosure, and the previous owner's lender had taken ownership and renovated it. The Jimenez family put in a bid, but soon learned that seven other prospective buyers put in higher offers. "I was heartbroken … I really wanted that house," said Jimenez, a medical biller.
Later, they learned the sale fell through and the house was back on the market. But the Jimenezes faced further challenges. Jimenez said the bank, which owned the home, initially balked at letting the couple back into the home to take another look. Every step of the process seemed to drag, she said.
"They look at it like: ‘Take it as-is or there’s other people out there, somebody will buy the house,’" she said.
Eventually the bank let the couple back into the house, and they hired an inspector who said they would probably need to replace the roof within five years. Even so, the bank would not budge on the price or make any major repairs. "I said, ‘You know what, it’s OK,’ " Jimenez recalled. They put in another bid, for $340,000. They closed on the house in August.
"This is our starter home and I absolutely love it," she said. "I got my little dream home that I wanted."
Brokers and real estate attorneys said it’s wise for buyers to pay for an inspection, even if they are willing to purchase a house that needs repairs. "You want to make sure that the house is sound, and the only way to do that is to get a professional in there," said James Manikas, a real estate agent with Realty Connect USA.
Paul Besmertnik, a licensed inspector and engineer based in Melville who is a past president of the Long Island chapter of the American Society of Home Inspectors, said hidden problems can include leaking roofs, cracked foundations and even buried oil tanks.
Besmertnik said he has had several clients who paid for an inspection but ended up losing out when other buyers came in with higher offers. In one case, he was hired to inspect a condominium in Coram but when he arrived the next day, the would-be buyers told him, " 'don’t do the inspection, we got overbid,’ " he recalled. "They were lucky they didn’t pay for the inspection."
Ortiz said he represented a home-seller who accepted a bid from a buyer in part because that buyer offered to waive an inspection. The seller had maintained the home well and kept meticulous records, and the buyers planned to do significant renovations to update the home, Ortiz said. The seller "was looking to get to contract and close soon after, so whoever could do that quicker and meet her terms, that was important for her," he said. The buyers’ willingness to waive the inspection, he said, "ended up being the deciding factor."
In addition to being flexible about the condition of a home, some buyers also are considering increasing their budgets. But buyers should be aware of potential pitfalls, real estate experts said.
With so many homeowners facing financial difficulties during the pandemic, the housing market could be due for a "rude awakening," with a potential spike in foreclosures within the next two years or so, said Andrew Lieb, a real estate attorney in Smithtown. Of all homeowners with mortgages nationwide, about 5.5% are in forbearance programs that allow them to temporarily defer mortgage payments, the most recent report by the Mortgage Bankers Association shows.
If a downturn hits the housing market, falling prices could hurt those who buy now and plan to sell within five years or so, though those who plan to stay in their homes longer can more easily ride out the market’s ups and downs, Lieb said.
Roy Clark, a real estate agent with Platinum Plus Realty in Smithtown, said buyers need to put in the best offers they can, but he makes sure his buyers understand what their monthly costs will be. If buyers overspend, he said, they risk living "a nightmare of just struggling to pay your mortgage and living your life under stress." Financial advisers typically recommend paying no more than 30% of income on housing costs.
Some budget-conscious buyers are considering purchasing homes that are farther from their workplaces, since working remotely has reduced or eliminated their commuting time, brokers said.
"If you're only going into the city one day a week as opposed to five, now you can open up a whole new area," where homes can be much less expensive, Manikas said. But, he said of work-from-home arrangements, "Is that going to be permanent or is that a temporary thing?"
An often-overlooked way to avoid some of the fiercest competition is to stay away from the newly renovated, modern-looking homes that are most in demand, and instead look at sturdily built older homes with a more traditional style, brokers said.
That’s what Dominique and Adrian Myers, 35 and 33, did when they purchased a four-bedroom house in Amityville in August. The pair, who have two daughters ages 2 and 3, toured more than 30 houses, many of them with a modern style that attracted hordes of buyers, but the construction often seemed "flimsy," said Dominique Myers, who is on leave from her job in human resources at a nonprofit in Manhattan.
"I wanted something with character, I wanted something that was made a long time ago, that's strong," she said. She said another potential buyer was interested in the Amityville house but hadn’t gotten preapproved for a mortgage loan. Ultimately, the homeowners agreed to sell the home to the Myers family for $450,000, less than its $470,000 asking price.
"It feels like we've always lived here, and I love it," Myers said of the home, which is across from a park in a neighborhood with plenty of children.
Myers said she believes having the mortgage preapproval also helped seal the deal: "That’s so important. It can be the difference between you getting a house and not getting a house."
Advice for homebuyers:
- Act fast, since homes are selling quickly
- Get preapproved for a mortgage so you’ll know how much you can borrow
- Hire an inspector before committing to a purchase
- Look at your budget carefully, factoring in taxes, insurance, maintenance and other costs, and don’t let eagerness to buy force you out of your comfort zone
- Offer the highest down payment you can afford, since higher payments give sellers more confidence that the sale will be successful
- Try to avoid asking the seller to help pay for closing costs or grant extra time
- Consider more affordably priced communities
- Don’t overlook more traditional styles of homes, which might draw less competition than modern-looking homes
- Take a homebuying class offered by a nonprofit group such as the Long Island Housing Partnership or the Community Development Corp. of Long Island
Source: Real estate agents, attorneys and inspectors