Queens Real Estate Market Update, What to Expect in 2017 – and Thoughts For Planning!
By Helen Keit – The Keit Team at Keller Williams Realty Landmark
* Interest rates have been held artificially low for years and now with this first increase since last December, the Fed is indicating there could be more regular increases in rates during the coming year.
* A shortage of homes for sale versus demand by buyers- especially first-time buyers – will continue to impact the market and spur additional price appreciation.
* The real estate market has been in a 7+- year cycle of appreciating prices and previous housing cycles have lasted 7-10 years. A shift in the market looks likely in the future.
We hear and read the news and information on the real estate market in the United States. These national reports need to be further refined on a local level as each market – town and neighborhood – has different factors impacting the real estate market in that area. Job growth, companies moving in or out of a town or city, as well as conditions relating to schools, crime and general lifestyle issues are just a part of the mix of variables that impact the health of a local market. An interest rate rise affects us all but adding to this the local variables and you can get differing outlooks throughout the country.
Home Sales: Nationally home sales reached the highest annualized rate in nearly a decade – 5.6 million homes sold – according to the National Association of Realtors. This was a 5.9% increase from October of last year.
In Queens total home sales (includes co-op and condo sales) were fairly stable compared to 2015 sales – 8,459 units sold in the past 12 months through October 2016 compared to 8,561 sold in the previous 2015 period. It is telling to note that Queens home sales did not grow at the national pace for 2016 and actually started to decline after the first quarter of 2016. Affordability issues and lack of inventory of homes for sale were probably contributing factors to this trend.
Median Home Price: Nationally the median home price fell 1.3% from September but was up 6% over this time in October of last year. The median home price in Queens decreased to $485,000 for November from $495,000 in October. This number was up, however, from a median price of $439,000 for November of 2015. This was an 11% increase in the median price of a home in Queens year over year while the national average price increase was 6%.
Inventory of Homes for Sale: Nationally there is currently a 4.3 month supply of homes for sale. This number has decreased by 10.2% from October 2015. Queens currently has an average of 5.3 months supply of homes for sale. This number also varies across Queens from a low of 4.6 months for sale in parts of eastern Queens to a higher number of homes for sale – 7.1 months – in a few areas of south Queens. This is an 11.7% decrease in the average number of homes for sale over last year at this time.
A six month supply of homes for sale represents a balanced market with equal number of buyers and sellers. With an oversupply of homes for sale – more than six months – we see a buyers’ market, and with less than 6 months supply a sellers’ market like the current one discussed.
What The Experts Are Predicting for 2017:
Most see the interest rates set to rise possibly several times over the coming year. There is no agreement on what the rate will be one year from now, but all agree the low rates we have seen for the past decade will be history. Many feel the rates will be somewhere around 4.5% and some say close to 5%. How this affects buyers will depend on the strength of the job market and wage growth, to name a few variables. These are still very low rates compared to an average interest rate of 8.9% historically. Since rates have been so low for so long, however, some think that as we reach the 5% barrier, a real impact in affordability and sales could be felt.
A low inventory of homes for sale will continue for the coming year. Some homeowners who want to trade up will be facing interest rates higher than their current rates and may decide to renovate rather than move. Others will find a move tied to a life event. The baby boomers will be debating whether to move or age in place.
A very high percentage of millennials – 90%+ – want to eventually own a home. They will start to “get off the fence” and purchase as the possibility of even higher interest rates continues. There is the potential for the market to have the most first-time buyers. Some may have to look beyond the bigger city limits to find more affordable housing.
Prices will not be growing at the same rate as seen in past years. However, some in the industry feel that prices in the high-end market will increase. They feel that as the economy experiences a greater risk of inflation, purchasing luxury real estate would provide a good balance away from the risk of the stock market.
Finally, it has been seven years since we have had a recession, noted Ralph McLaughlin, chief economist at Trulia. He mentioned that recessions tend to move in 7-10 year cycles. So if it’s not next year, the chances go up in the coming years that the market will shift.
What Moves Might Be Good For You?
First-Time Buyers: If you are able to, buy now before rates increase further cutting into your purchasing power. Be sure and have your lender issue not only a mortgage pre-approval but a conditional approval which helps your offer stand out among competing offers.
Those Looking to Trade Up: Now is a good time to sell your current home since the shortage of homes for sale will generate multiple bidding and top dollar for your home. Also your new home can be purchased before rates go up further.
Those Looking to Size Down: Again the low inventory of homes for sale make this a great time to sell. With little in competition, buyers are paying top dollar for homes. As the market begins to shift in the future, this scenario will change.
Investors and Those Looking To Build Family Wealth Through Real Estate: As inflation starts to rise with projected wage growth and a more robust economy, real estate is a good investment component to balance the risk in your portfolio. With the stock market reaching sky-high levels, real estate is an investment where you are able to have some control and create value.
Sources: National Association of Realtors, Long Island Board of Realtors Multiple Listing Svc.. Keller Williams Realty International Research, Inman News
Call 800-742-0126 or email Helen.Keit@KW.com for our free reports:
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