With the first quarter of 2021 officially in the books, we can say we’re definitely in one of the tightest and most competitive real estate markets we’ve witnessed here on Long Island! Thanks in part to the exodus from New York City that started last spring and hasn’t let up since, prospective home buyers are still competing for homes across every price bracket. With many sellers still hesitant to list their properties, the few homes that are available usually sell in just days with multiple offers.
CNBC recently posted a report about the state of the U.S. housing market that mirrors the pain we’re feeling here on Long Island. According to data from the National Association of Realtors (N.A.R.), the number of pending home sales fell more than 10% in February 2021 from the month before. N.A.R. also reported that there were “just 1.03 million homes for sale at the end of February, a 29.5% drop compared with February 2020. That is the largest annual decline ever and the lowest supply on record.”
Last month, we brought you our predictions for the Long Island spring real estate market. Since then, inventory has continued to decline on Long Island – we only have about two months of available inventory right now. In a normal, balanced market we would expect to see six months of inventory or more.
As a homeowner, a prospective seller, or a potential buyer, it’s important to understand how these historically low inventory conditions will shape the next six months of real estate sales on Long Island.
For sellers, you can expect your home to be met with a lot of interest from buyers. However, that doesn’t mean you should go it alone just to save the commission. It’s never been more critical to have an agent on your side. Working with an experienced real estate team will help you sell for the highest price possible while ensuring you go under contract with the strongest offer and buyer. Due to the extreme competition in the market, many agents are getting very creative with their offers. While cash is often king, there can be certain terms tucked away in another offer that actually makes it a better choice. Your agent will help you make sense of all the offers you have on the table so you can make the best decision for your situation.
If you’re planning to buy this year, it’s important you know how competitive this market is. Even with the best agent fighting for you, you’re probably going to need to put in at least a few offers to get one accepted. Buyers don’t have a lot of negotiating power so be willing to listen to your agent’s counsel. This is not the time to lowball. Be prepared to put in your highest and best from the very beginning. Then, be patient. Homes are going under contract every day. If you choose the right agent to represent you and really listen to their advice, you can be one of those lucky buyers, too.
Finally, as a homeowner you’ll want to keep your finger on the pulse of this market. Every month, we pull reports for Nassau and Suffolk counties and post them on our website. What we’re seeing right now on Long Island is a huge increase in closed sales. The number of closed transactions for homes over $1 million is up 120% from last year at this time! For properties under $1 million, closed transactions rose 40% annually. Even if you have no plans to sell, this is important information to know. Increases in closed sales like this indicate a very strong seller’s market, which contributes to rising home prices. Your home may be worth quite a bit more and your equity might have also increased substantially since the last time you checked. Remember, you can request your free online valuation any time by clicking here or reach out to us to request a more personalized estimate.
No matter where you’re sitting, this market is one to watch. Even if we were to suddenly get a flood of new inventory, there’s so much pent up buyer demand that things won’t change overnight. While the next six months will probably hold some surprises, these low inventory conditions will likely be with us at least into Fall 2021.
Questions on what the market looks like in your neighborhood? Not sure if it makes sense to cash out your equity and sell now? We can help. Contact us any time for free market information, sales reports by zip code, and more.