Well, it was an amazing moment in time, if you bought when rates were considerably lower in 2021 and in the beginning of this year.
However, if you waited too long for whatever reason, you paid considerably more per month. Locally on Long Island, where housing is more expensive, you paid a lot more as home prices had escalated to the highest point in history.
According to the New York State Association of Realtors report, record median sale prices were set in Suffolk County at $559,500, which was an increase of 10.7% year over year through November. In Nassau County, they were even higher at $720,000, which was an 11.9% year-over-year increase.
It was obvious that with the insane demand from all those waiting online at open houses and the bidding wars that ensued, the prices went through the roof, way beyond what would be considered normal.
For those who could afford to buy, you were fortunate, and congratulations. However, there were many who became locked out due to the much higher interest rates and/or the losses in the stock market that would have fueled their purchase.
Then there were those who were able to find a rental if they were lucky and locked in a 2-year lease and then there were those who were forced to pay considerably more as rental prices skyrocketed.
Inventory in One Key MLS as of the end of November was still very low (11,565 1-4 family homes, condos, and coops for sale according to One Key MLS. Inflation is still historically high, but really higher, when factoring in energy and food, affordability for housing has become unreachable for many more families and individuals.
However, prices have still been increasing, but at a much slower pace, due to a lack of inventory and high-interest rates. Moreover, sales have been slowing and declining over the last few months due to the latter reasons too.
However, if you price your home correctly with the most recent comparables the demand is still there to purchase.
Looking ahead to 2023, home prices will slow further. Depending on what our recession outlook will be will determine how slow the sales will be. We just may be heading into a bit more of a buyer’s market, if sales continue to slow.
It is projected that interest rates will continue to rise by another ½% in March. So it might be a prudent time to begin or continue to search for a home and lock in current rates. Also, depending on the job loss data leading to higher unemployment that will be occurring, and whether or not we will have slower growth, or a more severe recession, this will have an adverse effect on the housing industry.
As long as available inventory is low with higher interest rates, sales will continue to decrease. Long Island has a strong economy, but predicting what will happen is a difficult task and no one can be precise in their expectations and the end results.
From April 1, 2020-July 1, 2021 New York lost 319,020 people according to the U.S. Census Bureau population estimates. It continues to lose more families and individuals than are moving in, than any other state, due to the cost of living, taxes, employment opportunities, expensive rents, etc.
Market Watch has an informative article that expands further on the problem, https://www.marketwatch.com/story/no-more-new-york-people-are-trying-to-flee-the-empire-state-for-warmer-destinations-no-thanks-to-higher-rents-and-cost-of-living-11663097876
Those that are in charge must continue to anticipate what negative issues will be coming down the pike as the exodus of people continues in 2023 and its effect on our housing market. We must ponder and come up with solutions to stem the tide of our population loss otherwise our business environment will erode further and so will home prices.
I want to wish all my readers a healthy, happy and enjoyable, and more lucrative New Year in 2023.
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