When you observe the current market on Long Island, it’s quite surreal that the housing market still has more than an adequate demand for purchasing. Prices haven’t taken any hits in the reduction in pricing. The demand is still strong enough to prevent this from occurring. Bidding wars are sporadically still happening. Inventory still historically low (2.7 months housing supply). Unless there is a radical reduction in demand prices will still be strong.
It is possible that the upcoming election in November could have some kind of effect, but no one really knows or can predict for sure what the eventual outcome will be. What is happening today may be a once in a lifetime occurrence. Developers cannot even catch up with the demand because we are currently deficient in approximately six million homes. Moreover, we need at least an additional two million homes each year just to satisfy demand. However, with the current layoffs occurring from the larger companies, and continued reduction in our workforce, this may cause an increase in foreclosures as well as those who are smart enough to consider selling before the inevitable might occur.
The following graph courtesy of our local MLS shows the average increase in prices of properties sold year over year in Nassau County.
Residential, Condo, Co-op Properties | |||
Month |
Current Year |
Prior Year |
% Change |
Jul-2024 |
$913,149 |
$821,107 |
11.2 |
Jun-2024 |
$904,742 |
$817,436 |
10.7 |
May-2024 |
$891,382 |
$819,208 |
8.8 |
Apr-2024 |
$879,133 |
$824,594 |
6.6 |
Mar-2024 |
$874,489 |
$823,877 |
6.1 |
Feb-2024 |
$868,248 |
$822,700 |
5.5 |
Jan-2024 |
$861,376 |
$822,362 |
4.7 |
Dec-2023 |
$854,337 |
$818,693 |
4.4 |
Nov-2023 |
$846,172 |
$816,683 |
3.6 |
Oct-2023 |
$839,467 |
$815,449 |
2.9 |
Sep-2023 |
$833,929 |
$813,436 |
2.5 |
Aug-2023 |
$827,545 |
$811,035 |
2.0 |
It is quite obvious that are local market is still in a strong position. The number one reason is the extreme deficiency in inventory and the still robust demand for homes in Long Island. Another factor that comes into play are those baby boomers who are staying in the their homes much longer up to 14 years as opposed to 9 years, prior to the pandemic (NAR statistics 2024).
Here is the breakdown for residential, condos and coops, showing the increases within each category year over year.
(See the graph above as a featured photo)
The draw and desire to continue to live on Long Island with its various multitudes of activities and entertainment venues is unfortunately only for those who have the income and finances to afford to be here.
How and when prices might level off will depend on many factors and prognosticating what those might be in the future is a real tough call. Job layoffs and loss of businesses might be one factor that will level the playing field for those who still want to purchase.
Lowering interest rates will potentially increase inflation causing Jerome Powell’s 2% goal to be a bit more elusive in gaining that number. Also, if more currency is added to the economy that will cause greater inflation as more people continue to spend. Credit card debt is still increase every month. Somewhere along the line some will stop paying their bills and their mortgages that will have become unaffordable due to loss of employment and other factors.
These events will become untenable to those whose finances have become diminished. Foreclosures are still currently lower by 20% from 2023. However, this could change over the next 2-3 years.
While everything appears rosy, housing prices are up, stock market is at all-time highs. Looking back in 1926, everything also looked amazingly healthy (some will remember the Roaring Twenties). Then the stock market crash of 1929. So my opinion is that one must be as bulletproof as possible when and if there is a downturn in our economy.
Keep your finances tight. Don’t overspend. Pay off credit card debt. Keep at least -12 months of available funds in the bank. Be as prudent and to some extent as conservative as possible with your spending habits so as economic environment changes you and your family will be in a stronger position to weather whatever happens in the future.
I truly hope I am wrong in what I believe might happen, but the future will dictate the answer.
Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck. For a free 15-minute consultation, value analysis of your home, or to answer any of your questions or concerns he can be reached by cell: (516) 647-4289 or by email: Phil@TurnKeyRealEstate.Com or via https://WWW.Li-RealEstate.Com
Comments(4)