Long Island New Construction Homes ~ Mid-Year Market Trends Report ~ 2008

Long Island New Construction Homes - Mid-Year Market Trends Report

For the purpose of this report, new construction is defined as homes that were built within the current and last calendar years (2007 & 2008).

It was discussed in the original post that there is not a lot of new construction on Long Island by way of comparison to homes that are being resold.  However, there is a wide variety of new construction across Long Island in various price ranges and towns.  Although there are very few large developments being built on Long Island, there is a growing inventory of new construction homes to choose from.

By studying the trends in new construction, you will be able to track the inventory of new homes on the market, in addition to the new homes that have sold.  The information provided in this mid-year report will include the number of new homes that came on the market during the month of June, in addition to the first and second quarters.  This report also includes the number of new homes that closed during the month of June, in addition to the first and second quarters.  Average listing prices and sales prices are also be provided, along with a trend analysis.

If you have any questions about new construction on Long Island, please feel free to contact me directly.  If you would like to stay current with the new construction market on Long Island, you can either check back each week for the latest update, or send me an e-mail requesting to be put onto an e-mail list with the updates.  My contact information is listed at the bottom of the page.

The following is the market data for the month of June and the mid-year trends for both 2007 and 2008.  The reports are broken down by homes that are priced under $1 million, homes between $1,000,000 - $1,999,999, and homes priced at $2 million and higher.

LONG ISLAND NEW CONSTRUCTION HOMES - UNDER $1 MILLION

TREND ANALYSIS:  The June numbers are slightly lower than the 2nd quarter average, and also lower than the June 2007 numbers.  However, the overall numbers for the year at the mid-year mark are surprisingly higher.  This despite the fact that there has been a very significant increase in inventory coinciding with a significant decrease in closings.  The average days on market has remained relatively steady, as has the ratio of sales price to list price.  However, these numbers are not as good as the 2007 numbers.

The increase in inventory would usually show a decrease in sales prices, and in this case, it seems to be more about what the numbers aren't saying then what they are saying.  While it seems that prices are rising in the face of an increase in inventory, the reality is that prices of new homes have come down, and buyers are taking advantage of it.  The $600,000 new construction purchase in 2008 is buying more house than the 2007 new construction purchase.

Builders are well aware of the current competition that exists on the market.  They also realize that they need to sell homes to build more.  Some builders have given some nice incentives to buyers to entice them into making a purchase.

Buyers should look at the current new construction market as an amazing opportunity to purchase a new home at a reasonable price.  This is an opportunity that didn't exist during the red hot seller's market.  Sophisticated homebuyers will realize that having their own buyer's agent will help them when negotiating with builders.  The time is now to be checking out these homes.  Mortgage rates are still relatively low, FHA and Jumbo loan limits are raised until the end of the year, and prices have dropped due to an increase in inventory.

LONG ISLAND NEW CONSTRUCTION HOMES - $1,000,000 - $1,999,999

TREND ANALYSIS:The sales numbers have been up all year in comparison to 2007, despite the fact that there have been less closings and more new homes coming on the market in this price range.  Because there are relatively few transactions in this price range for new construction, the numbers are easily skewed by having more homes close at a price closer to $2 million than $1 million.

It should be noted that the buyers in this price range tend to be less effected by the current mortgage market than buyers in the lower price ranges.  However, builders still should be mindful of the fact that there is greater competition for fewer buyers.  Only the homes that are priced properly will sell.  Builders may need to use incentives to convince buyers that their home is better than others on the market.

While home price averages are rising, the rise in inventory and the slowdown in overall home sales has created more value for today's homebuyer.  Long Island is not an area that is known for new construction, but there are opportunities for homebuyers right now that haven't been seen in recent years.  Those that take advantage of this buying opportunity now will be in a good position as the market starts to rise again. 

LONG ISLAND NEW CONSTRUCTION HOMES - $2 MILLION AND OVER

TREND ANALYSIS:  The market for high-end luxury homes has limited data to work with.  There have been 21 closings this year compared to 22 closings in 2007 at the mid-year mark.  The rise in inventory has been negligible.  However, there are some indicators that the market is softer this year than it was in 2007.  The average sales price and list price have both declined, and the ratio of sales price to list price has as well, and the average days on market has increased.

However, since there is such limited data, a few transactions have skewed the overall market analysis.  In the first quarter, there was one home that was on the market for 778 days, which brought up the average days on market by a significant margin.  The extremely low ratio of sales price to list price in the first quarter can be attributed to one home that was listed for $6.36 million and sold for $4.95 million.

This segment of the market is very different than other segments.  Mortgage rates and availability usually don't play as big of a role as the lower segments of the market.  The main benefit of the current market for homebuyers in this price range is the increase in homes to choose from.