Want to buy a home in Suffolk County? It’s likely to cost you at least half a million dollars.
Suffolk home prices crashed through a new record last month, reaching a median $500,000 for the first time, up 16.3% from a year earlier, according to a report released Tuesday by OneKeyMLS, the listing service that includes Long Island.
In Nassau County, homes sold for a median price of $635,000 in May, up 8.5% year-over-year, the listing service reported.
The median is the midpoint, so half the homes sold last month traded for higher than those prices and half for lower.
Intense competition for a scarce supply of homes is forcing buyers into bidding wars that are driving up values, real estate agents said.
“This market just keeps heating up,” said Jim Speer, CEO of OneKey MLS. “There has to be an end in sight to what people will be willing to pay. But with those interest rates staying low, it does not seem like it’s right around the corner.”
The average interest rate for a 30-year mortgage was 2.96% last week, down 0.25 percentage points compared with a year earlier, mortgage giant Freddie Mac reported. Brokers say the fierce demand among homebuyers is due to the near-record-low interest rates, as well as an influx of buyers seeking suburban homes during the pandemic.
Speer said when interest rates eventually rise, the increased borrowing costs “will slow down the market a little bit.” But he said he does not believe the real estate market is due for a slump like the one that occurred after the 2007 collapse of the subprime mortgage market. “I don’t anticipate a bubble bursting, just due to all the economic factors being so much better than they had been in the past when we had a big downturn,” he said.
There were 7,044 homes listed for sale on Long Island last month, down 31% from a year ago. At the rate homes went into contract last month, it would take about two months to sell all the homes on the market. A healthy housing market has a five- to eight-month supply, so the market is tipped heavily in favor of sellers, brokers say.
For buyers, “it’s really hard, unless they’re working with cash, to get their offer accepted,” said Monica Balsan, a real estate agent with Daniel Gale Sotheby’s International Realty in Stony Brook. One buyer recently offered $25,000 over the asking price for a home, but the seller’s agent said the seller was only accepting cash offers, Balsan said. “That’s the hurdle, that is very hard for buyers, especially in that midpoint price range,” she said.
Despite the increasing prices, the pace of sales was brisk last month, especially in comparison with the previous May, when the real estate market was brought nearly to a halt by the three-month COVID-19 shutdown that ended last June.
In Suffolk County, home sales increased by 29.5% from the previous May, and the number of homes going into contract more than doubled year-over-year, OneKey MLS reported.
Nassau County home sales jumped by 79.4% compared with a year ago, and pending sales more than tripled, the listing service said.
Compared with May 2019 – that is, a normal spring month before the pandemic – the number of listings across Long Island was down by 47%, listing service figures show. Also in comparison with May 2019, the number of sales last month was about even in Nassau and down almost 9% in Suffolk, listing service figures show.
Speer said some homeowners have been hesitant to list their properties, in part because they don’t know how long they will continue working remotely, and in part because they aren’t sure where they would go next, given how competitive the market is: “They’re kind of stuck on that: ‘What do I do first? Do I buy, do I sell? If I sell and I don’t find what I want, am I going to rent?’”
Still, he urged homeowners who are on the fence to put their homes up for sale.
“Everybody’s concerned about, ‘when should I sell … is now the time?’” he said. The big gains in prices, he said, “should prompt people to put their homes on the market.”