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The housing market in Long Island has always been an interesting one to research. It has gone through many different prices and trends recently, so it has been harder to determine whether this is a balanced market to invest in.
Currently, Long Island seems to have been experiencing steady growth over the past few months, and this trend is expected to keep going on for longer.
Now, many factors may have contributed to the current state of the Long Island, New York market. Even though this city may be an attractive option for buyers today, everyone needs to consider what the forecast for the market is first.
We can't be 100% certain of what will happen with any housing market in the future, but we can make a few predictions based on the data we have available.
Are you interested in the Long Island housing market? Take a look at the most recent market predictions you should keep in mind before investing!
We'll also evaluate other interesting information such as the current state of the market, so read to the end if you want to get all the information you need.
Recent Trends of the Long Island Real Estate Market
There are a few market trends you should keep in mind before investing in the Long Island housing market. This will help you understand where the predictions are coming from.
Overview
Generally speaking, Long Island seems to be experiencing a slowdown right now. Home prices, on average, are increasing a bit. However, there have been fewer home transactions.
There are different arguments to justify the current state of the Long Island housing market. The most important ones are that Long Island has been affected by a lower housing supply and rising mortgage rates.
This information may suggest that Long Island's housing market may not be attractive enough for those looking to buy.
Let's now look at the specifics of the housing market in Long Island before jumping into the predictions for 2023:
The current median sale price for Long Island is $600K; a 0.7% increase from last year. On the other hand, the median sale price per sq. ft. is $390, which is a 0.26% decrease from last year.
According to Redfin, there were 1464 total homes sold this past month. 0.9% of those homes were sold under their listing price, and the average home sold after 38 days on the market.
What does this tell you? Overall, there has been a low-to-moderate growth of the market these past few months, even though year-to-year numbers, in general, are going lower.
Considering the data from last year, we can predict this "slowdown" trend may go on for a few more months because of the low housing supply and the increasing demand, which raises housing prices.
Housing Inventory/Supply
As we've mentioned before, there's currently a limited housing inventory, meaning there aren't many homes for sale.
What happens when there's a lower supply? In essence, buyers will compete for the only homes available, which allows sellers to raise home prices to get more profit from their sale.
Sometimes, these cases can lead to a bidding war, which isn't something that buyers look forward to.
Since home prices remain high (and will likely stay that way for some time), buyers searching for affordable housing may not find it in Long Island.
The increase in home prices may be a great thing for sellers, but keep in mind that there have also been lower home sales, as this has been putting off many potential buyers.
Mortgage Rates
Another reason why the housing supply in Long Island is so low is that mortgage rates are getting higher. High interest rates often make homeowners hold onto their property and wait longer before they try to sell.
Currently, the average 30-year fixed-rate mortgage is 6.96%. What this means for homeowners is that they may have to pay more money in interest rates with their future property, so there aren't many people willing to sell.
Those willing to sell, however, are increasing home prices to meet their needs.
It's important to remember that general inflation is still affecting many regions in the U.S. The Federal Reserve keeps raising interest rates in an effort to fight this economic trend, which affects the market.
To give you a general idea, existing-home sales in the U.S. in April went down by 3.4%, according to a report by the National Association of Realtors. Moreover, the four major regions in the U.S. reported month-over-month and year-over-year declines in sales.
In general, the higher mortgage rates are leading to fewer properties available for sale, and those willing to sell their properties are rising prices, which affects the local markets in Long Island.
While there has been a recent (and small) recovery within the Long Island housing market, it's still unknown whether the mortgage rates will get lower soon, and until they do, we may still have problems with low inventory.
What's Affecting the Housing Market in Long Island?
As we could see from the section above, it's safe to say that the two main factors affecting the housing market in Long Island are the high mortgage rates and low inventory.
However, other general factors could affect the real estate market in Long Island. Those include:
- Demographics
- Government Interventions
- Unemployment Rates
Overall, we can say that both sellers and buyers may be holding off to make a transaction. On the seller's side, they may be either waiting for mortgage rates to go down or raising their prices. On the other hand, some buyers may be willing to make higher bids due to the demand for properties in Long Island, although others may hold off from making a purchase due to unaffordability.
In general, it's expected for neither the buyer nor seller to have a monopoly in the market in the future. As mentioned before, if these trends go on for a while, some sellers may be willing to give in, which can increase the current inventory a bit, benefiting buyers.
As a buyer, you may have a hard time finding a suitable property for a good price, as you will likely find competition in the few available homes. However, if you wait, you may find better opportunities.
Is the Long Island Housing Market Going to Crash?
The current state of the market in Long Island may lead you to believe the market could crash soon. If you pair the current inventory with the rising mortgage rates, it wouldn't be crazy to expect a crash in Long Island (and New York, in general).
Now, is the housing market going to crash? It's not likely. Currently, Long Island is having inflated prices, high interest rates, and low inventory, which is forming a sort of housing bubble projection. A housing market bubble happens when there's a slight increase in prices with a lower supply and higher demand.
However, as home prices get higher, they can reach a point where they're unaffordable for the average buyer.
Still, a crash isn't likely to happen precisely due to the low supply of homes. If supply increases and demand increases, you could say that the "bubble" is burst. Unfortunately, supply won't likely increase unless the mortgage rates decrease or more sellers put their property on sale despite the current rates.
Now that you know Long Island isn't likely to experience a crash, does it mean that it's a good investment option? It depends on your current circumstances. Some buyers may hold off from purchasing until the market stabilizes even more.
Housing Market Predictions for Long Island in 2023
Let's summarize everything we just mentioned on this page. The following section will cover all the housing market predictions you should consider for 2023 and early 2024.
First, let's talk about home sales. Even though home prices have been steadily increasing over the past few months, there aren't many sales happening due to unaffordability and low inventory.
However, Long Island is currently an appealing option for many people, as it's not as populated as other areas in New York. Moreover, this city is near New York City, which makes it even more attractive for some buyers. Long Island, overall, is expected to keep being an attractive market for people despite current circumstances, although buyers and sellers may have a few issues navigating the market.
Now, some experts believe there has been a recent spike in activity over the past few months, as open houses are getting more traffic, and a few buyers are making investments. All of these are good signs that the Long Island market is recovering slowly.
With this available information, we can predict that the market could keep growing over the following months in 2023, which could open many opportunities for both buyers and sellers. However, the problem with high mortgage rates and low inventory will still affect this "growth" process.
Considering the current state of the U.S. market, it's safe to say that sales will decline throughout the nation, and according to Nadia Evangelou from the NAR, it's a matter of "how much" these sales will decline.
An important factor that can affect how much sales will decline is the Fed's ability to control inflation. We'll have to see what happens over the following months to determine whether Long Island will experience significant growth.
General Statistics About the Housing Market
Now that you know what to expect from the Long Island housing market, let's look at some statistics you should be aware of before making any investment.
- Even though there has been a small increase in home prices, year-over-year data still suggests prices are getting lower. More specifically, Long Island has been experiencing declines for the past 20 months, which is a sign of an unbalanced/struggling market.
- The median price of closed home sales in Suffolk was reported at $532K. This suggests a slight increase from February 2022 but a decline from January this year.
- On the other hand, the median price of sales in Nassau in February 2023 was $640K. This also suggests a decline from January 2023 but an increase from February 2022.
- About 15% of homes in Long Island have flooding risks, which can put off some buyers.
- According to Redfin, about 3% of homes in Long Island are required to have flood insurance. Premiums for this may range from $285 to $3,215 per month.
- Nassau and Suffolk are considered to be among the most expensive places to live in the United States.
Bottom Line
As mentioned at the beginning, navigating the Long Island housing market can be complicated at first. Considering how expensive the area is already, it's a challenging option for many buyers looking for affordability in their investments.
The current landscape of the market suggests that finding a great deal as a buyer can be hard, especially considering the low inventory and current mortgage/interest rates. With the current median sale price at $600K, it's safe to say the average buyer may not be able to afford a home here, and those who can invest may get involved in bidding wars to close the deal.
However, if the demand for homes at their current price decreases, sellers may be forced to decrease their prices, which can make the market more attractive for buyers again. Unfortunately, the current rates may keep that from happening unless they get lower throughout 2023.
In that sense, you can wait for an opportunity, wait until the rates drop and the supply increases, or find somewhere else to invest.
Considering all of the information we just reviewed, why do buyers still consider Long Island for investments? Why are people willing to pay higher living expenses and taxes?
Overall, Long Island is known for having great public schools, decent state services, and even high-quality healthcare. Moreover, its proximity to New York City makes it more appealing to some.
In other words, Long Island could be an excellent investment for many buyers. However, if you're interested, you should do proper research before making any decision.
We hope this article has helped you understand the market in Long Island and that our housing market predictions were helpful.
FAQs
Is Long Island a Buyer's or Seller's Market?
Technically, Long Island is considered a seller's market, as they have the upper hand when negotiating higher prices. This is because of the city's current problem with rising mortgage rates and low inventory.
However, if this trend keeps going on, sellers may be forced to get their prices down in order to keep bidding wars going and secure a deal.
Long Island could become a buyer's market if the demand for housing gets lower than the current supply.
Will Long Island Experience a Housing Market Crash in 2023?
It's not likely due to the area's low inventory and current demand. However, the market is expected to be slower over the following months.
What Is the Real Estate Investing Outlook for 2023?
Investing in Long Island may be favorable for those who set realistic expectations according to the current market's condition. Generally speaking, investing in such a popular area will always be a great option, but as a buyer, you should keep in mind that finding a good deal may be harder and that you may have to go through a few bidding wars in order to get a better price (unless the market conditions change).
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