Year over year the real estate market has done fairly well considering the average selling price, which as of June 2024 was $1,042,353. The average median selling price was $801,000, which means half of the homes sold above and half sold below the median sale price.
The average original listing price was $1,053,617. The median original listing price was $799,000. We had 2.6 months of residential inventory as of June 2024 (the number of months it would take to sell all the listed available homes). Comparing year over year, active residential inventory as of June 2024 was up a slight 0.57%. The absorption time was down 21.63%. However, contracts were off 16.02% and the number of closed sales was up 7.57 percent.
The number of residential units was at a high of 1,284 units in May 2024 and a low of 707 units in November 2023. In June 2023 the number of available units was 1,141 compared with 1,121 units in June 2024.
The number of condos and coops varies depending on what month you are looking at. In July 2023 the number of available condo and coop units was 181 and fluctuated from a low of 117 in December 2023 to a high of 214 in May 2024. The number of available units usually increases in January and escalates through May during the selling season. However, as of June inventory of both classes of condos and coops increased consistently in 2024 except in March where it was down 1.80%.
For most of 2023, inventory was down as buyers gobbled up what they could and absorption time varied from 3.3 months in July 2023 to a low of 1.8 months in March 2024. As of June 2024, the absorption rate was 2.7 months. There were 122 contracts in July 2023 with a low of 105 in December 2023 and then increased. As of June 2024 there there were 161 contracts. There is a direct correlation with the time of year, the number of units available, and the number of contracts. Last winter was milder than normal with less than 6 inches of snow, which allowed more buyers to purchase and sellers to sell.
Historically normal inventory has been 6-7 months, so we are still way below the typical and ordinary threshold. When the market imploded in 2008, we had an oversupply of 11 months and prices were severely impacted due to the reduced demand. To stimulate the economy the Fed funds rate (the overnight rate at which banks lend to each other) was reduced to 0.25% until 2015, when the rate began increasing. Currently, mortgage rates for the top tier of borrowers having 750+ credit scores can be secured in the low 6% range.
Prices are still strong due to the severe shortage of homes. There is still quite a lot of money out there, especially from those paying outright for their purchase, searching for their next place to call home and investment properties. If it makes sense in the brain, it will make cents in one’s pocketbook. Regardless of the interest rates, it’s an amazing time for those who need or want to sell, downsize, or upgrade and cash in and take the money and run to the bank.
I have noticed sellers, who have accumulated a lot of appreciation and are financing their next purchase, are utilizing much larger downpayment or if downsizing, paying cash for their purchase. So the higher interest rates aren’t a major concern in those situations. My most recent contract has my buyers putting down almost 50% for their purchase.
Pricing your home to entice more consumers to consider visiting your place is critical in getting the highest price within a quicker time frame. It starts with attracting as many eyeballs as possible on the internet and local weekly papers. Pricing at or slightly below the market will create a stronger feeding frenzy. Once emotion sets in, price sometimes can be pushed to the sidelines and becomes less relevant as a potential bidding war can occur.
Demand fluctuates depending on the time of the year. There are still more purchasers than available homes. In my 42-plus years in the real estate industry, I have never experienced the craziness of the market today on Long Island. Cycles occur where prices go up when there is inadequate supply and then level off and come down based on excessive inventory beyond what would be considered normal. It’s basic supply-demand economics.
The pandemic has caused the normal averages and statistics to be thrown out the window, however. The normal market was drastically altered as people exited large cities to get as far away from people and Covid-19 as possible. This created a demand that was not typical. More people began permanently working at home as companies shut down. The fashion in which real estate was purchased also changed as more needed office space at home and it became a crucial facet of decision-making. Slowly the working environment morphed into a hybrid atmosphere as some had to go back to work several days a week, which my daughter experienced.
Until the supply of homes becomes more normalized, which could take 5-10 years, my professional opinion is that only a huge surge in foreclosures, much higher rates, or a long-contracted catastrophic event will slow this market. However, current foreclosures did increase in the first quarter of 2024; 32,878 in March for a drop of less than 1% from the previous month and a 10% decline from 2023 as per ATTOM, a property data provider. Foreclosure starts increased nationwide by 2%, spiking in New Hampshire, Illinois, and Florida. However, Illinois, Connecticut, New Jersey, and Florida are the top four foreclosure states in 2024. There was a 7% increase in bank repossessions from the previous quarter but a notable 20% decline compared to a year ago.
There is talk about a potential rate cut in September as layoffs increase and job creation has slowed. However, the jury is out as to whether or not this will occur. If it does, then the last quarter of 2024 might be an excellent time to consider selling and purchasing.
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