Our thoughts and prayers go out to the Israeli people in this most challenging and difficult time facing the deliberate and planned attack by Hamas on their country.
Need I say more as to how our market has progressed nine months into 2023? Unless your head is buried in the sand, don’t read a paper or listen to the news, then you just might not care or are just oblivious to the dramatic changes that have occurred.
Mortgage rates have increased 11 times since early 2022 and we could possibly see one more increase by the end of the year. Employment numbers were up a staggering 336,000 in September when most economists and the Fed were predicting less than 200,000 jobs would be created. Unemployment was steady at 3.8%. Our economy is a lot stronger and more resilient than most would have thought.
The leisure and hospitality industry added the largest increase with 96,000 jobs. But based on average salaries and wages, most still cannot afford to purchase a home and would be stuck in a rental situation for a longer period of time. Wage growth has been slowing for new hires, mainly due to lower-paying industries.
I’ve been researching all the various numbers and stats about the economy and am not always convinced that they are accurate. I believe if we were provided a more accurate picture, we just might stop spending, which is 70% of our economy. Our economy is a very complicated and immense entity with so many variables. Explanations about how it functions and the way it is remind me of this: figures don’t lie, but liars figure.
The numbers have to be skewed, so we will feel better about how things are and keep shelling out our dollars to keep our markets going. If you look at our inflation in September, it was 6.3% on an annualized basis. However, the government doesn’t add food and energy due to their volatility, so if you were to add them to that number it would be considerably higher.
How we feel will affect our spending habits. The more doom and gloom that is out there, the less we might consider buying. Although you would never know it by how things currently appear. In 2022, housing required the greatest outlay of consumer expenditure across all races, with the Asian population spending the most in the U.S. as well as on insurance, pensions, and education compared to any other race as per Statista.com. As many keep spending using their credit cards, debt is piling up at an alarming rate and being able to pay it back has and will become more challenging every month.
Being gainfully employed is part of the challenge and solution. But if you are purchasing more and more and not saving, this becomes detrimental to building your future wealth and you are becoming a slave to the credit card institutions. Moreover, for those who have to begin paying their student loans this month ($1.7 trillion owed), this has and will become a burden for so many and it just might take them a lifetime to repay. Sadly for those, this will surely eliminate the opportunity to be in a position to own a home.
Currently in Nassau County when comparing the sales of single-family homes year over year, Sept.-Oct 1, the median (1/2 sold for more and ½ sold for less) sold price was $700,000. September/October 2022 saw the median sale price of $692,000. So the increase was 1.2% which was the smallest over the last few years. Going back to October 2022, the median sale price vacillated from$699,000 to $700,000. The higher interest rates over that time period most likely attributed to the much smaller appreciation.
However, when compared to the median sale price of $649,995 going back to Oct 2021 through September 2023, the increase has been over 7%. But comparing the average sale price of $880,346 in September 2023 to the prior year of $858,898, the increase was 2.5%. But when you go back to Sept 2021 and compare the average sale price of $794,615 and the $880,346 in September 2023, this provided an increase of 10.8%. This has been an excellent appreciation for those who purchased over the last few years. Appreciation has slowed and the number of sales has decreased, again, due to the higher interest rates keeping many out of the market.
Median sale prices for condos in September 2023 were $670,000 compared to $650,000 year over year, an increase of 3.1%. However, comparing it to Sept 2021, the median sale price was $621,000, which over the last two years provided an appreciation of 7.3%. Comparing the average price of $820,601 to the prior year of $802,321 showed an increase of 2.3%. But going back to 2021 when the average sale price was $730,271 compared to the $820,601, the increase was 12.4%.
The median sale price for coops in Sept. 2023 was $300,000 compared to a $289,000 sale price year over year, which equated to an increase of 3.8%. However, again going back to Sept. 2021 when the average sale price was $279,000 and comparing it to the $289,000 price the increase was 7.5%.
These statistics are derived directly from the reports generated by our local Multiple Listing service. It is obvious that with the advent of the COVID-19 pandemic, people began leaving the cities for more safety and to work at home and interest rates were at their lowest point, making homes affordable to purchase. The demand went wild with sales, bidding wars ensued and prices took off like a rocket, as inventory stayed at historic lows. As interest rates and prices increased, sales have markedly decreased by 28% compared to 2022, due to those who could no longer afford to purchase. However, the greatest demand was in those towns that had the lowest asking prices enabling those prices to continue to increase.
We are at a crossroads at this point in time as demand continues to cool. The majority of homeowners aren’t giving up their very low rates to move. Currently, there are scant choices in inventory. Inflation is still with us and whether or not the Fed will increase rates one more time or leave them the same is the $64,000 question. I believe those who can still afford to purchase are being much more diligent in their decision-making. As I said last week, we are in a checkmate situation.
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
