EXISTING HOME SALES FLAT FOR 2019

On a full-year basis, total existing-home sales* ended at 5.34 million, the same level as in 2018, even though existing-home sales grew in December, according to the National Association of Realtors®.  Sales in the South were up 2.2%, offset by declines in the West of 1.8%, declines in the Midwest 1.6%, while the Northeast remained unchanged.

The median existing-home price in December was $274,500, up 7.8% from December 2018. Prices rose in every region. The price increase marks 94 straight months of year-over-year gains.

Lawrence Yun, NAR’s chief economist, said home sales fluctuated a great deal last year. “I view 2019 as a neutral year for housing in terms of sales,” Yun said. “Home sellers are positioned well, but prospective buyers aren’t as fortunate. Low inventory remains a problem.”

Total housing inventory at the end of December totaled 1.4 million units, down 8.5% from one year ago (1.5 million). The drop in inventory accounts for most of the increase in prices as demand increases and supply decreases, prices go up.  There is always a tipping point where the pricing growth may hit a wall and sellers need to be realistic about this when pricing their home for sale this year.

First-time buyers were responsible for 31% of sales in December.  Individual investors or second-home buyers, who account for many cash sales, purchased 17% of homes in December 2019, up 15% year-over-year. All-cash sales were down in December, 20% versus 22% in December 2018.

Yun said conditions for buying are favorable and will likely continue in 2020. “We saw the year come to a close with the economy churning out 2.3 million jobs, mortgage rates below 4% and housing starts ramp up to 1.6 million on an annual basis,” he said. “If these factors are sustained in 2020, we will see a notable pickup in home sales in 2020.” 

On the North Fork, there are very few new homes being built and existing home sales account for most of our sales. With lower inventories, sellers would be smart to list sooner and catch the early-bird buyers!

 *Existing home sales excludes new construction.

 Source: National Association of Realtors, 2019 Existing Home Sales, January 22, 2020,

BEFORE YOU PRICE YOUR LUXURY HOME FOR SALE…

The luxury market trends often differ from the trends affecting the traditional market.  It certainly takes some creativity, especially in the static market we have experienced in 2019. But, even in a market that has been somewhat sluggish, there are strategies that should be considered.  Often, dropping the price is the first course of action.  In fact, a price drop can sometimes undermine the luxury quality of a listing, and therefore should be one of the last strategies to use.

If your home doesn’t measure up, you may want to consider making some smart changes to raise the value. Raising the actual value of the home requires an investment of time and money to complete renovations, update amenities and make the space more neutral so that it will show better when potential buyers come to visit. For higher-end homes, buyers’ expectations require “near-perfection.” A home that needs work if often passed up by second-home buyers because they do not want to spend time and effort on managing a renovation project – even when the price offers great value. Homes trade at higher than market prices when there are no major repairs or renovations required, completely updated and move-in.

However, there is one fundamental that must be addressed - appropriate initial pricing.  While the luxury real estate market differs from the traditional market in that price is often a secondary requirement to a property’s amenities and location, appropriate pricing is still critical to the equation.  Most buyers start the process online and many may have a skewed perception of the local real estate market based on information they see on major listing portals. Often, it will not be evident that a home’s value on Zillow or Trulia will not include the fact that it is on the water or has had a major renovation because the algorithms used by these portals don’t specifically account for such differences. It’s important therefore, that regardless of the algorithms, you and your realtor form a realistic idea of your home’s current value based on comparative sales.  As the seller, you must decide if you want to max out on your home by investing in it to bring it up to snuff.  It’s a trade-off that has a direct impact on the market price. 

If you’re planning to sell your home and you’d like to discuss the specifics of your home price valuation and the impact of enhancements, call us at 631 765 5333.  We’ll be happy to give you a complementary analysis.

Sources: RIS Media, Before You Drop the Price of Your Luxury Home, November 12, 2019.  Institute for Luxury Home Marketing.

Americans Bullish on Buying, Selling – NAR Study

Americans are confident in the housing market and their ability to buy or sell successfully, according to the National Association of REALTORS® recently reported, 2019 fourth quarter survey.  74% of Americans felt optimistic regarding selling, while 63% were confident in home-buying.  According to the report, 73% of the Silent Generation (WWII) and 70% of younger boomers are most likely to think now is a good time to buy a home.  82% of those who earn $100,000 or more and own their home are most likely to think that now is a good time to sell a home.

64% of Americans believe home prices rose in 2019, NAR’s research shows. When asked their outlook on prices, 48% believe they will increase in the next six months, while 41% believe they will remain unchanged.

According to NAR’s newest research, 52% of Americans believe the economy is positively progressing. Lawrence Yun, chief economist at NAR, feels that economic gains have lifted positive sentiment. In December, the Labor reported that the economy generated 145,000 jobs and earnings rose 2.9% in 2019.  Affordability has improved, additional NAR research reveals.

“The mobility rate has been very low as many have opted to stay put for longer,” says Yun. “However, this latest boost—Americans saying now is a good time to move—is good news. With mortgage rates low, the timing is indeed ideal for those who want to enter into homeownership and for those looking to move on to their next home.”

At the start of the year, the average 30-year fixed mortgage rate sank to 3.64%, according to Freddie Mac.

            Same message as last week – take advantage of the timing and put your home on the market sooner rather than later. Same goes for buyers. Call us 631 765 5333!

Sources: National Association of Realtors, HOME Survey – Housing Opportunities and Market Experience, January 2020.  RISMedia, Suzanne De Vita, January 14, 2020.

Good News: Case-Shiller Study Shows Home Prices Passing 2006 Peak

The latest S&P CoreLogic/Case-Shiller Indices reported that October home prices rose 3.3% year-over-year, reaching a milestone 15%  above the pre-financial crisis peak reached July 2006.

Craig J. Lazzara, of the S&P Dow Jones Indices, said in a statement, “After a long period of decelerating price increases, the national, 10-city and 20-city composites all rose at a modestly faster rate in October compared to September. However, it is, of course, still too soon to say whether this marks an end to the deceleration or is merely a pause in the longer-term trend.

Heading into 2020, appreciation could temper, according to Lawrence Yun, chief economist at the National Association of REALTORS®, if builders expand inventory options. “Demand remains strong and supply is lacking,” says Yun. “Moreover, faster price appreciation in warmer Southern states reflect the ongoing migratory trend of people moving out of expensive regions of the country to more affordable parts. Southern cities should once again do better than most other markets.”

Additionally, although buyers face increasing prices, they also benefit from rising values, Bill Banfield, executive vice president of Capital Markets at Quicken Loans, points out.

The October, Year-Over-Year data for the 20 markets measured by S&P are:

Atlanta, Ga +4.2%, Boston, Mass. +3.4%, Charlotte, N.C. +4.8%, Chicago, Ill. +0.5%, Cleveland, Ohio +3.3%, Dallas, Texas +2.9%, Denver, Colo.+3.3%, Detroit, Mich. +3.1%, Las Vegas, Nev. +2.3%, Los Angeles, Calif. +2%, Miami, Fla. +3.3%, Minneapolis, Minn. +4.2%, New York, N.Y. +0.8%, Phoenix, Ariz.
+5.8%, Portland, Ore. +2.7%, San Diego, Calif. +2.9%, San Francisco, Calif. -0.4%, Seattle, Wash. +2.5%,
Tampa, Fla. +4.9%, Washington, D.C. +3%.

Although the stability was broad-based, New York was at the low end of the price increase year-over-year, and has had the lowest overall recovery rate (29%) from the 2008 crash of all the 20-city composites studied by Case-Shiller. This would suggest the New York composite, which includes NYC, Long Island, parts of New Jersey and Connecticut, has further to go and/or other factors like 2018 federal tax reforms, with significantly reduced certain state and local deductions may be holding down appreciation.  

Taking a microeconomic look at the North Fork Market, we have seen an increase in activity in recent months and believe our market reflects the pricing improvement. We also believe it will continue for the better part of 2020.  My advice: Sellers – call us and list early; Buyers - take advantage of the mild weather and low mortgage rates and shop early!

Source: RISMedia, Prices Now 15 Percent Higher Than Last Peak, December 31, 2019; Seeking Alpha, Updated S&P Case Shiller Home Price Data, Bespoke Investment Group, January. 8, 2020.