What is the market like in Long Island toward the end of 2022?
If I were to use one word for the 2022 Long Island Real Estate Market, it would be unpredictable. Winding down from a very strong 2021, we entered the new year with energy and excitement for sellers who were receiving significant premiums for their homes due to the inventory shortage. Many believe this was a result of the pandemic, however, my experience was that the shortage of houses for sale coupled with the pandemic (the cherry on top) is what created the perfect storm for sellers to receive these premiums.
Long Island Real Estate 2020-2021
While many sellers were making a big profit on their homes without having to make repairs or meet any demands regarding the time frame, many buyers found themselves in a brutal situation. From 2020 through the present time, it was becoming customary (yet unadvised) for buyers to waive home inspections and appraisal contingencies. This was pretty much mandatory if you wanted your offer to be considered. The concept of a repair list was not something heard of during this time.
In the second quarter of 2022, we saw a significant interest rate hike, and then a few after that. Since it took such a long time for buyers to secure housing, many of the same buyers who started with a rate of 2.99% were now seeing their rates up to 5-6% or more.
For some unfortunate people, the interest rate increase bumped them out of the market.
With rates continuing to rise, we are seeing buyers put their foot down. Even though 6% is a historically low rate, the buyers who were approved at the lower rate were feeling choked and tackled by the market conditions.
Now, while we are still seeing multiple bids on houses that are priced compellingly, we are seeing fewer of them over asking and fewer offers overall. Buyers are becoming less willing to waive appraisals and inspections. Some sellers are repositioning their prices, which we have not seen much of in the last 2 years.
Is Long Island Becoming a Buyer’s Market?
In my opinion, it is still a seller’s market – but while we were moving at 100 miles per hour, at least for now, we have slowed down to 50mph. I think houses will continue to appreciate over the next few years at a much more “normal” pace of appreciation. I believe houses will become more challenging to sell, and the high skill set of listing agents will become imperative.
In addition, having a well-trained buyer’s agent in the purchaser’s corner will also have great value. The Long Island Real Estate Market has certainly not been for the faint of heart. With that said, staying in the ring and duking it out on the journey to homeownership was, and remains, a good mission.
Keep Trying to Buy, But Have the Right Mindframe
Buyers should stay cognizant of the fact that they are shopping for a payment, and not a price tag. It is crucial to watch interest rates and stay very aware of taxes. Low taxes and lower interest rates are the driving forces toward an attractive and palatable mortgage payment. Buyers should shop for loan products and explore the possibility of adjustable rate mortgages. Homeownership is one of the most significant accomplishments we can achieve in our lifetime. Find the right agent and continue to follow your dream.