The Long Island real estate market has seen some tumult over the last few years. From a near-unprecedented surge to a stabilization due to a number of factors, one thing it hasn’t been is consistent. Yet, based on what we know about the market, we can make sense of what is going on in real estate and reassure both buyers and sellers that the answer to the question, “When is the best time to buy real estate?” is yes.
It is always a good time to invest in real estate as long as the expectations have been adjusted to meet the realities of the market. We know that mortgage rates are on the rise limiting the buying power of those looking to invest. It is critical to understand that buying power is not a true reflection of the real estate market.
So if a buyer was able to afford a monthly payment in 2020 of $4000 per month, which might have put them into a $600,000 home, that same payment today may only afford that family a $500,000 home. Does that mean that the Long Island real estate market is down? No. But it does mean that buyers need to accept this reality.
Looking at the closing prices of properties on Long Island, the market is stabilizing. It is not going in reverse, and it is doubtful that it will. Prices are not coming down. They are just going to stop going up for right now.
What we can anticipate is going to happen, with the interest rates getting higher, it’s going to reduce the number of buyers and the buying power of buyers. The result is that it will take longer for a house to sell. This is one of the reasons it’s important to hire a professional realtor.
People have stopped working 9-5 in an office and now so many people are working remotely. We saw a surge during the pandemic, but instead of going back to a pre-pandemic structure, things has permanently shifted. We see it in a number of ways.
Two things happened to make real estate go so well during the pandemic and it’s still true. Because we were sheltering in and working from home, the mindset was either A: I want to go buy my dream home because if I’m going to stay home, I want to love my home or B: I’m sick and tired of this door knob not working so let me fix it and let me paint this room and buy new furniture.
So it makes a one bedroom apartment in Forest Hills that had an easy commute into the city a lot less tolerable than a yard and a home office. It made Long island’s landscape that much more appealing and created this hot market due to the shift in mindset that considers what in a home? What do we want from our homes?
Real estate is still–and always has been–the best investment for people, as long as expectations are in check. For those who fear that we are about to see a real estate crash like we did in 2004, rest assured that the reasons for bubble bursting do not apply here. Mortgage companies now have higher standards, with more regulations and safeguards to protect buyers.
For residential buyers, real estate should be viewed not as an investment but based on the next level in your life. You’re buying a home. You’re not buying a stock. Residential home owners are looking to buy a home to live in because they grew out of their current home, they have a baby on the way, they want to be in a different school district for that child.
Now we are leveling off from that surge but it’s still going up. Even this gradual increase that we see now will stabilize and get much smaller and slower in price improvements. It’s about managing expectations I think the other thing is that when you’re thinking from an investment standpoint, you care about timing and overpaying, but that’s not what the residential market is or what it should be.
Jaime Franchi is the Executive Editor of Morey Publishing. She covers education and contributes news and entertainment pieces for the Long Island Press, along with occasional op-eds when she’s in the mood for some hate mail. Her work can also be found on Salon.com, Milieu Magazine, Huffington Post and The New York Times.