North Shore Long Island housing market booming

Real Estate Weekly, Oct 9, 2002 by Louise Brooks, Patricia McCormick, Karen Newhouse

The current boom in residential real estate sales in the metro New York area has also fueled an upsurge in sales in the North Shore of Long Island. This has turned out to be a great year for real estate, largely because interest rates are low and the stock market has been turbulent, persuading many buyers that it is better to invest in real estate than in stocks.

The flourishing market in sales in counterbalanced by a decline in rentals. It's taking longer to rent a house in Long Island because rates are so low, and people are moving ahead instead to buy. While interest rates remain so low, real estate values should remain high. As the economy improves, interest rates may go up. But the improvement in the economy will then take over and keep housing prices stable.

In the long, run, of course, people are buying houses not as investments, but as homes they expect to live in for a long time, rather or not house prices go up or down.

Houses coming on the market are quickly sold throughout the North Shore. As a result, at any one time we have very little inventory of product to sell. One reason that so few houses are coming on the market is that people who might have thought of moving to a bigger house or to another location are watching what is happening in the world and deciding to stay put for the time being.

Houses selling for $600,000 and below in the current marketplace are gone in a week. As one example, the Locust Valley office of Insignia Douglas Elliman put a house on the market for $1.5 million in May, and we got a full price offer in 10 days. The owner then decided to take the property off the market for the time being. We put the house back on the market in August and quickly sold it for $50,000 more than the asking price.

In the Locust Valley/Brookville market area, which incorporates high- and low-population densities and a consequent broad mix of income levels, we're selling houses priced anywhere from $400,000 to $25 million. The Manhasset market area is more homogenous. Average sales price there is around $870,000. We're noticing that some of the most expensive North Shore properties are starting to take a longer time to sell, but we continue to be aggressive on pricing, and are not really worried about the market absorbing these houses.

As sales increase, our rental business has declined. Rentals are down in the North Shore because they are down in Manhattan. People who couldn't afford to buy apartments in New York City are giving up their rentals there and buying houses here.

Looking ahead, as long as we continue to have very little product to sale, the market for North Shore real estate will remain fast-paced as demand continues to outpace supply. A change in world conditions, such as a war with Iraq or other major world event, could dictate the economic climate -and thus real estate -- in 2002. However, we are very positive we will have another great year.

Overall, the market is stabilizing and we don't expect to see any percentage increase in interest rates in the immediate future at least. The possibility that Nassau County will reformulate the assessment rate for taxes is creating a little bit of uncertainty. Just the same, we believe the real estate industry here will hold onto the gains that have been experienced over the last couple of years.

Louise Brooks, Patricia McCormick and Karen Newhouse are, respectively, the sales managers of the Locust Valley, Manhasset and Port Washington, Long Island, offices of Insignia Douglas Elliman.