STATEN ISLAND, N.Y. — After more than three years of a strong seller’s market, Staten Island’s residential real estate is now favoring home buyers, Realtors say.
“Real estate always works in cycles. The seller’s market started to wind down around September from what I saw, and the buyer’s market is becoming more front and center,” said Traci Cangiano, broker/owner of Cangiano Estates in Great Kills.
“We are seeing more inventory, and as a result it’s almost eliminating the multiple-offer scenario. Prices are slowly dropping, and homes are sitting on the market longer. Buyers are finally able to be a little bit selective,” she added.
Since 2015, there has been a home buying frenzy on Staten Island where there were more buyers than sellers in the marketplace. Prices and values of homes peeked during this time, and houses became unaffordable for many millennial buyers.
According to a 2017 post on the Staten Island Board of Realtors’ website, homes had reached “unaffordable levels,” at a time when there were less homes on the market than buyers who wanted to purchase them.
In 2017, the number of homes sold by Nov. 30 was 3,947, according to Staten Island Board of Realtors (SIBOR). In 2018, the number of homes sold by the same time period was 3,863, said SIBOR.
Although current home sales are at 98 percent of what they were last year at this time, the market is trending in favor of buyers.
INTEREST RATE HIKE
One of the main reasons for the switch from a seller’s to buyer’s market is the rise in mortgage interest rates.
“The national average for interest rates this week is around 5 [percent] versus 4 [percent] a year ago,” said Cangiano.
“That jump can cost borrowers a few hundred dollars a month, so it changes the affordability when it comes to borrower’s spending. The increased rates on credit cards, home equity, short-term lending also affects people’s out-of-pocket monthly. It’s all relative. …Besides interest rates on housing, it’s making the average person’s monthly out-of-pocket expenses higher,” she added.
Increased interest rates can also deter buyers from making first-time or move-up purchases.
“The rise in interest rates combined with rising home prices has created an affordability issue for some buyers causing them to postpone their home purchases,” said Joan Camerlengo, broker/owner of Joan Camerlengo Realty in New Dorp.
“Anytime that inventory increases to a six months plus supply, we have a ‘buyer’s market,’” she added.
Currently, Staten Island has a 5.3 months’ supply of homes, according to Staten Island Multiple Listing Services, she said.
However, interest rate hikes aren’t always bad for the marketplace.
“The rates have been steadily increasing, however, it has been at a good pace,” said James Prendamano, vice president and CEO of Casandra Properties, which has two Island-based offices.
“The impact of the rate increases on the local real estate market have stabilized things. Part of the intention of a rate increase is to hedge against inflation, and to keep the markets from overheating. This type of incremental steady adjusting of the rates long-term can actually be a positive thing,” he added.
Home sales have slowed, giving buyers more choices.
“After years of pent-up buyer demand and valuations below the market heights, the speed and velocity of the real estate market over the past 30 months has tapered off with valuations above the 2008 crash,” said Frank J. Rizzo, broker/owner of Cornerstone Realty in Annadale.
“As much as there had been pent-up buyer demand, there was pent-up seller demand. Families had stayed in their first and second homes longer than they had in the past because they had been down the equity they thought they had. With those equity levels back, sellers are re-entering the market,” he added.
FAVORABLE FOR BUYERS
After three years of bidding wars and few homes for sale, the change in tide in the real estate market will allow first-time buyers more options.
“With less demand in the market, there will be fewer bidding wars and multiple offers. Sellers who price competitively can still walk away with a handsome amount of profit, but not the price jumps observed in previous years,” said Judith Iucci, associate broker for Salmon Real Estate in Castleton Corners.
DOWNSIDE FOR SELLERS
A buyer’s market often means homes will sit on the market for longer periods of time.
“For sellers, this shift will lead to fewer offers and more time on the market, and may result in dropping their asking price. In many cases, sellers enjoy benefits of purchasing in the same market,” said Iucci.
And homes that are overpriced likely won’t sell for the asking price.
“Properties that are over-priced may see few or low offers. …that’s where ‘how you go about positioning your property against the competition’ will matter,” said Rizzo.
2019 MARKET PREDICTIONS
Despite rising interest rates, many Realtors believe the 2019 real estate market will be strong.
“Prices will continue to drop a bit, and level out, and I feel like people who were afraid of the market the last 18 to 24 months may now come out and explore what is available,” said Cangiano. “Granted, instead of paying an inflated price for a home, they will pay a higher interest rate, so it’s all relative in that respect, but at least they will not feel rushed or pressured into making a decision, as many buyers over the last few years have indicated being the case.”
Said Prendamano: “I see the 2019 local residential real estate market remaining strong, but sensible. …We will have a healthier balance of buyers to sellers. I think we will maintain pricing, but stay away from those crazy increases we saw back in 2005 and 2006.”
Many said 2019 real estate prices will be closer to fair market value.
“We think 2019 will be a time when sellers will have to be realistic about prices and where buyers will be able to negotiate from a stronger position than they have been recently,” said Sandy Krueger, CEO of the SIBOR.