2005 Market Report

2005 broke all the records again for home sales on Long Island. In 2005 a total of 28,899 homes, condos and parcels were sold a 1.93% increase over 2004. In total dollars sold the numbers jumped to $14,994,339,149.- a 13.39% increase over 2004. The average home price went from $466,408 to $518,853, a 11.24% increase. Lets break the numbers down.

In Nassau County for homes and condos the average price went from $540,601 to $603,952 an 11.72% increase. In Suffolk, prices rose from $405,127 to $449,765 a 11% increase. There are currently 6,028 residential properties listed in Nassau, down from Septembers 6,474, but up from December 2004’s 3,761. In Suffolk there are 8,748 properties listed, down from Septembers 9,356, but up from a year ago at 5,662.

Average prices for Residences, Condos and Land in the forth quarter are shown in the charts below.

	Nass 05	Nass 04	Suff 05	Suff 04
Sept	$639,608	$552,570	$468,171	$415,843
Oct	$651,933	$565,724	$450,502	$404,438
Nov	$649,550	$576,742	$444,636	$424,833
Dec	$605,890	$553,937	$458,662	$422,614

4th Quarter Home Sale Prices

When you look at the following chart you can see the number of homes going under contract follows a similar pattern from 2004 and 2005. Where you see a big difference is the big increase in the number of listings taken during 2005. If some of these potential sellers were testing the market and don’t re-list their homes we could see the inventory levels drop significantly during the next few months. Were these homes realistically priced? I feel some sellers were testing the market to see how much they could get for their home.

Number of Homes Listed Vs the Number of Homes going Under Contract

While my feelings are not scientific, a look at the list price for homes newly listed may be useful. As you can see the list price for new listings jumped from February to March in Nassau County from $547,484 to $700,800. After the March jump asking prices kept rising even as the under contract price was declining. Suffolk County seems to be more balanced. It is interesting to note, if you take a snapshot of December 2005, in Nassau the Average Sold Price was, $605,890, The average Under Contract Price was $609,418, and the average new listing price was $809,569. In Suffolk the numbers are as follows. The average sold price, $458,662, the average under contract price, $466,533, and the average new listing price of $550,352.

Average Price of a Home When Listed vs Average Price of a Home When          Under Contract

Another factor effecting real estate prices are mortgage rates. In early 2006 you can expect a 30 year fixed mortgage rate to be about 6.5%. This is my estimate to be used for the following example, not as a prediction. So if you are waiting for the right time to buy a home you must factor in the interest rate.

Lets take the average home price in Nassau County in 2004 of $542,235. In 2005 you could get a 30 year fixed rate of 5.5%. Putting 10% down this would give you a mortgage payment of $2770.

In 2005 the average price was $607,396. Using the same math with 10% down your payment would be $3103, and you would have needed another $6,000 for the down payment.

 Lets look at 2006 with an expected rate of about 6.5% if prices stay the same, that $607,396 home will cost you $3,455 a month. To keep the same payment of $3100 you can only buy a home for $545,000 with 10% down due to the interest rate increase.  

Where is the market heading? Anyone who says they know is at best guessing. I find it interesting that many financial institutions are now self proclaimed real estate experts, predicting the real estate bubble bursting. In the last 5 years did you ever hear any of these same people tell you to pull money out of the stock market and invest in real estate? In the beginning of 2004 the DJIA was at 10,409, and on January 3rd 2006 it was at 10,847. Not much to talk about there. These experts also couldn’t predict the tech bubble. Lets look at some more charts. The following chart shows the number of homes that went under contract in December for the last three years. In Nassau 742 homes went under contract in December 05, while Suffolk had 960. 

The average price of a home going under contract continued to climb over years past. Now the contract price and the final selling price aren’t necessarily the same, but it gives an indication that at the under contract price the buyer and seller were close enough to make a deal.

In December we saw the average Days on Market increase slightly, no real clues here. This number is not always accurate. When a home expires, some homes are relisted with a new multiple listing number and the days on market clocks starts from zero again.

January is starting off slower then in 2005 and 2004 with 110 homes going under contract in Nassau and 137 for Suffolk.

Sales may have slowed but most prices are still rising. In Suffolk the list price and U/C price both rose in the first week of January. The average list price for homes listed the first week of 2006 was $559,601 and the U/C price was $489,609. In Nassau the numbers are $700,193 for lists and $585,649 for U/C. As you can see in the chart below the list price for the first week of 2003 was over $800,000. This was due to the fact that only 10 homes were listed and 3 of them were over $1,000,000. The highest was $3,500,000. The other 7 were between $209,000 and $389,990.

The average closed or sold price is still climbing over years past with Nassau increasing from $591,299 to $762,122 in Nassau and from $401,159 to $425,504 in Suffolk.

The number of homes listed is still climbing with more home coming on the market then going under contract in the first week of January.

While these figures give an overall view of the market they can be misleading. In some Long Island towns a $600,000 home doesn’t exist, while in other towns $600,000 buys you a big beautiful home. If you want to find out what your home is worth, or how much you can expect to pay for a home in a specific market, do your homework and then call your local Realtor. Almost all Realtors will give you a free comparitive market analysis for your home.