Home News Feeling the pinch: High home prices, inflation impacting Long Island real estate

Feeling the pinch: High home prices, inflation impacting Long Island real estate

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Sandra Brian and her husband, Neil, have been looking for a home to buy by August, when they have to surrender Huntington’s rental home for six months.

Their $ 450,000 budget would have been considered healthy two years ago for the neighborhood under consideration on the south coast of Suffolk County, but finding a three-bedroom home was very difficult. ..

“We have had many obstacles,” Brian said. “We bid, then someone else bids more than we do.”

The stress felt by the Bryan brothers is just one of the pressures homebuyers face as they deal with rising interest rates and inflation.

Neil and Sandra Brian at Huntington’s house have to leave by August because they were rented. Their efforts to buy a house were frustrating.
Credit: Morgan Campbell

Long Island home prices hit record highs in May, with median selling prices in Nasso County reaching $ 686,000, 8% higher than the median selling prices in May 2021, and median selling prices in Suffolk at $ 555,000. It reached (11.2% higher than the previous year). To OneKey MLS.

And the combination of rising home prices and rising interest rates (last week’s mortgage rates rose to 5.91%) means people are paying more for their monthly mortgage payments than they were a year ago. ..

This is all because inflation has reached its highest level in 40 years, 8.6%. Americans are not only looking for ways to save on food, gas, lumber and paint prices, postponing vacations and haircuts, and buying new cars, as well as home repairs and I’m feeling a pinch because I’ve postponed the renovation.

High inflation and future expectations of rising inflation have led to higher mortgage rates. This means that long islanders who currently buy a home will pay more each month.

Postpone repair

Chuck Mastro, the owner of the renovation company, is usually fine to repair his mother-in-law’s Hampton Base summer house, but material costs are “now tremendously bloated.” “. He said.

“At one point, I was thinking about replacing shingles with vinyl siding, but after COVID, all prices soared, so I decided not to do that,” said Roslyn Heights’ Talex Home Improvement owner. Says the 59-year-old Mastro. .. Instead, he replaces the old shingles and repaints the exterior.

The cost of plywood to replace rotten underlayment in another job: $ 200 instead of the usual $ 75, he said. Filling his truck with petrol used to cost $ 75, but now it costs $ 130. According to NASDAQ, timber costs fell from a peak of $ 1,329 in May to $ 651 per 1,000 board feet, but are still higher than they were before the pandemic.

“Most people understand what’s going on,” Mastro said when estimating the price of the project. “Hopefully things settle down, but who knows, things are crazy now.”

Stephen Zappara, an agent at Keller Williams Realty in Suffolk, decided to postpone so far when a seller faced an estimate of about $ 250,000 to add a dormer to refurbish the kitchen. Said that.

Also, the high cost of home remodeling has led some sellers to change their minds about putting their homes on the market, exacerbating the problem of low inventory, Zappala said.

James Hogan, an agent at Daniel Gale Sotheby’s International Realty on Westhampton Beach, said homeowners have abandoned the major refurbishment at the beginning of the pandemic and opted for a small touch, such as a painting. Said. “I don’t see people plunging into the kitchen unless they’re flipping the house,” he said. “I think we’re back to the level of minor repairs before the pandemic.”

Higher interest rates

Joyce Colletti, a real estate agent at Douglas Elliman in Long Beach, said her buyers were primarily the first homeowners to have problems with rising interest rates.

“What I see is a complete change in the market since last year,” she said. “Everyone bought it. Everyone.”

Rick Morro, a 50-year-old engineer, recently bought a home on East Atlantic Beach for about $ 800,000 and listed a home on Long Beach.

“When I found this new property, interest rates rose three months ago, rising from 3% to 4% within a month,” he said. “If I hadn’t locked in a month ago, that would have had a big impact on me.”

Last year, he jointly signed a loan with his two daughters in their early twenties to buy a house in Linbrook. He helped them when interest rates were much lower, instead of paying rent or staying home because they didn’t have the money to buy themselves.

Kelly Knowles and Al Storiarov postponed the wedding ...

Kelly Knowles and Al Storialov postponed the wedding when looking for a home.
Credits: Howard Simmons

Price cut

“More people are priced from the market,” said William Jacobs, an agent at Keller Williams Real Tiger Nasso. “They got the qualification six months ago, but now they can’t afford it.”

Soaring prices are hurting low- and middle-income buyers, those with a budget of less than $ 600,000. “They get a rude awakening that payments will be added from what they were paying six months ago,” he said.

William Jacobs, an agent at Keller Williams Realty Greater Nassau, said in an Elmont-listed home, “more people are being priced from the market.”
Credit: Danielle Silverman

Dental assistant Kelly Knowles and her fiancé electrician Al Striarov postponed the wedding after searching for eight months to live with their parents in the West Babylon and Lindenhurst areas, respectively. ..

They are looking in the range of $ 450,000 to $ 500,000. This is a budget that was optimistic when we started our search. However, a two-bedroom home near her parents in West Babylon was involved in a bidding war and was put up for sale for $ 30,000, for about $ 500,000.

“It was ridiculous,” Knowles said. “The house was probably less than $ 300,000 in 2019.” They moved their search to Centereach and Selden.

Even with their total income she gave in the range of $ 160,000 to $ 180,000, buying a home “will be very, very tight,” she said. “I feel very stuck. I’m 33 and he’s 34. At this point, it’s almost impossible to live in Long Island.”

“Buyers are losing purchasing power because interest rates are rising,” Zappala said. “We see it every day in this market.”

Buyers who approved a $ 500,000 loan at a 3% interest rate 6 months ago could drop to $ 450,000 at an interest rate in the 6% range as they are only approved at a specific debt-to-earning ratio. .. According to Bankrate.com, lenders typically say that the ideal debt-to-earning ratio should not exceed 28%, or 36% including all costs.

“The deal under contract has died,” Zappala said.

He advises buyers to talk to their loan officers every month or so to reconfirm their numbers. “You don’t want to make an offer, and you find that you are no longer approved because interest rates have risen,” he warned.

For Brian, their home hunt feels even more frustrating as they fight rising home prices and the family’s FHA loan, a mortgage guaranteed by the Federal Housing Authority that has discouraged some sellers. increase. With an FHA loan, real estate cannot exceed a certain maximum price. This is a problem in the highly competitive and bloated housing market.

The seller told them to go with the buyer on a traditional mortgage or full cash offer.

“It’s like a rat race,” said her husband, 47, who works in information technology, and Sandra Brian, 54, a medical claimant and coder who emigrated from Jamaica about 10 years ago. “We are hard-working regulars — and we are almost on the street.”

They have been renting homes in Huntington for about five years with their grown-up children, looking for Huntington, Deer Park, Lindenhurst, Bayshore, Wheatley Heights, Babylon, Amityville, Massapequa, Farmingdale and more. Brian said this was the first time he had bought a “really life-changing” home for us.

The Bryan brothers are preparing to move, but still ...

The Bryan brothers are preparing to move, but haven’t found a home to buy yet.
Credit: Morgan Campbell

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