New real estate analysis show market is settling down
Real Estate Market Snapshot By The Numbers
At an average sale price of $550,027 in December, Staten Island home values fell for the first time in several months. But more importantly, the fluctuations we have seen over the last six consecutive months have been very subtle compared to the sharp upward climb over past two years.
When taking into account the way prices have leveled out since July, this small price dip gives us more certainty that the real estate market frenzy in Staten Island is settling. At no other point in the last two years, which saw staggering price increases, have we seen values stagnate so consistently.
Two more important indicators show that home prices have hit a ceiling. The first is that days on the market have increased significantly since last month. Average Days On Market to sell in December was 75, up from 68 days in November and the longest we have seen since April. With homes taking longer to sell coupled with the fact that prices are down, the demand curve is certainly flattening, if not falling somewhat.
The second indicator is that the sold volume was actually up slightly from November to December. Staten Island sold a total of $240.4 million in real estate last month, a 14% increase over $210 million sold in November. While total sales volume was up, the fact that average price was down showed that a few high-end purchases did not bring up the average home price. The typical buyer from the working class segment may not be willing to bid much higher at this point.
Staten Island Housing Affordability Cap
In previous reports over the past months, a repeated theme we have explored is home affordability. This is crucial when considering the future of real estate values here in Staten Island.
With its large amount of single family homes, Staten Island is less of a renter’s haven than other boroughs of New York City. The borough also has fewer affordable housing options, particularly the suburban South Shore. The most recent Census in 2011 showed that up to 57% of North Shore residents rented, while fewer than 20% of South Shore dwellers had a landlord.
This means home ownership is more common in Staten Island than in pricier boroughs like Manhattan, where the bulk of residents rent their homes. Buying a home is a goal for many people living here, unlike pricier boroughs where renting is the norm.
A Hypothetical Mortgage Expense Breakdown
The US Census bureau also releases more current estimates based on previous data collected. According to Census estimates for 2012-2016, median household income here is roughly $74,000. An average-priced home at $550,000 would require a down payment $110,000 to meet the 20% threshold. For a first time home buyer using the FHA loan of 3.5%, this amounts to a more reasonable down payment of $20,000, but at the cost of a much higher mortgage.
At the current 30-year fixed rate, this comes out to a mortgage around $2,500 per month. With this mortgage taking up 40% of the average household income, housing costs have ballooned far higher than the recommended max of 30%. With the added upkeep costs of maintaining a house, it may be looking less desirable to buy in this pricey market.
Everyone’s financial situation is different. Some of us have children while others are single. Some have much more debt than others. We have, however, provided an estimated “wake up cost” breakdown for what someone one a middling $73,000 income would be looking at to afford an average home in Staten Island. Using data from a Reclaim NY New York Affordability Crisis Report: Staten Island Edition, the leftover chunk of pie for other personal expenses including transportation, leisure and savings is a mere 11% of income. This makes it very hard to make ends meet for a single family buying a home, let alone save for retirement.
But don't despair- this need not be your fate so long as you budget creatively and wisely. It may be true that the average home is no longer affordable for the average family, and it will behoove you to accept this truth. Starter homes are a much smarter investment. With equity, you can always scale up in the future. With such stability lately, benefits of buying or selling your home in Staten Island now far outweighs the risks.
By Hannah Jay
*Note: Our budget calculations reflected in this graph are hypothetical and adjusted slightly from Reclaim NY's since transportation costs vary widely for each person, and costs of living have increased substantially since this study.