Inventory plummets, making the Staten Island market white hot for sellers
After a prolonged stalling over five months straight, the longest in recent memory, Staten Island home prices headed upward again. The $21,000 average price increase rose at the same time days on the market fell.
A price increase of this magnitude is significant. At $571,411, January’s average sale price rose 4% over December’s $549,531. Even more striking is the low inventory. Available homes in Staten Island now sits at just 1,278. This counts pending listings, bringing the true available inventory to well below 1,000.
If there was any speculation that the market was poised to fall, January disproved that idea. We previously predicted that prices are unlikely to fall significantly, but this past month surpassed our expectations. Staten Island living appears very desirable to people these days!
Homes are selling very fast which clearly drives demand. At just 70 days on the market, January homes sold on average 5 days quicker than they did in December, and 10 days faster than they did in January 2017.
Though inventory tightened since December, available homes have increased since January 2017’s 1,184. Seasonal adjustments are important – inventory is often at its lowest point in January. Staten Island has also added more listings than January of last year. At 496 new listings, we see 69 more new January listings and a total of 94 more homes listed than last year. By increasing competition between sellers, this will hopefully keep the market from going too wild.
Rising Interest Rates and the Stock Market
As we look to the future, two things are important: rising interest rates and the fate of the U.S. stock market as a whole.
As you may already know, the country saw a historic drop in the Dow Jones this month. A record was broken February 4, as the DOW fell over 1,000 points in a single day – the largest loss in a single day for our country’s history. It then rebounded 1,000 points again, though still remains shy of its 26,500 high.
Wall Street’s wild ride in early February can be likened to a bucking bronco. This uncertainty shakes consumer confidence, and the real estate market is certainly not immune. When a buyer’s investments look rocky, the last thing they may want to do is risk everything and buy a home they can barely afford. We advise buyers to proceed with caution and avoid risky investments.
Something also being talked about, but probably less so, are the rising mortgage interest rates. At 4.5%, the mortgage rate has come up significantly in the past few weeks. This is a major difference for homeowners since 2017, when interest rates were below 4.0 (and had been for several years). While still very low historically (interest rates reached 18.5% in 1981), even a fraction of a point is crucial when homes are selling for over half a million dollars. This sizeable mortgage jump was likely a factor in the Wall Street shakeup this month.
Property Taxes: A Silver Lining
One reason that so many buyers look to Staten Island these days is the low property tax. And when you think about equity it makes sense.
Property taxes in “cheaper” surrounding areas New Jersey, Long Island, and Upstate New York are roughly three times higher than our 0.805%. So while your mortgage loan on a $550,000 house will be higher than a $350,000 New Jersey home, the bulk of those payments will feed back into your home’s value. This means more for you when it comes time to sell, and MUCH less for Uncle Sam.
Of course, don’t forget to account for mortgage insurance. If your down payment is less than 20%, mortgage insurance will be required so be sure to build that into your total monthly living budget.