How high will home prices fly? If recent numbers are any indication, perhaps not much higher.
With a median sale price of $526,000, the typical Staten Island home increased 10.7% over the previous year’s numbers. However, it has actually declined over last month. August’s median sale price was $535,000. This also marked a decrease since August's one-year price increase of 16.3%.
When compared to September of last year, the market saw a full 15% decline in closed sales. This year-over-year comparison is noteworthy when we consider last month's report. This past August saw a 2.2% increase in closed sales over the prior August. Significantly fewer transactions took place this month compared to last year, a possible indicator the market may be leveling off.
Change is slow, however, and properties are still selling at impressive speeds. The number of days on the market until sale decreased a full 20% over September 2016, showing that homes are still in very high demand.
Fewer homes are being listed as well. The market saw a 1.6% decrease in new listings over September of last year. In the past twelve months, this decrease in new listings was only surpassed once, when January marked a 6.5% decrease over the prior year. If fewer homes are listed for sale now, naturally this means fewer closed sales down the line.
Housing affordability has become a major issue for the average home buyer in Staten Island. September’s Housing Affordability Index dropped an additional 11.5% since last year. When we examine rising home costs and compare these numbers to fairly stagnant wages for the working class, it appears the average family is struggling to afford a home.
Housing affordability peaked in early 2013 at 85 and has been falling ever since. The sharpest downturn took place in 2016, when the index fell from 75 to 60. It hovers around the same mark today, staying at 59 for the past two months. A balanced economy would show a number closer to 100. In this scenario, the median household income would be 100% of what is necessary to qualify for the median priced home.
As the market’s inventory continues to plummet, the demand is not quite keeping pace. Just 1,611 homes were up for sale in September. This marks an 8.3% decrease of available homes since last year. With around 500,000 residents in Staten Island, it is interesting to note the 15% one-year drop in closed sales. It would appear that more people need homes than those who are actually willing or able to close on a house at this time.
Inventory constraints are a factor throughout the New York Metro area, so we will not likely see major price decreases anytime soon. The driving economic factor at play is likely housing affordability- people are only able to budget so much of their income for housing before pulling back and waiting out the market. This is especially true of first time homeowners who have little equity to use as a down payment.