Are prices going up, up and away?
This month’s numbers proved to be another head-scratcher. Prices were driven once more to an all-time high at an astounding average of $597,426. This makes it very plausible that the market may break $600,000 by the end of 2018.
The average sale price has increased around $50,000 in the past 12 months. The reason this seems odd though is that other indicators have slowed down noticeably. Days on the market is up 6 points over last year, from 68 in 2017 to 74 last month. The number of home sales is also down over last year, from 376 in 2017 to 360 this past November.
These slight but observable changes show that home sales are slowing down for not just one month but consistently this year. Why then would prices keep going up if demand is waning?
The strangest of all, and perhaps the largest and most consistent indicator of a slowing market, is the active inventory. Active listings were up to 2,032 in November, making it the seventh straight month that active listings have plateaued around 2,000. In November of last year, nearly 400 fewer homes were listed on the market at 1,638.
We have been looking at these leading indicators and expecting prices to level out or fall, so this price spike is strange to say the least. It is important to remember that 360 is a relatively small sample size. We can see that many homes are still not selling.
What could this mean? Here’s a theory: Perhaps energized by rising prices, the majority of home sellers simply price their homes too high and refuse to reduce them out of pride. “Why lower my price, when I see homes fetching more? What is my agent doing wrong?”
On the other hand, homes that are priced right (and likely in a hot neighborhood) will fetch high sale prices, largely from investors. The homes not selling may well be those in colder neighborhoods, priced like hot neighborhoods. If this theory is true, there are certain neighborhoods carrying the market to where it is now- and the rules are completely different for homes listed in the rest of the island.
A Wild Ride In Real Estate
Staten Island’s market has been a strange one over the past few years. Though not immune to the housing crisis of 2008, it remained stronger than many parts of the country. Our strength is the New York Metro Area, an economic and cultural anchor. Whatever sways the country’s future in coming years, New York will remain desirable to buyers.
Home values in Staten Island dipped at that time, then slowly began rising again around 2012. This steady trajectory continued until 2016. Prices began shooting up at this time, buoyed by a lengthy streak of economic success and subsequent interest from investors. Home prices continue to accelerate through 2018, although not quite as much as they have the two previous years.
It has been difficult to predict where the market will head next since sitting inventory remains at odds with rising prices. The Staten Island area is really too diverse to put under one umbrella like our market data attempts to. If we had more detailed information, we could read into the different markets within Staten Island. There would almost certainly be contrasting stories to tell.