The North Fork sees a Shift to a more “Normal” Market
Summer is drawing to a close, with Labor Day right around the corner – and North Fork pumpkin season not far behind! This summer has been glorious – sunny, hot days filled with all the summer fun the NOFO has to offer. The question on many people’s minds: “What’s next for the North Fork real estate market?”
As we have seen since early summer, the real estate market is leveling out, reaching a new, post-pandemic normal. Housing supply, while still at historic lows, is easing: inventory and new contract signings have evened out over the course of the summer, with slightly more homes coming to market than are being sold.
Jill Dunbar, associate broker in the Greenport office of Douglas Elliman comments: “The market seems to be having a moment of reflection, mostly on the buying side. Those buyers, who have not postponed their search to see what happens in the next few months, are more discerning. Interesting and well-priced properties (and there are too few of those at this moment) continue to get multiple offers and are still selling above ask.”
Scott Bennett, associate salesperson in the Cutchogue office of Douglas Elliman agrees. “The frenzy is pretty much gone. We are seeing a shift to a more “normal” market – it’s not a buyer’s market, but it’s not a seller’s market either. It’s more balanced.”
Interest rates soared through the spring but softened a bit in June and July and the East End real estate market seems to have decoupled from Wall Street, which has been battered this summer by setback after setback. Given the extremes of the capital markets, together with the fact that the equity and crypto markets are in freefall, investment in North Fork real estate seems to be a much safer bet – and if all else fails it’s an asset you can live in!
That being said, it appears that more buyers need financing, which is significantly more expensive than the past few years. The increase in financing costs puts some pressure on market pricing, which could result in some pricing reductions – as well as increasing supply to the market.
Scott Bennett has a few tips for those sellers who have not yet brought their properties to the market. “It’s important for sellers to remember that purchase power decreases when rates go up, so sellers need to do two things: the first is to make the property affordable, and the second is to have buyers see the value.” Mr. Bennett further comments that “affordability” often translates into a necessary price reduction.
Bridget and Eric Elkin (The Elkin Team) of Greenport’s Compass office concur. “Between the rise in interest rates and a barrage of negative headlines, buyer sentiment has shifted but deals are still being put together. We’re adjusting strategies and expectations to account for lower buyer traffic but do anticipate an uptick in demand this fall when the surge in summer travel winds down. Well-priced homes that are move-in ready will find motivated buyers in the market. In the months ahead, it will be essential to adjust our expectations around time-on-market. We’ve grown accustomed to seeing new listings go under contract within days or weeks; anything longer was indicative of red flags. It will be important to remember what normal looked like pre-covid.”
And what about the North Fork rental market? Listings seem to be down; could that be a function of rising rates and inflation forcing would-be investment property owners to sell because of affordability concerts?
Bridget and Eric Elkin are very specific about the impact of rising rates and financing costs on the market as they relate to rental properties. “We don’t anticipate recent buyers rushing to sell because they’ve been unable to rent their homes. Their motivation to purchase came from a desire to use the house, and people were buying within their means. Covid saw a surge in demand for rentals over two seasons, but this summer, a considerable percentage of would-be renters are traveling elsewhere. Additionally, many homeowners are traveling and thus looking to rent their properties, creating the opposite supply/demand imbalance we saw in 2020-2021. We’re experiencing this anecdotally in our circle of friends, family, and clients, and the travel data backs it up.”
And, as Scott Bennett comments: “Many property owners are using non-traditional rental models like Airbnb and VRBO, so it’s hard to track the exact state of the rental market as many do not track through the local real estate offices.”
