As many U.S. real estate markets begin to dip into negative territory with falling home prices and higher interest rates, Long Island’s East End – particularly the North Fork – remains insulated from such market pressures. Some of the top North Fork brokers share their thoughts on how the market is shaping up for 2023…
What’s in store for the 2023 market?
2o23 is shaping up to be all about pricing. Kristy Naddell, associate broker with Douglas Elliman’s Cutchogue office leads off on this topic. “North Fork prices remain strong because we continue to have low inventory and high buyer demand. Despite the fact that two out of three economists are predicting a recession, looking all the way back to 1980, home prices appreciated in four of the last six recessions. So historically, when the economy slows down, it doesn’t mean home values will always fall. I think the market now is more stable in that things that are priced right are still selling. Sellers need to adjust to the market and understand that buyers aren’t going to pay 20% over asking anymore and listen to their agent’s pricing recommendations. Things are selling, but pricing is key.”
Corcoran’s Sheri Winter Parker confirms that pricing is paramount. “The market is busy, there’s definitely a lack of inventory. It’s not the pandemic anymore: there’s no panic buying, and buyers are looking at product which is priced properly. Pricing is key right now, and good product is going to go.”
“Right now, it’s a bit of a more wait and see with the buyers,” states Bill Walters of the Greenport office of Daniel Gale Sotheby’s International Realty. “Low inventory is propping up pricing, and we will have to see how interest rate hikes will affect the market in 30 to 45 days. It’s more of a traditional market cycle now, not driven by panic and historically low interest rates.” Mr. Walters goes on to echo the idea that pricing is key. “I am very bullish on turnkey properties in
good locations. People will pull the trigger for the right property, meaning move-in ready in the right location.”
Bridget Elkin, leader of The Elkin Team in the Greenport office of Compass sums up the issue as follows: “Numbers are strong because despite volatile financial markets and some macro headwinds, buyer demand remains significant, and inventory remains low. We’re seeing prices stabilize which is healthy and many of the supply chain issues that challenged homeowners and builders alike have been resolved. Recessions are hard to predict, but we’re not seeing early warning signs of a North Fork housing market downturn. The home’s coming to market are seeing activity and offers.”
What are the underlying reasons for this ongoing North Fork market strength? Especially as other markets across the U.S. are beginning to falter, especially with rising interest rates and inflation?
Kristy Naddell leads with this: “Mortgage rates will likely stabilize because they tend to respond to inflation. As inflation cools, rates will stabilize, but the days of 3% interest rates are certainly behind us. Many people just look at the rate, but if you look at what people are paying now for homes, compared to what they were paying 2 years ago, in many cases their monthly payments are less. During Covid, buyers were sometimes paying $100K over asking, so even with a low rate, they were paying more than a buyer today paying fair market value with a higher interest rate. The fact is, the North Fork is still very desirable and although prices have appreciated, there is still more value here than on the South Fork. I am also noticing many people are sitting on cash and are investing this into homes rather than the stock market. So, I have had more cash deals recently than before.”
Sheri Winter Parker sees stability in the North Fork real estate market. “A downturn for the North Fork? Nope, not happening here. In many respects, the North Fork remains an undervalued area with access to Manhattan which will not be affected by a ‘downturn’. Numbers are staying really strong, and sale price medians are going up. Interest rates are dropping, and inflation is going down. Sitting on the sidelines in this market is not a winning strategy, even as prices are appreciating. Any buyer who is trying to wait out the market has already lost.”
“There is good activity across all price points if the home feels like a ‘getaway,” explains Ms. Elkin. “In 2021 and 2022, buyers were willing to purchase a home with a suburban feel to it and then make changes needed to convert it to a vacation home; in today’s market, we are seeing those buyers want the classic second home amenities in place. The Greenport market remains very strong; while interest rates were rising between August 2022 through the end of the year, Greenport prices continued to climb.”
What about the North Fork lifestyle? Are buyers coming to the East End for a full-time lifestyle change or has the market returned to a more traditional weekend/summer approach?
The general consensus is that weekends are not what they used to be – they are longer by a couple of days. “Weekenders are looking to spend more time out east. Weekends are Thursday to Monday now,” shares Ms. Parker. “The weekend is definitely longer,” confirms Bill Walters, “Thursdays to Mondays for sure.”
Longer weekends mean that buyers make more use of their homes. “Most of the buyers I have sold to continue to use their ‘weekend homes’ year-round,” shares Ms. Naddell. I run into many of them in Greenport when I am out for dinner or otherwise around town.” “People are absolutely making a lifestyle change by coming to the North Fork, with the idea of spending more time in order to eventually migrate to the weekend house full-time. I am also seeing young families making the move,” states Ms. Parker. “It falls somewhere in the middle,” comments Ms. Elkin. “Increased flexibility with work schedules has allowed buyers to spend significantly more time on the North Fork than the traditional weekend-only demographic. Young families have school considerations, and while some have moved here permanently, enrolling their children out east, a number have gone west to put their children back in the schools they were studying in pre-pandemic.”
While weekends are getting longer, Ms. Naddell shares that she’s beginning to see a shift in home use. “Many of the people who were using their homes full-time have returned to the city and only come on weekends because many companies are requiring employees to work in the office again. Another trend: many people who bought during COVID are now relisting their homes for sale. These buyers thought they would be out east more and didn’t realize the upkeep of having a home and aren’t using them as much as they thought.”
Some final thoughts and insider advice?
“2023 is coming in hot! It’s going to be such a hot year,” exclaims Sheri Winter Parker. “Don’t miss it – you are going to lose if you’re sitting on the sidelines, even if interest rates keep rising. Why wait? Don’t!!”
Bill Walters is equally enthusiastic. “2023 is all about getting the right property. Pull the trigger, buy the property because there’s nothing more important than time – so enjoy it while you can.”
