Long Island Housing Markets Are a Disaster Waiting to Happen
Nassau and Suffolk Counties are home to nearly 3 million people. Their housing markets are two of the most misunderstood in the nation. Here's what you need to know if you're a potential buyer or seller.
Editor's Note: The following is an excerpt from Keith Jurow's just-released Long Island Housing Market Report. For the complete, in-depth analysis and report, download it here.
The two counties of Nassau and Suffolk on Long Island comprise the largest suburban housing markets around New York City. Like the housing markets of NYC, those of Nassau and Suffolk Counties are also very misunderstood.
Most active sellers believe that the market has held up rather well and list their property at a rather lofty price. As in New York City, prospective buyers look at the listing price, shake their head and just walk away. The result has been extremely low sales volume at prices that cause nearly everyone to think that the Long Island market has resisted the major decline of other major metros.
This report is written to help both buyers and sellers. If you are a potential buyer, you will learn why you need to be extremely careful to avoid overpaying on a property. If you are an active or potential seller, you will understand why asking prices throughout Long Island are too high and why you must carefully determine a listing price that might actually entice buyers in your local market.
How the Long Island Housing Bubble Developed
Long Island experienced a huge housing bubble between 2000 and 2006. This never-seen-before chart was custom-made for me by FNC.com. It shows how the bubble developed in Suffolk County.
Click to enlarge
Let me explain the chart. It is an index of sale prices for homes that had between 1,000 and 3,000 square feet of livable space. This is the heart of the Suffolk County housing market. Homes larger than 3,000 square feet are excluded.
FNC is able to create this price index because it has a database of roughly 45 million appraisals for homes sold between 2000 and 2011 including square footage. Since the chart is able to include only prices of homes within a given range in size, it is able to compare apples to apples more than other indices.
You can see that prices more than doubled between early 2000 and the spring of 2006. After the peak in 2006-2007, prices have declined by roughly 1/3 through May 2011. This takes prices back down to the level of spring 2003. What that means is that nearly everyone who bought since the summer of 2003 owns a home worth less than they paid for it. My sense is that many of them have no idea that this is the case for their property.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter