To anyone who’s been paying attention, it’s no surprise that the Long Island housing market has been struggling lately.
And the slowdown in home sales has also been painfully obvious to people in businesses that have depended on a healthy real estate industry for their own success.
It’s not just brokers and sales agents that have felt the pinch. It’s also those in ancillary businesses, like moving companies and mortgage lenders, that share in the suffering.
Just how bad is the current home sales slump? Let’s take a look at the numbers.
There were 2,319 homes contracted for sale last month in Nassau and Suffolk counties, that’s down 15 percent from the 2,727 homes contracted for sale in August 2022 and more than 28 percent fewer than the 3,230 Long Island homes contracted for sale in August 2021, according to statistics from OneKey MLS.
In the first eight months of the year, there were 17,215 Long Island homes contracted for sale, a drop of 15.7 percent from the 20,414 pending home sales in the first eight months of 2022, and 31 percent fewer than the 24,945 pending sales from January through August of 2021.
Even comparing this year’s home sales to the last pre-pandemic year shows how far sales have fallen. The number of Long Island homes contracted for sale in the first eight months of 2023 is more than 23 percent fewer than the 22,381 homes contracted for sale in the first eight months of 2019.
Long Island home prices climbed to record highs last month, with the median price of closed sales in Nassau reaching $725,000 and the median price in Suffolk hitting $585,750. However, brokers say those all-time high prices can be directly attributed to the severe lack of homes on the market, as listing inventory remains at historically low levels.
There were 5,089 Long Island homes listed for sale with OneKey MLS as of Tuesday, down 25.8 percent from the 6,854 homes listed for sale at the end of August 2022 and nearly 29 percent fewer than the 7,155 homes listed for sale in August 2021.
Industry analysts say the biggest reason for the recent dearth of available homes for sale is higher mortgage rates, since most homeowners have mortgages at much lower rates and don’t want to shoulder a higher monthly payment for their next home. The average rate for a 30-year fixed mortgage is now 7.51 percent, according to bankrate.com, more than double the rate of 18 months ago and the highest rate in more than two decades.
For Chris Roberti, director of strategic growth for Woodbury-based mortgage lender Hartford Funding, the rapid rise of interest rates and the resulting slowdown in home sales has been problematic.
“During the height of COVID, it was like the steroid era of baseball. Interest rates were at 2.5 percent, people with no experience in the industry were making money hand over fist,” Roberti told LIBN. “I was working around the clock and sometimes didn’t even have time to eat lunch. It was crazy. And then all of a sudden, everything kind of fell off a cliff. It was a violent rise in rates and happened in like three to four weeks.”
Roberti says home refinancing had been as much as 40 percent of the company’s business before the rates took off and that business has all but dried up. And though he focuses on loans for home purchases, the recent slump in sales has caused mortgage applications to drop by at least 50 percent.
Another industry affected by the decline in home sales is the moving business. Like those in the mortgage sector, Robert Esposito, founder and principal of Hauppauge-based Relocator Service Inc., has also been riding the housing rollercoaster. During the height of the COVID pandemic, Esposito’s firm was busier than ever, as home sales boomed.
But two years later, the housing boom has turned bust, and the company’s residential moving business is now down about 40 percent since 2020.
“This is the first time I’m really noticing how much the pendulum has swung,” Esposito says.
But though the firm’s residential moving business has waned, the company has diversified over the last several years, offering storage, estate sales, online auctions and commercial moving services. In fact, Esposito says the firm’s revenue is up over $1 million so far this year as a result of those additional services.
Restoration work has also become a big part of the company’s offerings, with Relocator removing salvageable items from homes damaged by storms and other disasters. The pandemic also steered the firm in new directions.
“When COVID started, all the work dried up for three months and then it came crashing back, with online auctions and out-of-state moving,” Esposito said. “One major world event caused parts of our business to explode while other parts were failing.”
Relocator, which has 64 employees and 18 trucks, is still chasing residential customers and Esposito credits his relationships with brokers for assisting in that pursuit.
“Our relationships with real estate brokers are so important and we are still able to get work,” he said. “Because we offer multiple services, we get estate work referred to us, so in a down market like this, we’re still getting houses to do multiple services, so I think that helps a lot, too.”
Meanwhile, though business is down right now, Roberti tries to pump up his team of 18 sales staff who work out of the firm’s Rockville Centre office.
“What I try to do is keep the negativity out. You can’t let it get in there. You have to just try to do the best you can every single day,” he said.
And Roberti remains optimistic that the market will turn around in the not-too-distant future.
“You want to get back to some sort of reality to allow the market to do its regular business,” he said. “The phones have been ringing over the last several weeks. I think what happened this past summer is that the public didn’t catch up to the mortgage rate hike, but now people understand this is where it’s at and eventually the market will normalize. That’s my hope.”