(Pictured above: Monthly home sales have dropped precipitously over the last few months in the Staten Island market)
Home sellers have been reluctant to accept the market slowdown, insisting that prices are still up over the last year. That is now no longer the case.
The average home sale price in March came in at $570,088. This is down $13,426 from the prior month and $4,171 lower than one year ago.
Not only are prices down, but other indicators have also slowed considerably. March had only 261 closed sales, the lowest in 2+ years and down from 322 last March. Sold to list price ratio is down to 96.2%, tied with the prior month for a two-year low.
Month’s inventory is up to 7.46, another two-year high. This means it would take 7 1/2 months to sell the current inventory. For comparison’s sake, it was 5.16 last year- over two months lower. Days on the market are about the same, up from last year but down from the last month. The average home sale took 91 days last month, compared to 89 last year and 96 last month.
The last big standout is the housing inventory. Active inventory is up again from last month at 1,947. This is down 17% from the same time last year when 1,662 homes were on the market.
What Are The Market’s Driving Factors?
So prices are down, supply is up, and properties are selling less often and taking longer. Why aren’t they biting like they were last year? We are going to examine three major factors in the real estate slowdown.
Chinese investment pullback: Our real estate market began to accelerate in 2015 largely thanks to investments from Chinese buyers. In 2016, US foreign real estate investments hit their peak at $46 Billion. In 2018, these investments dropped by 90% to just $4.6 Billion nationally. The Chinese also sold $13 Billion in US assets last year. The reason for this is two-sided. First, the United States government has placed regulations on foreign investments to protect our competitive edge. In turn, China lawmakers have placed restrictions on outbound real estate investments. The dropping of assets is part of their push to cut Chinese debts. This was a major source of real estate demand in Staten Island that is now largely absent in 2019.
Home affordability: Staten Island’s average household income in 2016 was $77,197 according to City-Data.com. If we assume this household has $50,000 for a downpayment on their first home, this puts the max affordable home value at $269,347 at 36% of income. It’s difficult to even find a condo or co-op in this range. Couple that with HOA fees, property maintenance, insurance, and other expenses such as city fines and closing costs, buyers are having to pull back on home bidding because it simply is not in their budget. Those still intent on buying often must look at more affordable alternatives.
Rising Property Taxes: If you’re a homeowner, you probably received a new assessment last year. Rising property values, such as those in Staten Island over the past few years, cause home values to be re-assessed. From fiscal year 2019 to 2020, Staten Island homes saw a 10.4% value increase. This is the highest increase in all five boroughs and resulted from large amounts of new construction. With home affordability already becoming an issue for Staten Island families, higher taxes on top of rising mortgages keep home ownership out of reach for more families all the time.