Earlier this month, mortgage rates took a plunge, declining to the lowest level in nearly 15 months and coming in below 6.5% for the first time this year. Mortgage rates have been trending downward since mid-July, perhaps signaling good things to come in many housing markets. We asked our esteemed panel of agents how they each anticipate it affecting the Long Island market. Experts don’t expect rates to recede much further, so how do current rates position both buyers and sellers on Long Island?
Jessica White
THE CORCORAN GROUP
DIX HILLS
The recent drop in interest rates is creating a promising opportunity for first-time homebuyers, potentially increasing demand as more buyers find affordability within reach. This shift is an encouraging sign for the market, even though some buyers are still waiting for the perfect home. For sellers, we may see a modest rise in inventory, especially from those who have been holding out for a favorable change in rates. Homeowners who have outgrown their “starter homes” may now find this an ideal time to move. I think motivated sellers will see it’s important to act soon, as further rate declines could lead to more competition for them when purchasing, making current conditions particularly advantageous. Additionally, I noticed an uptick in investors capitalizing on gains from the recent rate drop, with many choosing to relocate their investments out of state or into multiple cash purchases on the island.
Hara Kang
THE ATLANTIC TEAM
DOUGLAS ELLIMAN
EAST HAMPTON
I can certainly see this as a window of opportunity for both buyers and sellers on the East End. For buyers, this decline in rates can boost purchasing power, allowing them to consider properties and even neighborhoods that might have been out of reach just a few months ago. It also nudges those who have been on the fence to act now, knowing that rates could rise again. For sellers, now would be the time to list their homes. Lower mortgage rates should increase demand as more buyers enter the market, potentially leading to quicker sales and competitive offers, especially during the typically busy fall selling season for the East End. This is especially relevant for my clients who have purchased in the past four years listing their homes now; many are now viewing this as an opportunity to sell, whether they’re looking to upgrade, down-size, or even make a lifestyle change.
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Alana Benjamin
COMPASS
MANHASSET
Timing is everything in real estate. The recent decline in mortgage rates has been a welcome reprieve for those buyers who have been lucky enough to sign contracts in the last few weeks. Seeing your potential monthly payments go down is simply delightful! But … while rates are trending downward, it still is a far cry from the golden days of 2-4% interest rates. In a hot market like Long Island, lower rates may allow some buyers to push their purchase price limit a bit more, or even just make all buyers feel better about paying more than they would have 2 years ago! It is doubtful that the lower rates will solve the low inventory problem, which continues to push prices and buyers to their limit. The rates still are not low enough to truly move the needle and even out the lack of inventory. Lower rates are likely to encourage buyers who have been sitting on the fence to jump back into the market, which leads us back to lack of inventory and inevitable competiion.
Eileen O’Hara
DANIEL GALE SOTHEBY’S INTERNATIONAL REALTY
GARDEN CITY AND ROCKVILLE CENTRE
In the communities where I list and sell homes in Nassau County, the recent decline in mortgage rates from well above 7% have started to shift the dynamics for buyers and sellers, especially in the entry-level market. Buyers have been struggling due to limited inventory, competitive bidding situations, and higher monthly costs. This shortage has further been driven by the fact that many homeowners who would typically trade up to larger homes hesitated due to high rates, limited inventory, and soaring prices in the luxury market. Now that rates have decreased, I expect more homeowners to start looking for their next home, which could free up inventory in the entry-level market. While a further decrease in rates might be needed to see significant movement, this drop is a positive sign that more homes may soon become available. In fact, inventory has already increased since mid-July’s rate drop at a time of the year that is typically slow for new listings. This is welcome news for buyers who have been frustrated by the lack of options and the impact of high rates on their purchasing power. For sellers considering a move, listing now allows them to get ahead of other sellers and benefit from increased buyer activity, as the pool of potential buyers expands with more people re-entering the market due to the improved rates.
John Breen
BRANCH REAL ESTATE GROUP
SEA CLIFF
The housing market is an everchanging landscape that can be difficult to navigate, but when it comes to shopping for a mortgage the future is looking a lot brighter and I feel we are at a unique tipping point where a market correction will be a healthy change overall. The average 30-year fixed mortgage is 6.46% and will soon be approaching the 6.25% mark. After the Federal Reserve’s predicted interest rate cut in mid-September, mortgage rates should soon follow. We could potentially see sub-6 % rates on a 30-year mortgage at the beginning of 2025. More buyers may be entering the Long Island market as the Fed applies these monetary easing policies. This influx of activity could increase an already highly competitive market for home buyers. I recommend that people be ready to go with their pre-approval letter so they can make quick decisions when the time comes. For sellers, it is still a great time to get their property on the market, as increased competition amongst buyers drives profits for sellers. Choosing to list your property now will add desperately needed inventory to a starved market, and buyers who have been struggling to find homes will move quickly to get the deal done.
Alyssa Caravella
FIRE ISLAND SALES AND RENTALS
OCEAN BEACH
Since Fire Island is a luxury secondary market with most buyers purchasing second or third homes or investment properties, we have not seen too much of a slowdown in transactions despite the higher mortgage rates in the past year and a half. Nearly half of our buyers are still paying in cash or financing with larger down payments. With rates declining, we expect to see an uptick in interest from those who have been watching from the sidelines as financing terms become more favorable for that specific pool of buyers. From a seller’s perspective, those considering listing their house for sale may be more inclined to do so now that buyer activity is on the rise. Sellers expect to see more showings and overall interest with lower rates on the horizon.
This article appeared in the September issue of Behind The Hedges Powered by the Long Island Press. Read the full digital edition here.