December 2015 Queens Real Estate Market Update
Home sales slowed again in November as inventory remained tight and prices continued their steady increase. As the end of the year approaches, consensus among economists was that the Federal Reserve would likely increase interest rates in December, and that indeed has happened which solidifies a trend of rising mortgage rates much more likely in the coming year. Rising interest rates affect buyer purchasing power and that in turn will likely affect home prices. StreetEasy.com recently released their 2016 market predictions which includes a prediction that Queens home price growth will slow down next year. We agree with this prediction and believe that the affect will be result of the rising interest rates which now have become much more of a reality & expectation with the fed rate increase this month.
Absorption Rate: 741.83 sales/per mo. (4,451 Sales in last 6 months/6 months)
Current Available Inventory: 3,971
Month’s Supply: 5.4 Months (3,971/741.83)
Last Month: 5.9 Months
Last year: 6.3 Months
*Month’s supply over 6 months is said to favor buyers, month’s supply below 6 months is said to favor sellers, and month’s supply of 5-6 months is said to be a balanced market.
Interest rates began trending up in November amid speculation of a rate increase by the Federal Reserve in December. Currently, Freddie Mac reports the following figures: 30-year fixed rate, 3.97%; 15-year fixed rate, 3.18%; 5/1-year adjustable rate, 2.98%.
Queens Home Sales
Homes sold at a seasonally adjusted annual rate of 656 homes in November, a decrease of 15.2% from October and an decrease of 2.7% from the same month last year. Tight inventory is likely weighing down sales as they have been all year and could be a persistent headwind through the colder months of the year. However, the recent fed rate increase will likely create urgency among buyers that are either on the fence, or barely qualified, so this should lead to an increase in sales in the next quarter. Specifically, residential 1-4 family home sales were down 4.8%, Condo sales were down 31.4%, and Coop sales were up 9.7% compared to November of last year. Over the last 12 months, sales are down .3%.
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Queens Home Prices
Home prices continued their steady increase in November as the median home price rose to $430,000 according to the Long Island Board of Realtors. This was an increase of 1.3% from October and a year-over-year increase of 1.2%. As we move into the winter months, we should begin to see some seasonal alleviation on prices, especially considering the fed rate increase which can ultimately have an impact on buying power for prospective buyers. Year-over-year gains will likely continue throughout next year, however, as predicted by StreetEasy, the gains will most likely slow to a more standard appreciation rate. Specifically, residential 1-4 family home prices rose 4.3%, Condo prices rose 7.3%, and Coop prices rose 5.9% compared to November of last year.
*Economists tend to say that a healthy appreciation rate for home prices is one that follows along with general rate of inflation, about 4-5%.
Queens Housing Inventory
The actual number of homes for sale at the moment (3,971) is down 7.4% compared to last month (4,291), and down 11.1% compared to the same month of the previous year (4,469). This led to the months supply of inventory, which measures the relationship between supply and demand, to dip slightly to 5.4 months due to the drop in sales. For most of the year we have seen a large year over year decrease in number of homes for sale, however, in the last three months, we have seen a smaller decrease which seems to signify that the market is shifting slightly. Let’s see what happens in the first quarter of 2016.
Blog Courtesy of George & Abigail Herrera w/the Queens Home Team at Keller Williams Realty Landmark II.