Nov. 3, 2021

What Higher Inflation Could Mean for the Long Island Housing Market

If you’ve been to the grocery store lately or tried to book a hotel, you’ve seen the effects of inflation in today’s economy. Supply chain issues and labor shortages in multiple industries have contributed to price growth almost across the board. In the last year, home prices in the US rose almost 20% and are expected to climb another 8% next year

 

With all this added expense on goods, services, and necessities, should you be worried about inflation? Perhaps more concerning, should you be worried about how inflation will affect the Long Island housing market in the coming years?

 

Put simply, while inflation can be a cause for concern about the overall health of the economy, real estate remains one of the most solid investments you can make in today’s market. Here’s why:

 

Housing is Unlike Other Products on the Market

 

Houses, like anything else, are ultimately a product. However, unlike other products which can become severely devalued, or even worthless depending on market fluctuations, housing will always retain some value. People need places to live, whether they’re buying or renting. That’s one of the reasons real estate is viewed as a solid investment, no matter what’s happening in the market. 

 

Even if talk about hyper-inflation concerns continue, it’s still a good idea to buy a home if it makes sense for your situation. Home prices on Long Island are up 12% from last year at this time, meaning you could sell your existing property for a great price. If you’re a buyer looking to own for the first time, buying a home on Long Island now means you can lock in a great interest rate. You’ll also benefit from having a little more spending power to get that property you really want. Whether selling or buying, we would love to work with you. Our team has helped tons of people on Long Island this year and we’re gearing up for a busy 2022. Let us help you make your next move!

 

Owning a Home Provides for Steady Housing Costs

 

One of the benefits of a fixed-rate mortgage is just that: a fixed interest rate. That means your monthly mortgage payments will stay the same over the lifetime of your loan, rather than fluctuating due to the market and consumer demand. While you still have property taxes and other expenses for your home that can change, the lion’s share of the cost of holding onto your largest asset will remain steady. 

 

If you haven’t yet taken the opportunity to refinance and secure a lower rate on your mortgage, now is truly the time. Interest rates are already rising and on track to continue their climb into 2022 - the Mortgage Bankers Association predicts rates will hit 4% by the end of next year! Inflationary conditions also influence interest rates, so again, lock in that low rate now. If you need a referral for a great local lender on Long Island, reach out to us – we have several trusted contacts we can refer you to. 

 

Look to Existing Homes, Not New Homes

 

Most everyone dreams of building their own home with custom features and amenities. However, due to the cost of lumber and other construction materials, the cost for new homes is up significantly and likely will remain high for some time. 

 

While the inventory of homes in the Long Island market is down, buying an existing home may end up being more affordable than building from the ground up. If you’re looking to buy on Long Island, click here to browse all available homes on the market and set up a free account to get alerts whenever a new property is listed.

 

Be Cautious, Not Afraid

 

In times of inflation, it’s important to be cautious and not overextend yourself. However, that doesn’t mean you have to be afraid and stay in a situation that doesn’t serve you. If your current home is not working for your needs, don’t be afraid to make a move. Meet with a lender to find out what you can afford to buy and then set a purchase budget that feels comfortable. Buying at the top end of your budget rarely makes sense in any market. 

 

If you currently own a home on Long Island, you likely have increased equity you can put toward your next home. Click here to get a quick, free estimate of its current value or reach out to us to receive a personalized valuation. You might be surprised at what you can get for your Long Island property in today’s market. 

 

With the economy still finding its way back after the effects of the COVID-19 pandemic, no one is certain exactly how things will shake out. However, we can count on the Long Island housing market continuing to be a good investment opportunity. Whether selling or buying, there’s a lot of upside in today’s market. If a move this year or next makes sense, give us a call to take the next step! 

Sept. 27, 2021

How the Delta Variant Could Affect the Long Island Real Estate Market

With surging COVID-19 cases and the Delta variant increasingly in the news, there’s some concern in the Long Island community that we might return to the early days of the pandemic. Mask mandates, schools closing, and certain businesses deemed non-essential.

 

The real estate industry has proven its resilience in adapting to the novel coronavirus by implementing new health and safety procedures. However, if COVID cases continue to rise, what will that mean for the Long Island housing market?   

 

Determined Buyers and Sellers Will Likely Stick It Out

 

This time around, we know what we’re dealing with. Many people are vaccinated or have already had COVID. This means buyers and sellers who really need to move are unlikely to back off. Some sellers may pull their homes off the market, but many will likely stay the course knowing that there are still buyers out there ready and willing to jump through whatever hoops are necessary to get a home. We might see some change in available inventory and the number of closed sales, but it’s unlikely to be as dramatic as it was at the beginning of the pandemic. 

 

Virtual Tours and Showing May Make a Comeback

 

While a lot depends on how much the Delta variant causes the pandemic recovery to backslide, we might see more agents and sellers opting to use 3D and virtual tours as a pre-screening mechanism for prospective buyers. That way they limit the number of people entering a home to only the most serious of buyers. Virtual showings have tapered off somewhat as we’ve returned to normal on Long Island, but we could see a rebound in the months to come.

 

Interest Rates Will Stay Low

 

Despite the Fed’s declarations that interest rate increases are on the way, turbulent times tend to have an insulating effect on interest rates. Just don’t expect a dramatic decrease as rates are already near historic lows. Mortgage rates may dip a bit, but it’s more likely that the Fed will just reverse course and push back their planned rate increases until later in 2022 and 2023. Either way, prolonged low interest rates will continue to incentivize many buyers to not wait and buy now – Delta variant or not. On Long Island, where we’ve struggled with limited inventory and intense buyer competition over the last year, low interest rates will continue to propel multiple offer scenarios and bidding wars. 

 

Home Prices Will Continue to Rise

 

While the rate of home price growth has shown signs of slowing over the fall and winter, if buyer competition intensifies it will put more pressure on home prices as people fight to secure one of the few available homes. Many communities on Long Island have already seen record-high sales over the last twelve months. A new wave of intense buyer activity could push those prices higher still. For the latest in Long Island market data, click here

 

No matter what happens with the Delta variant, the bottom line is this: the Long Island housing market is likely to weather the changes just fine. We have more information about the virus and more tools in our arsenal to keep people safe. Determined agents and clients sustained the market in the early days of the pandemic and they will do so again. We’re also rounding the corner into the traditionally slower part of the year for home sales. Some drop-off is to be expected and, in the end, it may be hard to determine how much of that is due to rising COVID cases and how much is just normal seasonal adjustment. 

 

If you want to list your home this fall or start your search for your Long Island dream home, we’re here to help. With our innovative and tech-forward approach to real estate, we can help you adjust and stay the course no matter what obstacles the Delta variant presents. Reach out to us today to get started!




July 23, 2021

Housing Inventory is Increasing on Long Island: What’s Driving the Change

As Long Island prepares for the traditional second wave of real estate that happens in late summer and early fall, there’s good news for prospective home buyers this month: inventory is finally increasing.

 

What’s behind this change and, perhaps most importantly, will it last? Here’s what we think is driving the shift in Long Island real estate.

 

Sellers Have Been Tempted Off the Sidelines by High Prices

 

After months of rising home prices, including record-breaking sales all over Long Island, some sellers have been tempted to see what they can get for their own property. This temptation to list and cash out while the market is hot contributed to an 11% increase in the number of new homes that hit the US market in June. While inventory is still down more than 40% from a year ago, it’s encouraging to see a significant month-over-month increase. July market data is not finalized, but the number of new homes for sale on Long Island has definitely increased in recent weeks.

 

Want to see the latest market data for your community or zip code? Reach out to us!

 

The Market Has Started to Top Out and Come Back to Reality

 

There’s a ceiling to every market and we may have finally reached it on Long Island. Homes are only worth what a buyer is willing to pay for them. If prices rise too high and too fast, buyers won’t buy. It’s as simple as that. If buyers won’t buy, that means sellers will need to consider price reductions. Overall days on market will increase as result. 

 

Despite the change, sellers on Long Island are still getting great prices for their homes. Curious what yours is worth? Click here to request a free estimate.

 

The Recovering Economy Has Encouraged Some People to Move

 

The post-pandemic economic recovery has been stronger than expected. More than 850,000 jobs were added in the US in June. Unemployment rates fell to pre-pandemic levels. The Federal Reserve also announced they will raise interest rates twice in 2023, a move that reflects their confidence in the forward momentum of the economy.

 

One surprise for the job market in recent months has been the number of people who are quitting their jobs or changing careers. Nicknamed “The Great Resignation,” many people have decided to look for other opportunities that either allow them to telecommute or involve less of a drive to the office. Others, encouraged by the strength in the economy, are seeking higher pay and more career opportunities. With millions on the move, people are doing what they always do when they’re navigating a big life change: putting their homes up for sale. 

 

Bottomline: While There Are Still Plenty of Buyers Out Looking, It’s Not Such a Frenzy Anymore

 

During the first half of 2021, the Long Island housing market was a whirlwind of eager buyers and determined agents trying to get homes for their clients. Bidding wars were common, and buyers were willing to pay well over asking for the home of their dreams. Some people waived their inspection contingency and even paid the seller’s closing costs alongside their own. That type of market simply can’t last forever. Now, we’re seeing that shift. 

 

Whether people have grown weary of fighting to get a home or have put their plans on hold while they travel to see loved ones this summer, the market feels just a bit more relaxed. There are still way more interested buyers than there are homes for sale and while many properties do receive multiple offers over asking, buyers are acting a bit more rationally. They’re willing to walk away if the demands are too great or the price is too high, putting pressure on unrealistic sellers.

Where there’s change, there’s always opportunity. After months of such a strong seller’s market, there’s a bit of hope for prospective home buyers. If you’re been thinking of selling or need to sell because your home no longer fits your needs, it’s still a great time to list. Home prices are up across Long Island and with the right agents to market your home, you’re sure to get a great offer. Check out some of our recent featured sales hereand if you’re ready to make your move, give us a call today

June 23, 2021

Best Things About Living on Long Island

Working on Long Island and selling some of the area’s most beautiful homes has given us a deep appreciation for what makes this community truly special. With more than ninety distinct towns and villages, there’s so much to love about living here. 

 

Though if we had to choose, here are nine of the absolute best things about living on Long Island. 

 

Driving Distance to Plenty of Beautiful Beaches

 

Long Island is only about 23 miles wide at the widest point. That means you’re always within driving distance of the beach! Whether you’re more of a North Shore or a South Shore person, Long Island offers miles of coastline to explore. Find your new favorite beach this summer – find information about beaches on Long Island here.

 

Lots to See and Do for All Ages

 

While Long Island doesn’t have the nightlife of New York City, there’s still plenty of activities for people of all ages. Historic sites, museums, gardens, and the aquarium are all popular choices for residents and tourists alike. Some of our favorites include Old Westbury Gardensthe Planting Fields ArboretumLong Island Aquarium, and the Cradle of Aviation Museum. Petting zoos, farm tours, berry picking, and pumpkin patches provide outdoor fun for kids and adults. Neighborhoods parks host events all year long. If you’re more into theatre and the arts, Long Island has a number of different institutions that put on shows throughout the year – click here to see what’s coming up next.

 

Abundance of Water Sports and Activities

 

Owning to Long Island’s unique geography, with the open waters of the Atlantic Ocean on one side and the Long Island Sound on the other, there’s no shortage of water activities you can enjoy. From sailing to swimming, kayaking, fishing, and even surfing, if you love the ocean, you will love living on Long Island.

 

Gorgeous Landscape to Explore

 

One of the best things about living on Long Island is the gorgeous scenery that changes with the seasons. Unlike some parts of the country where you have to suffer through a few months of bad weather, all four seasons on Long Island have their unique charms. From snow-covered landscapes to flowers in spring to summer days on the beach and the turning of the trees in fall, miles of walking and bike trails allow residents to enjoy Long Island’s natural beauty throughout the year.

 

Emerging Wine and Craft Beer Scene

 

Over the last twenty years, a thriving craft beer scene has emerged on Long Island. With more than sixty craft breweries and tasting rooms, it’s easy to spend an afternoon enjoying a pint with friends or checking out a beer festival. 

 

Along with craft beer, you can find Long Island’s wine country situated in western Suffolk County. With vineyards and wineries dotting both the North and South Fork, locally grown and cultivated grapes lend themselves to unique wines. Wine festivals and vineyard tours are held throughout the year.

  

Close to Montauk, the Hamptons, and Fire Island

 

What if you could vacation close to home? On Long Island, it’s easy to get away for the weekend and visit some of the top tourist destinations in the country. The Hamptons have long been the summer vacation playground for the rich and famous – with good reason. The gorgeous beaches and picture-perfect beach towns make it a great choice for a summer escape.

 

If you’re looking for a different sort of adventure, Montauk is less crowded than the Hamptons while still offering the same idyllic coastal experience. Don’t miss the iconic Montauk Lighthouse, the oldest lighthouse in New York. Or head to Fire Island, which feels like a trip back in time. With little car access on the island, most people walk or bike to get where they’re going which lends itself to a slower pace of life. 

 

Rich with Historical Sites and Landmarks

 

The history of Long Island is as old as the United States itself. While the town of Southold holds the distinction of being the first English settlement in the area (dating back to 1640!), there are historic homes and sites all over Long Island from the seventeenth, eighteenth, and nineteenth centuries. From sprawling Gold Coast mansions to the birthplace of Walt Whitman, Long Island is an exciting place for history buffs.  

 

Great Local Restaurants and Cafes 

 

Long Island has a great restaurant scene with a wide variety of different dining concepts and cuisines to enjoy. Farms and orchards supply kitchens with the freshest local ingredients – fruits, vegetables, eggs, cheese, meat, chicken, and more can be sourced nearby. With easy access to the ocean, Long Island is also known for its fresh seafood which is some of the best in the country! 

  

Proximity to New York City

 

One of the things residents love about living on Long Island is the close proximity to New York City. Many people used to commute to the city before the COVID-19 pandemic and as offices transition back to in-person work, many people are starting to commute again. It’s also easy to drive to the city for the day and see a show, go to a museum, or visit Central Park. You can also get there by train – click here for more information about rail service on Long Island. 

 

Are you considering a move to Long Island? Get to know the area by learning about all the different communities here. Already own a home here and thinking about moving? We would love to work with you to sell your home for top dollar and find that next property. Get in touch to learn about our seller services.

May 14, 2021

National Eviction Moratorium Could Be Coming to an End

More than six months after the Centers for Disease Control and Prevention (CDC) enacted a moratorium on evictions nationwide that order could be coming to an end. Last week a federal judge in Washington D.C. ruled that the CDC’s order was illegal and must be terminated, though the ban will remain in effect until final ruling. While the CDC has appealed the decision, with vaccinations ramping up across the country and all states moving forward with their reopening plans, it’s likely that the decision will be upheld.

 

In New York, the state legislature signed an extension of the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020, which placed a hold on evictions until the end of August. Even if the nationwide eviction moratorium is terminated, so long as the New York ban remains in effect, landlords and tenants will still need to abide by the state’s ban.

 

As we wait on a final decision about the national eviction moratorium, there’s one question on the minds of many Long Island real estate industry professionals: what comes next?

 

According to CNBC, 1 in 5 renters in America are “are struggling to keep up with their payments amid the coronavirus pandemic.” If the eviction moratorium comes to an end and a renter has fallen behind with their monthly payments, their landlord can move to evict them. This could potentially displace millions of people across the country.

 

Best case scenario, as the economy continues to recover and many businesses hire back workers, the problem could take care of itself. With people going back to work, some renters might have the opportunity to either make up missed payments or work out a plan with their landlord to get back on track and avoid eviction.

 

Worst case scenario, there will be a lot of movement in the rental market and a possible increase in foreclosures across the country if some landlords are unable to keep up with their own mortgage payments. While foreclosure is never a good thing, in the long run it would actually add inventory to an incredibly tight sales market. Some landlords may also opt to put their rental properties up for sale to avoid a foreclosure.

 

Either way, when the eviction moratorium comes to an end, it doesn’t mean we’re heading toward a housing market crash. There is still a ton of demand from qualified buyers who are pre-approved and have the funds to buy, but haven’t yet secured a home. More inventory, even distressed, would be a welcome relief to prospective home buyers.

 

A market correction is much more likely than a crash. If more inventory enters the market, it will help offset some of the current demand for homes. This could slow upward price growth and reduce the number of offers received on an individual property. This is not to say the market would shift from a seller’s market to a buyer’s market on Long Island overnight. It would just mean that instead of receiving over ten offers on their home, a seller might receive two or three. More inventory would mean a more balanced market for everyone.

 

If you currently own a residential investment on Long Island that you’re thinking of listing, we would love to talk with you about how we can help you get that property sold quickly. Check out some of our recently sold properties to get an idea of how we market homes. We also have plenty of qualified buyers that are looking to buy a home on Long Island – we might be able to make a match for you from within our own client database. Reach out to us today and let’s set up a meeting to get your property on the market this year.

April 13, 2021

What a Low Inventory Market Means for the Next 6 Months of Home Sales on Long Island

With the first quarter of 2021 officially in the books, we can say we’re definitely in one of the tightest and most competitive real estate markets we’ve witnessed here on Long Island! Thanks in part to the exodus from New York City that started last spring and hasn’t let up since, prospective home buyers are still competing for homes across every price bracket. With many sellers still hesitant to list their properties, the few homes that are available usually sell in just days with multiple offers. 

 

CNBC recently posted a report about the state of the U.S. housing market that mirrors the pain we’re feeling here on Long Island. According to data from the National Association of Realtors (N.A.R.), the number of pending home sales fell more than 10% in February 2021 from the month before. N.A.R. also reported that there were “just 1.03 million homes for sale at the end of February, a 29.5% drop compared with February 2020. That is the largest annual decline ever and the lowest supply on record.”

 

Last month, we brought you our predictions for the Long Island spring real estate market. Since then, inventory has continued to decline on Long Island – we only have about two months of available inventory right now. In a normal, balanced market we would expect to see six months of inventory or more. 

 

As a homeowner, a prospective seller, or a potential buyer, it’s important to understand how these historically low inventory conditions will shape the next six months of real estate sales on Long Island. 

 

For sellers, you can expect your home to be met with a lot of interest from buyers. However, that doesn’t mean you should go it alone just to save the commission. It’s never been more critical to have an agent on your side. Working with an experienced real estate team will help you sell for the highest price possible while ensuring you go under contract with the strongest offer and buyer. Due to the extreme competition in the market, many agents are getting very creative with their offers. While cash is often king, there can be certain terms tucked away in another offer that actually makes it a better choice. Your agent will help you make sense of all the offers you have on the table so you can make the best decision for your situation.  

 

If you’re planning to buy this year, it’s important you know how competitive this market is. Even with the best agent fighting for you, you’re probably going to need to put in at least a few offers to get one accepted. Buyers don’t have a lot of negotiating power so be willing to listen to your agent’s counsel. This is not the time to lowball. Be prepared to put in your highest and best from the very beginning. Then, be patient. Homes are going under contract every day. If you choose the right agent to represent you and really listen to their advice, you can be one of those lucky buyers, too.

 

Finally, as a homeowner you’ll want to keep your finger on the pulse of this market. Every month, we pull reports for Nassau and Suffolk counties and post them on our website. What we’re seeing right now on Long Island is a huge increase in closed sales. The number of closed transactions for homes over $1 million is up 120% from last year at this time! For properties under $1 million, closed transactions rose 40% annually. Even if you have no plans to sell, this is important information to know. Increases in closed sales like this indicate a very strong seller’s market, which contributes to rising home prices. Your home may be worth quite a bit more and your equity might have also increased substantially since the last time you checked. Remember, you can request your free online valuation any time by clicking here or reach out to us to request a more personalized estimate. 

 

No matter where you’re sitting, this market is one to watch. Even if we were to suddenly get a flood of new inventory, there’s so much pent up buyer demand that things won’t change overnight. While the next six months will probably hold some surprises, these low inventory conditions will likely be with us at least into Fall 2021.  

 

Questions on what the market looks like in your neighborhood? Not sure if it makes sense to cash out your equity and sell now? We can help. Contact us any time for free market information, sales reports by zip code, and more. 

March 12, 2021

Long Island Spring Real Estate Market Predictions

In February of last year, we laid out our predictions for the Long Island spring real estate market. While no one could have predicted what would happen just a month later with everyone going into lockdown and real estate sales effectively coming to a halt until June 2020, the housing market on Long Island quickly rebounded during the second half of the year.

 

This year, things are shaping up to be a bit more normal. We’ve already been busy helping sellers and buyers make early moves in 2021, ahead of the usual selling season. With spring just around the corner, here are our thoughts on what’s ahead for Long Island real estate.

 

Buyer Competition Will Remain Fierce

 

The early days of the pandemic saw many people leaving New York City for Long Island. A year later and buyer demand for homes remains as strong as ever. With the vaccine rolling out, kids returning to school, and workers going back to the office, people are hopeful. This optimism, along with continued low interest rates, have propelled many prospective buyers into the Long Island market. However, with inventory continuing to stay near record lows, buyers are finding the marketplace crowded and competition fierce.

 

If you’re planning to buy this year, be prepared to move fast. Homes often go into escrow just days after being listed. Working with the right agent that knows the market and has the negotiation skills to get offers accepted is critical. You’ll also need a certain amount of patience and resilience to buy in this market. Many buyers make several offers before finally going under contract.

 

 

Home Prices Will Likely Not Waiver Much

 

Across the country, home prices are expected to climb 5.7% this year.  Here on Long Island, thanks to all the buyer demand in the real estate market, low housing supply, and low mortgage rates, we anticipate home prices remain strong during the spring and summer. Multiple offer situations help drive up prices, with buyers doing everything they can to entice the seller.

 

If you’re planning to sell your Long Island home, this is good news for you. Yet even in a hot seller’s market, it’s important to work with a team who can help you get top dollar for your home. First impressions still matter and homes that are marketed properly will draw the attention of more prospective buyers. More attention means more offers for you. More offers usually mean more money in your pocket at the closing table.

 

 

Inventory May Increase

 

Though we’ve had months of persistent low inventory conditions on Long Island, with a rosy economic outlook, the optimism of a new stimulus plan, and widespread vaccine rollout ahead, more sellers may opt to list their homes in 2021. While it likely won’t be enough to offset the current demand, more inventory may make things a little easier for prospective buyers.

 

 

Interest Rates Will Likely Inch Up

 

While interest rates will remain low throughout 2021, rates have started to creep up in recent weeks. The 30-year fixed mortgage rate hit 3.26%, the highest it’s been since July 2020. Still, with rates under 4%, most buyers see the wisdom of buying a home now to lock in a great rate.

 

 

The Housing Market Won’t Crash

 

In recent weeks, the rumbles about a potential housing market crash have gotten louder. Many people point to sustained home price growth over the last few years as evidence that the market may be headed for a crash. After all, what goes up has to come down right?

 

Yet out here on Long Island, it’s easy to see that it’s just basic economics at work.  As we have mentioned many times, low supply and high demand, coupled with the historically low interest rates will continue to fuel this aggressive real estate market.

 

While only time will tell, it seems unlikely that the housing market will crash in 2021.

 

 

If you’re planning to sell or buy a home on Long Island this year, we would love to earn your business. Our innovative, targeted marketing strategy has helped many of our clients sell their homes for record prices. If you’re looking to get top dollar for your home, check out some of what we do to successfully market your home here. You can also request a free estimate of your home’s current value today. If you have questions about the market or would like to see an updated activity report for your neighborhood, reach out to us.

 

 

Feb. 16, 2021

How a Repeal of the SALT Cap Would Help Long Island Homeowners

A new administration in the White House means a new opportunity for New York lawmakers to push for a repeal of the SALT cap. With President Biden sworn in and changes to the makeup of the House and Senate, conversation about the SALT cap has renewed with support from Governor Andrew Cuomo, Senate Majority Leader Chuck Schumer, and Congressman Tom Suozzi, among others. Both Schumer and Suozzi introduced legislation in late January to the newly Democratic-controlled House and Senate.

The SALT cap was enacted in 2017 by former President Trump as part of his tax reform package, the Tax Cuts and Jobs Act (TCJA). Among other changes, the TCJA placed a limit on the deduction for state and local taxes (SALT) that a taxpayer could claim. For singles and married couples filing joining, the SALT cap is $10,000. Homeowners in New York pay some of the highest property taxes in the country and many critics of the TCJA argued that it subjects New York residents to double taxation. A repeal of the SALT cap would allow Long Island homeowners to fully deduct their state and local taxes from their federal taxes. According to WSHU, “the average homeowner would claim $18,300 a year, if the cap was repealed.”

In the wake of the pandemic, supporters of the repeal argue that the benefits of such a move would be even more strongly felt now. They believe it would put more money back in the pockets of the average Long Island homeowner, who may be struggling under the weight of medical bills, job loss, or a decrease in income as a direct result of the coronavirus. Governor Andrew Cuomo argues that it would also return more money to the state – to the tune of about $34 million a day in tax revenue.

On the opposite side of the table, those who support keeping the SALT cap in place view this question of repeal primarily as a vehicle to provide a tax cut to the wealthy, not to the poor or working class. They argue that the people most affected by the SALT cap are the top 1% of earners who are also the least likely to have been affected by COVID-19 in the first place as they don’t work essential or frontline jobs.

While we’ll have to wait and see how the newly introduced legislation plays out, with Democrats in control of the White House and both houses of Congress, many people think it’s likely the SALT cap will be repealed in the coming months. That means Long Island homeowners may see a cut in their taxes. As a result, we could see increased support of the Long Island economy through purchases made to local businesses and restaurants with that extra cash. From a real estate perspective, more buyers and sellers may decide to enter the market. This is particularly good news if the repeal of the SALT cap encourages sellers to list their homes. During much of 2020, inventory of available homes in the Long Island market was unable to meet buyer demand, leading to high home prices and short market times. Buyer demand for Long Island homes isn’t expected to ease anytime soon so more inventory would be a welcome change.

Wondering how the new administration is already affecting the Long Island housing market? Thinking of making a move later this year? Reach out to us learn more about the current market conditions and how we can help you, whether you’re planning to buy or sell on Long Island.

Jan. 11, 2021

2021 Long Island Real Estate Outlook: What a Biden Presidency Means for Real Estate

With the start of a new year and about ten days to inauguration day for President-elect Joe Biden, you may be wondering what 2021 holds for the Long Island real estate market. 2020 was a fantastic year for the housing market, despite the challenges presented by the COVID-19 pandemic. Low inventory, high buyer demand, and low interest rates contributed to record home prices in our local market. However, with a new administration on the way, let’s look at whether we can expect the good times to last or if 2021 will bring significant change.

 

 

Low Interest Rates Will Continue

 

Presidents don’t set interest rates and so a new administration will not have much effect on the current low rates. According to Bankrate, the Fed “has signaled that it will keep rates low for years, which will translate to little upward pressure on mortgage rates.” That’s good news for prospective home buyers and for the real estate industry as low interest rates helped fuel the home-buying frenzy on Long Island in 2020. While America continues to fight and recover from the effects of the COVID-19 pandemic, we can expect interest rates to stay low this year.

 

 

First-Time Home Buyers Could Receive More Government Assistance

 

During his campaign, Joe Biden promised to provide more assistance to first-time home buyers. With a Democratic House and Senate, we may seem some of these promises come to fruition in 2021. One notable proposal is the First Down Payment Tax Credit, which could give up to $15,000 to qualified home buyers. This tax credit would be “advanceable” which means “homebuyers receive the tax credit when they make the purchase instead of waiting to receive the assistance when they file taxes the following year.” This would certainly help more prospective buyers move into the market, but it won’t help the already competitive environment we have here on Long Island.

 

 

Proposed Higher Taxes for High Income Earners

 

President-elect Joe Biden hasn’t been shy about sharing his opinion that wealthy Americans should pay their fair share of taxes. Biden has proposed raising the “income tax rate to 39.6% from 37% for people making over $400,000 annually. That sets the top rate back where it was during the Obama administration.” While this won’t affect the majority of Americans, high earners do fuel the luxury housing market and we may see that affect luxury home buyers and sellers here on Long Island.

 

 

1031 Exchanges May Go Away

 

For those who aren’t familiar with it, a 1031 Exchange allows real estate investors to save money when buying and selling investment properties by deferring the payment of capital gains tax. This is also called a “like-kind exchange.” While Biden isn’t the first to propose eliminating 1031 Exchanges, if the measure passes it would have a major effect on the real estate market. A 1031 Exchange can be used with both residential and commercial properties so if investors aren’t able to defer their capital gains taxes, we could see a big shift in investment behavior going forward.

 

 

More Pandemic Aid Likely

 

Finally, one item we’ll likely see in 2021 from the new administration is more COVID-19 relief. With the latest stimulus package only delivering $600 in assistance to qualified Americans, it’s likely the discussion of those $2,000 stimulus checks will be renewed after inauguration day. This proposal, which failed in the Republican-controlled senate, may stand a chance of passing now that Democrats control the house and the senate. We’ll likely also see more assistance for businesses in a new stimulus package proposal. Increased help for individuals and businesses could help keep some people moving forward with buying a home this year.

 

 

Thinking of buying a home on Long Island this year? Not sure if it makes sense for you to sell your current home? Let’s talk! We are here to help you with all your decisions surrounding real estate, whether that’s a home purchase or sale. We’ll advise you on what makes sense for your specific situation and then help you achieve it in 2021. Contact us today!

Nov. 9, 2020

Will Raising Taxes in New York Cause the Wealthy to Leave the State?

The question of raising taxes is always a contentious issue, whether it’s talk about raising taxes across the board or just for the wealthy. With the COVID-19 pandemic affecting revenues not only for businesses, but also local government, New York legislators have renewed discussions about raising taxes for high earners.

 

In a state like New York where there is a high concentration of millionaires and billionaires, such proposals don’t exactly fly under the radar. Even Democratic Governor Andrew Cuomo has come out in opposition of a tax hike on the wealthy, citing concerns that it “would only cause them to flee to lower tax states.”

 

That’s something we’ve certainly heard before. The main argument in favor of not raising taxes on the wealthy has always been the fear that they will sell their homes and move to other states or even countries with lower taxes. That would be a big deal for New York if it actually happens. A recent article from CNBC found that, “the top 1% of earners pay 40% of New York’s income taxes and 47% of New York City’s income taxes.”

 

However, as we said above, the idea of the wealthy fleeing high-tax states for greener pastures is not a new one. That means there’s data and studies about what the wealthy actually do when confronted with higher taxes. The most prominent study is encapsulated in a book by Cristobal Young called The Myth of Millionaire Tax Flight. In a 2017 article for The Guardian, Young synthesized the central conclusions of his book which involved analyzing the tax returns of “3.7 million top-earning individuals” in the United States. His conclusion? “Only about 2.4% of US-based millionaires change their state of residence in a given year.” Moving from one state to another is actually more common for people who belong to the middle class and below. When millionaires do move, 85% of the time it has “no net tax impact for the movers.” Young also found that, of the 15% who make a move with a favorable tax impact, “almost all of the tax-migration moves are to just one low-tax state: Florida.”

 

In more recent reporting, The Atlantic published an article just last month on the topic of millionaire tax flight. They found that after the passing of the Tax Cuts and Jobs Act in 2017, which capped state and local tax deductions for high earners, the number of wealthy residents in New York City actually increased. Between 2016 and 2018, the number of people earning more than $5 million and paying taxes in New York City rose from 3,528 filers in 2016 to 4,412 in 2018.

 

Of course, all this data is pre-pandemic. The coronavirus has injected a level of uncertainty into pretty much every aspect of our daily lives. It’s unprecedented in many ways so we can’t entirely predict how wealthy New Yorkers would react now to an increase in taxes. However, on Long Island we have seen an increase in people relocating from the city since the pandemic begin. So much so that, as we reported earlier this summer, home sales increased year-over-year in almost every price bracket, including luxury real estate. What we haven’t seen as much of is people leaving New York entirely. With most people able to work remote for the foreseeable future, people (including the very wealthy) are still choosing to stay in New York state where income tax for high earners is set at 8.82%. Not the highest in the nation, but still substantial.

 

Our conclusion? Based on several independent studies and our own anecdotal evidence of recent Long Island real estate market trends, tax rates do not seem to be the biggest determining factor for where wealthy New Yorkers choose to live. The location independence granted by the COVID-19 pandemic has illustrated the truth of that. Even with the freedom to choose and the means to do so, most wealthy New Yorkers are not leaving the state. Instead, they’re choosing a little more space and a different pace of life for themselves and their families outside the city.

           

If you’re one of many people thinking of making a move this winter or in spring 2021, we would love to work with you. If you own a home currently that you might want to sell, click here to request a free estimate of your home’s current value. You can also view some of our recent sales to see how we’ve helped many people on Long Island take advantage of the strong seller’s marker. Thinking of buying? Start your search today by learning about Long Island’s best neighborhoods or browse all homes for sale.