BY MICHAEL STAHL
In the wake of scanning Douglas Elliman’s first quarter Queens residential sales market report, the executive manager of sales at the company’s Long Island City office says he was not at all surprised with their findings particularly the numbers outlining the fact that sales volume was down 18.7 percent when compared to last year’s inaugural three months.
“It just verified what all my agents were yelling at me,” Glessman said. “It’s 100 percent accurate.”
With interest rates microscopically low, the economy scaling a new phase of recovery and the presence of outlandish prices in both Manhattan and Brooklyn, the other Borough on the other island is suddenly home to the hottest real estate market perhaps in the entire country. One could even say it’s too hot, as inventory across Queens has been staggeringly truncated.
The average number of Queens residential sales in each month according to the report hovered around 800, which is roughly half of what was being sold in the first quarters of 2006 and 2007, just prior to the infamous housing bubble burst. But more recently, in quarters towards the end of 2013 and at the beginning of 2014, sales volume was 30 percent higher than it was this past quarter. The good news—depending on whom you ask—is there’s almost an exact negative correlation between inventory dearth and price maturation. Median sales prices in Queens jumped 20.7 percent to $446,434 from the same period last year, the ninth increase in the past 11 quarters. Still, the average home spent just 85 days on the market, representing another sharp change from last year’s first quarter, which posted an already tidy 97 days.
“We put something on the market last week and it already received an offer,” Glessman said, crediting the hyperactivity to more market-savvy agents and less greedy sellers that all know how to fairly price a property these days. So, even when there’s a shimmer of inventory, it’s gone in a blink.
Glessman is certainly looking forward to the opening of more luxury residential condominiums in Long Island City in the coming months, but those few developments alone won’t solve the inventory problem as they too are expected to sell quickly. In his mind, only the resale market will provide consistent opportunities for buyers. His hope is that over the course of the next year or two, homeowners will see the prices of these new units and feel compelled to take a fresh look at the equity they’ve built up in their own property. Should that happen and resales begin popping up, the market would likely be even more active, and prices will moderately stabilize.
One type of property has been immune to the price hikes in Queens, regardless of the inventory lag. Over the past four years, condominium costs have virtually flat lined, save for a swift rise and fall in the summer of 2013. A typical Queens condo commands slightly more than $450,000, the same as it was in 2011, and not much less than it’s peak median price of about $500,000 in early 2009. On the other hand, co-ops—those units trapped somewhere between the rental realm and the land of outright ownership—have seen a surge in sales prices the past two years. In the first quarter of 2013, a Queens co-op cost roughly $180,000. Today, the average price is $40,000 higher.
“Co-ops are attractive especially in Sunnyside, Woodside, Jackson Heights, and Long Island City,” Glessman points out. Those Western Queens neighborhoods attract young, emerging professionals who can’t quite meet Manhattan prices and appreciate the quick city commute.
“With co-ops, it’s definitely the affordability factor,” Glessman adds. “A one-bedroom condo is selling for $900,000 in Long Island City right now, but you can get a beautiful co-op for $400,000. They’re a great way for first-time buyers to get their feet wet.”
The only real blemish for the Borough on the market report—there’s not much anyone can do about the undersized inventory caché, and certainly the high demand is more than welcome—is that the Northeastern area of Queens, which includes the neighborhoods Bayside, Whitestone, Douglaston, Flushing, and others, saw a continuation of decreased sales. In last year’s first quarter, 908 units were sold. In 2015’s first quarter, just 700 were purchased—a slip of 22.9 percent. More poignantly, in each of the last four quarters, regional sales figures have gone down.
Glessman attributes this lone unfortunate trend to the attitudes of buyers now entering the Queens market. Part of the reason Western Queens is seeing so much action, he says, is due to its proximity to Manhattan, which, obviously, Northeastern Queens can’t match. But those buyers in Western Queens are also looking to purchase either condos or co-ops in amenity-laced buildings, similar to what can be found in the city, just, of course, at a cheaper price. “It’s more like suburbia out in Whitestone and Bayside,” Glessman said. “There are people who need to be near the city, but they’re going to pay more. There are also people who need a bargain, and they will look east.”
Given that observation, Glessman advises people to buy into neighborhoods like Long Island City, Astoria, Sunnyside, Woodside and Jackson Heights because that is where they will gain the most equity on their property. “Maspeth is a lovely area in Queens,” Glessman said. “But I don’t think you’re going to get much of a return in, say, five years.” As one example, he says apartments in Long Island City’s L Haus building that sold for $800,000 four years ago, are asking $1.3 million today.
“I doubt that if you bought a house for $400,000 in Maspeth at that time that you’d get anywhere near $700,000 for it now,” Glessman said.
Still, there are buyers looking to invest and others hoping to plant their roots in a classic, Queens residential neighborhood, landing a dream home at a great price with a low interest rate. Clearly the eastern portion of the Borough is where to look for those deals, but if one is eager to buy, either on the riverside, the bayside, or somewhere in between, Glessman, like every other real estate pundit in the city, instructs prospective homeowners to “get into the market now, and get aggressive.” He says: “The average finance rate over the past twenty years is 6 percent. We’re somewhere between three and four percent right now. It can’t get any better than that, and we might never see this again.”
To view the full report on Queens’ first quarter residential sales, visit their official website at elliman.com.