BY JOE MARVILLI
As the City and Borough move further away from the Great Recession, Queens’ real estate market is showing signs of steady growth.
The residential real estate market has improved in nearly every category when compared to the statistics from the first quarter of 2013. Sales are up across the board, with houses staying on the market for shorter periods of time before being purchased. As Manhattan and Brooklyn continue to get pricier and pricier, the eyes of homebuyers and investors are turning towards Queens.
According to a new report by Douglas Elliman and Miller Samuel, the number of home sales in the Borough has gone up, rising 32.8 percent to 3,156 for the first quarter of 2014, compared to 2,377 sales in the first quarter of 2013. This is the highest first quarter total in six years.
Properties are also spending less time on the market, showing that buyers have been hungrier for real estate this year so far. Rather than the 121 days a house was on the market in early 2013, a typical house now averages 103 days on the market. The listing discount, which is the percentage difference between the list price at the time of contract and the sales price, also dropped from 5.8 percent in the first quarter of 2013 to 5 percent for the first quarter of 2014.
“We’re finding there’s definitely a strong demand for homes in the local area, which is Queens and Brooklyn,” Tom Rudzewick, Executive Vice President and Chief Lending Officer at Maspeth Federal Savings, said. “There has been a slowdown for the last couple of years of new residential construction. That’s caused a little bit of an uptick in demand.”
Of course, the boost in sales means that there are fewer options on the market. Listing inventory has gone down to 5,617, a 13.5 percent drop from the 6,496 pieces of property available in the first quarter of 2013. Inventory has fallen to its second lowest level in nine years, setting a record low the previous quarter, with 5,248 units available.
Unfortunately, the strength of the real estate market has also boosted prices. The average cost of a home in Queens has increased by more than 10 percent in the first quarter of 2014, when compared to 2013. The average price of a Queens home for the first quarter was $429,544, up from $389,420, the highest first quarter metric since 2008.
Struggles Among Growth
According to Rudzewick, many homebuyers in Queens are aiming for longer, 30-year mortgages, rather than 15-year mortgages. This is partially due to the continued slow recovery from the Great Recession, making residents more cautious with their purchasing power. While Rudzewick said those long-term mortgages are good, they require “stellar credit.”
He added that the recent financial regulations put in place have added pressure to banks like Maspeth, limiting their ability to lend to and assist homeowners.
“The rules and regulations that have been enforced in the last few years have placed a lot of pressure on homeowners,” he said. “The regulatory rules are so tight. We’d like to see some relief from that, especially as a community bank. We are here to help people who are just starting out.”
David Ostrowsky, the Senior Loan Officer at Investors Bank, added that a problem he is noticing in Astoria and Long Island City is that there are many self-employed residents. Therefore, they have a harder time borrowing and putting together a mortgage.
Despite this, Ostrowsky said that there has been an increase in first-time homebuyers as well as investment buyers. However, the increasing prices can knock some of those first-timers out of the running.
“The values coming up as they have can certainly squeeze out some first time homebuyers. I would say it does cover the full spectrum,” he said.
He added that there has been a decent amount of buy-and-hold or rent-and-hold properties, contributing to the slow and steady increase in the residential real estate market, rather than the boom-and-bust that dominated from 2004 to 2007.
Rudzewick agreed that a slower real estate market appears to be the norm for the near future.
“I think those peaks were an aberration from regulations that were changing and a lack of regulation,” he said. “They moved the real estate market in a peak that we will not see for a very long time.”
Both Investors Bank and Maspeth Bank have a variety of services available to help homebuyers. Investors hosts homebuyer seminars and certified real estate advisor programs as well as offering lending programs, reduced interest rates and other services for low-to-moderate incomes. Maspeth Bank has an assortment of different mortgage plans meant to help everyone from first time homebuyers to those looking to refinance a loan.
While there are trends that cover all of Queens, many homebuyers look to invest in a neighborhood, rather than the Borough as a whole.
One of the most surprising statistics from Elliman and Samuel is that central Queens had the largest market share growth in the Borough over the last six years. Between 2008 and 2014, the area that includes Forest Hills, Fresh Meadows, Jamaica Estates, Kew Gardens, Queens Village and Rego Park has had a 4.7 percent increase in sales share to 25.3 percent. In the past year, sales in that region jumped from 597 to 799.
“I think the central Queens market is increasing because of the overflow from areas that are out-priced at this point,” Rudzewick said. “That, plus the fact that we are such an ethnically diverse center in Queens. There’s an assimilation that people feel. These neighborhoods are absolutely exploding.”
On the other end of the spectrum, northwest Queens only makes up around 14 percent of the market sales for the Borough. Despite the popularity of Long Island City, Astoria, Sunnyside and Woodside, the region has a lower market share than any other neighborhood, with the exception of Rockaway.
Rudzewick said that the cost of purchasing a house in those neighborhoods has gone up too much for many homebuyers to deal with. The average sales price for the first quarter of 2014 was $514,077, the only Queens neighborhood average to go above half a million dollars.
“I think the pricing in the northwest sections of Queens have reached the tipping point and have become overpriced,” he said.
Ostrowsky said that he thought those neighborhoods were still hot, but the numbers were affected by a lack of available properties on the market.
In terms of where to buy in Queens, Rudzewick said that the central Queens market is vibrant and a good investment, along with nearby communities like Flushing, Bayside and Auburndale.
“Those areas are going to continue to rise. The construction aspect of it is going to take a long time to catch up to the demand,” he said. “Those areas that are centrally located will be very important.”
Reach Joe Marvilli at (718) 357-7400, Ext. 125, firstname.lastname@example.org, or @Joey788.