First-time buyers are looking for the urban in suburban

Millennials drive the already tight housing market, taking longer to find the perfect property

Mar.March 01, 2017 07:00 AM

Homes on Nassau’s North Shore, like this two-bedroom in Roslyn

With median sales prices surpassing $1 million in Manhattan and $750,000 in Brooklyn, first-time home buyers are widening their search circles to include Long Island. But that doesn’t mean they’re willing to forgo the convenience of city living, including easy access to train stations, restaurants, shopping and other amenities, and in some cases, minimum property upkeep.

“Today, families with children are busy taking kids to different places, and as a result, there’s no time to be at home during daylight hours,” said Laura Rittenberg, president of Coldwell Banker Residential Brokerage Long Island/Queens, who said many first-time buyers are purchasing condos. “They’re looking for playgrounds and pools, that’s very attractive, but really what makes this lifestyle work is it doesn’t require families to spend time doing yard work and taking care of a house.”

Whether the buyers grew up in the region or are New York City dwellers looking for better value, local brokers say they can’t keep up with them. And although developers are starting to build more in-town projects — often condos — close to commuter lines, there currently isn’t room for the influx.

As Long Island strives to keep up, first-time buyers are flocking to places like Merrick, Bellmore, Port Washington, Huntington and other towns with lots of amenities, good schools and a growing population of young families.

This “new urbanism,” as Jonathan Miller of real estate appraisal firm Miller Samuel calls it, is happening across Long Island. “The impact is being seen in the suburbs with the entry market coming a lot from millennials,” said Miller, who produces the Elliman Report for Douglas Elliman.

The 2016 median sales price for a home on Long Island — excluding the Hamptons and the North Fork — was $388,850, according to a fourth quarter report from Douglas Elliman. That’s a 3.1 percent increase from 2015. The number of sales was up 14.3 percent year-over-year to 26,939. Median household income also began to rise, and even though historically credit is still extremely tight, it began to ease a little, which is another reason for the uptick.

This wave of sales activity started to hit the New York City suburbs in mid-2015, particularly in the counties of Westchester in New York, Fairfield in Connecticut and Long Island’s Nassau, with prices rising with the increased demand, said Miller. At the same time, it’s become more expensive to build properties, so developers focused on the high-end market and paid little attention to the rest.

“So you have housing more expensive than it should be in entry and middle markets, and oversupply in the high-end market,” said Miller. “And a first-time buyer isn’t buying a $3 million house on the North Shore.”

Laura Rittenberg

However, developers are now responding to the demand for entry and middle-market housing across Long Island. Many of the projects planned close to train stations are for rental units geared toward young, single individuals who still want easy access to the city, but other areas are seeing a mix of condos and townhouses, said Mitchell Pally, CEO of the Long Island Builders Institute. He specifically cited Patchogue, Mineola and the Beechwood development Country Pointe Huntington at Huntington Station. There’s also a proposed condo development near the train in Babylon, and one going up by Tritec in Ronkonkoma, Pally added.

In addition to looking in towns with convenient commutes and city-like amenities, buyers are less likely to settle for a fixer-upper. In the past, they might have been open to doing some work on the property, but now buyers are opting for move in-ready homes.

“Homes that need work are not selling,” said Evangelia (Angie) Boudourakis of Daniel Gale Sotheby’s. “If it’s turnkey, they’re fighting over it. They’re not interested in fixer-uppers at all.”

If a home has an unusual layout or is in a town with a challenging commute or higher taxes, there will be a significant price reduction, she said. But if there are no defects, buyers will fight over it and pay top dollar.

Elliman’s fourth quarter report showed that the number of days a home stayed on the market dropped in 2016, from 104 to 93, and the absorption rate also declined, from 5.8 months to 4.7. Still, some brokers observed that first-time buyers are taking their time before committing to a property in order to get exactly what they want in their price range.

“The average length of time a buyer looked for a house has increased,” said Boudourakis. “I used to show 10 to 15 houses and make a deal. But now, there are people looking for two to three years.”

The Real Deal spoke to brokers about Long Island’s most attractive areas for first-time buyers. Because preferences and budgets vary so much, many towns were mentioned, but the following were the most cited areas. 

Nassau South Shore:
Merrick, Bellmore and Massapequa

For those seeking affordability, there are lower median sales prices on the South Shore, said Rittenberg. But prices are on the rise: The company’s fourth quarter report shows year-over-year increases for every town included in south Nassau County.

Merrick and Bellmore are popular for first-time buyers, especially for families, as the towns have good school districts. They’re conveniently located between the Meadowbrook and Wantagh State parkways, and just south of the Southern State Parkway. Plus, they’re close to the water and recreation — Jones Beach is nearby — and “there’s a village, where it’s possible to have good dining and shopping without having to pile everybody in the car,” added Rittenberg.

Coldwell Banker’s recent report shows median prices in Merrick at $525,500 and neighboring Bellmore at $499,900. But deals can still be had in the $300,000s, said Fern Karhu of Realty Connect USA. “In Merrick, you can get a four-bedroom, four-bath expanded Cape Cod with taxes at about $12,000 per year in the $300,000s. In Bellmore, there’s a Colonial asking $375,000. There’s quite a variety of homes in these areas, and they’re very affordable.”

A little farther east is Massapequa, where “buyers get more bang for their buck,” said Boudourakis. The town is near the Suffolk County border, so the commute is slightly longer than from Merrick, but there are three solid school districts in the area, with District 23 the most in demand, she said. There’s also a “great village,” according to Rittenberg. Median prices are $425,000, according to Coldwell Banker, but Karhu noted that homes can start in the low $300,000s. “That’s why it’s a good market,” she said.

Nassau North Shore:
Port Washington, Great Neck and Syosset

It’s no secret that Port Washington has become popular in recent years, thanks to its proximity to the city — it’s only a 36-minute ride on the Long Island Rail Road to Manhattan. It also has a “funky little town” that you can walk to, said Karhu. Port Washington offers several split-level homes and Colonials, with the latter in particular drawing interest because of their upstairs bedrooms. Median prices are steep at $735,000, but that’s a decrease of 8.7 percent from 2015. Karhu had a three-bedroom, two-bath ranch home available starting at $469,000.

One stop closer to the city is Great Neck, which is attracting first-time condo and co-op purchasers. Single-family homes are much more expensive. The median price jumped 2 percent last year, to $912,500, but a two-bedroom co-op with maintenance at $900 per month listed recently for $289,000. Both Great Neck and Port Washington are near high-end shopping and entertainment.

Angie Boudourakis

Toward the middle of Nassau is Syosset, which many brokers said is attracting first-time buyers for the usual reasons: affordability, convenience, a town center with good shops and restaurants, and especially the competitive schools. (Judd Apatow is a graduate.) The town isn’t near either shore, but it’s close to a few country clubs and Stillwell Woods Park, a 270-acre nature preserve in neighboring Woodbury. The median home price is $705,000. Karhu had a listing for a four-bedroom, 1.5-bath Cape Cod for $450,000 with taxes at about $14,000.

Suffolk County:
Huntington and Ronkonkoma

For buyers willing to accept a longer commute, each of these towns has benefits for first-timers.

In Huntington, it’s a vibrant center. “Downtown is spectacular,” said Karhu. “There are great restaurants and shops open late into the evening. It’s almost like Long Island’s version of Williamsburg.”

The train commute to Manhattan is one hour. Co-ops and condos start in the $300,000s. Coldwell Banker’s median home price has stayed relatively steady the past year, at about $500,000.

Ronkonkoma is nearly 1.5 hours away during peak commute times, but it draws buyers for its affordability.

“We’re seeing an awful lot of movement [there],” said Rittenberg. “It has a great train hub, and there is a lot of redevelopment now.” She added that you can find homes in the $200,000 to $300,000 range, and there’s easy highway access, plus good schools. The median sales price last year jumped 11.45 percent, to $312,050.

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