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Homebuyers hoping to snag the house of their dreams as moving season returns on Long Island are in for a reality check as the pandemic continues to loom large over the market.

Median residential real estate prices in Nassau County were up 14 percent in February over this time last year to $525,000 while prices in Suffolk County were up 18 percent to $475,000 for the same time period, according to One Key Multiple Listing Service data. Inventory was down 3.4 percent from January and 24 percent since last year, the data shows.

“There is an insatiable demand for homes right now, and it can’t be met by resales of existing homes, so people are signing contracts for new homes,” said Holden Lewis, home and mortgage expert at NerdWallet.

Low mortgage rates, along with spiking demand driven by a flight to the suburbs in search of lower population density and home office space, have contributed to a surge in real estate prices and driven supply to record lows locally and nationwide. But mortgage rates, which have hovered at or near historic lows for months and contributed to the housing market bouncing back to above pre-pandemic levels, are now on the rise.

Conversely, commercial real estate has the opposite problem. The popularity of working from home and the exodus of people from expensive coastal cities will likely weigh on demand and change workspace requirements, leaving office buildings that do not adjust less valuable. Scott Rechler, chief executive and chairman of closely held Uniondale-based RXR Realty, one of the largest office building owners in New York State, sees a growing disparity between high- and lower-quality properties.

“For buildings that can’t do that — they’re not in the right location, they’re older, they’re obsolete — it could be a meaningful free fall in value,” Rechler said.

LI’s residential real estate crunch has forced some buyers to forgo turnkey options and instead buy vacant land on which they are having new homes built. About 72.4 percent of homes sold nationwide in December were either under construction or yet to be built. 

Higher house prices because of the tight inventory resulting from lack of land and very expensive lumber could push homeownership out of the reach of many first-time buyers. The National Association of Realtors reported that the supply of previously owned homes available for sale plunged to a record low in January. That has pushed buyers toward the market for new homes. Demand for housing is being driven by Americans seeking more space for home offices and schooling as the yearlong coronavirus pandemic drags on.

Those willing to endure the renovations that come with a fixer-upper have more options.

“There are some really great renovation opportunities,” Mala Sander, a Sag Harbor-based realtor with Corcoran Group, told the Press sister publication Behind The Hedges. “It’s not a bad idea to get a house in a great location that needs some TLC.”

According to a survey of single-family homebuilders this month, record-high lumber prices were “adding thousands of dollars to the cost of a new home and causing some builders to abruptly halt projects.” Softwood lumber prices jumped by a historic 73 percent on a year-on-year basis in January.

“Strong demand, a shortage of supply, and rapidly rising prices is the perfect combination of factors that should convince builders that now remains a really good time to get the shovels in the ground,” said Joel Naroff, chief economist at Naroff Economics in Holland, Pa.

-With Reuters

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