Now that New York has lifted the pandemic-related restrictions it imposed earlier on in the outbreak, we could see a huge influx of people eager to rent out city homes or purchase city real estate of their own. But the demand for housing in New York City's suburbs is still booming, even as things improve on the coronavirus front.
One common destination where former city dwellers flock to is Long Island. Some towns on the island are accessible to Manhattan via a 40-minute train ride or less, which means those who work in the city can maintain proximity to their office buildings while also getting to enjoy the benefits of having a larger home with a driveway and a backyard.
But now's a tough time for the typical house-hunter to buy a home on Long Island for one key reason: Today's buyers are so eager to live there that they're forgoing mortgages and scooping up homes in cash.
Cash transactions have exploded
More than 50% of home sales recorded from the start of 2021 through April for Long Island's Nassau and Suffolk counties were recorded in cash -- meaning there was no home loan associated with those sales, according to Redfin. That's the highest percentage of cash transactions since 2009. (That figure doesn’t include purchases by buyers who waived contingencies.)
Granted, this trend isn't unique to Long Island. On a national level, 30% of home sales were made with cash between the start of 2021 through April.
But what is unique to Long Island is higher-than-average home prices. The median home price in Nassau County, for example, was $638,000 in May. On a national level, the median home price in May was $350,300.
A prime opportunity for real estate investors
The fact that cash transactions are ruling Long Island's real estate market is bad news for the average homebuyer. But for real estate investors, it's a key opportunity. Real estate investors commonly have more access to capital than your typical buyer, namely because they can leverage the equity in their existing properties to eke out cash as they need it.
Buying Long Island homes today is a move that could serve many investors well. Between now and the end of the year, more and more employers are apt to start calling workers back to office buildings. That means those who moved away from the city when the pandemic struck may now have no choice but to find their way back. Those wanting more space may seek to rent houses on Long Island, giving investors a chance to rake in the dough.
Plus, Long Island homes are likely to appreciate in value over time -- even in spite of today's inflated prices. Proximity to New York City alone is enough to make that happen.
Of course, some real estate investors don't like tying up huge amounts of cash in homes and would rather go the mortgage route. But those with access to cash could really set themselves up for success by scooping up Long Island properties today.