By: Abigail Mago, Licensed Associate Broker
I think it’s safe to say that 2020 has been a wild year for everyone. Despite the economic chaos brought on by the pandemic, the Fire Island real estate market has flourished this year. While we won’t have a complete data set to analyze the full year’s performance until roughly February 2021, recorded sales so far indicate strong market growth in 2020. The average recorded sale price for all of Fire Island so far this year is $909,881. That’s a 10.9% increase from 2019’s average sale price of $820,381, and just above the highest average sale price of all-time which was $907,042 in 2018. While the average sale price is a very useful metric, it can be heavily skewed by any outliers, so it is also helpful to look at the median sale price. While Fire Island’s 2019 median sale price was $750,000, 2020’s median so far is $800,000, which represents a 6.7% increase.
There are a number of factors at play that are contributing to the strength of the market. Covid-19 has caused a large demand spike from city dwellers who are looking to escape to less dense places. Even though Fire Island is not traditionally thought of as a year-round destination, we are seeing many families still utilizing their homes late into the Fall season and planning to stay through the Winter months. Year-round usability was not previously a request made by many buyers, but in the current climate that has become a sought-after amenity.
Another major factor is that with the stock market back near all-time highs, many buyers are looking to real estate as an alternative home for their capital. Those with excess cash are weary of investing their money in what could be the top of the equities market, and many who are already invested have decided to cash out some of their stock portfolios, lock in their gains, and put that money into real estate. As an asset you can enjoy, beach houses are at the top of many savvy investors’ wish lists.
The final major factor at play is obscenely low interest rates. With mortgage rates currently in the mid 2’s, it almost feels as though the bank is paying you to buy a beach house. All of these factors acting at once are creating the perfect storm for an extremely strong market. With such robust buyer activity, inventory is rapidly shrinking, and I believe we are poised for another price jump.