L.B. brokers shrug at rising interest rates

Ed Chernoff’s 9-bedroom, 6.5 bathroom house on West Beech Street, just listed at $6.9 million, is said to be the most expensive home on the market in Long Beach. 

In a sign of how hot the real estate market still is in the city, Chernoff, 58, said he has turned down several $5 million offers, convinced he will get his price

“There’s a huge amount of money out there,” Chernoff, who made his millions in the eyewear industry, said earlier this week as he stood in the living room of the three-story house that was built in the late 1920s or early ‘30s. It has been designated a historic site by the Long Beach Historical Society.

“The market is insane,” Chernoff said.

It certainly has been, in Long Beach and across many parts of Long Island. But mortgage rates have already risen an average 3.69 percent for the week ending Feb.10, up 14 basis points from the previous week. That is the highest level since January 2020, before the covid pandemic hit the U.S. 

Moreover, the Federal Reserve, hoping to tamp down spiraling inflation, is expected to raise interest rates several times this year, with the possibility of a raise as soon as March. 

But real-estate brokers in Long Beach remain bullish about the market. 

Joyce Coletti of Douglas Elliman, an industry veteran who is the broker for Chernow’s house, said inventory in Long Beach is exceptionally tight and has been since the pandemic began in March 2020. 

“The market is flooded with offers,” Coletti said. “Buyers now understand when something goes on the market, they have to pull the trigger or there will be other (buyers) behind them.”

“I don’t see interest rates affecting buyers at all,” she said.

David Kasner of Coldwell Banker American Homes in Long Beach, said that since the buying frenzy began, a new bottom appears to have been set.  Three-bedroom homes now sell for between $500,000 to $600,000, up from below $400,000 prior to the pandemic.  Even if higher interest rate hikes put a brake on home price sales, the new bottom will remain, Kasner said.

“We have little supply and high demand,” said Leah Rosensweig Tozer of Daniel Gale Sotheby’s. “The pandemic totally gave a shot to the market here.”

Before that, she said, “We were waiting” for a correction. 

According to The Motley Fool, an Alexandria, Va.-based financial and investing company, higher interest rates will impact the real-estate market.  In a recent report, Motley Fool said that last year, 30-year rates bottomed out at 2.65 percent, the lowest point since 1971. But this year, the company said, “You can expect some of that competition to wane. Buyers will pull back slightly as higher rates make homes less affordable, and there should be fewer bidding wars for those still on the market.” 

Martin Melkonian, a Hofstra economics professor, said that historically, fed rate hikes have cooled housing markets. He said there may be more than three rate hikes this year.  “There’s a strong possibility that it will affect the housing market,” Melkonian said. 

But Long Beach brokers see the city as unique – a place that offers a beach, a boardwalk, and downtown shopping, affording it some protection from the national trends.

“I don’t leave this barrier island,” Coletti said, explaining the business is all here. 

Brokers do see Gov. Kathy Hochul’s plan for accessory dwelling units, living spaces in garages, attics and basements as a way to combat the affordable housing crises, as troublesome. Such a program, they say, would remove control by local governments that have protected neighborhoods from overdevelopment. 

“It’s not a good idea to take away a municipality’s power,” said Tozer, who has run for Long Beach city council. “It would kill the rental numbers.” 

But for now, brokers are busy with their clients. And as for Ed Chernoff, interest rates could not matter less. Anyone who wants to buy his home would be so wealthy that no mortgage would be needed. Chernoff himself would not need a mortgage: he has two other homes - one in the Hamptons and one in Bermuda.

He has regrets about selling his home. It was, he said, the center of his family’s life for decades. “Both my sisters got married here,” he said. “Every single holiday, Jewish or Christian, was celebrated here.”

“But it’s time for me to move on to the next phase of my life,” Chernoff said. “This house needs to be used and lived in.”