We frequently hear about how much the real estate market has gone up in price.  In this post we take a closer look at real estate appreciation. What lies beneath the headline number. First we will look at the difference in the appreciation rate between selected towns then we will dive still deeper and examine how house styles within these towns have appreciated. 

We will look at 9 towns in Nassau county, NY.  First we explain why these towns are representative of Nassau. Then we see how each town has its own unique mix of house styles but take note of  a pattern as the towns get more expensive. Next we look at property sizes and see a big difference between towns. Lastly we offer an explanation as to why Ranch style homes, which are generally not the most expensive style in any town, sometimes sell for high prices in the most expensive towns.

Discussions about the Real Estate market often speak as if the market were a single homogenous thing. As if all houses appreciated at the same rate.  This graph shows the change in median sold price for Nassau county but the story is more complex than this single red line.

dis·ag·gre·gate

/ˌdisˈaɡrəˌɡāt/

verb

• separate (something) into its component parts.

When we drill down and disaggregate that red line we notice that there are three color sets divided into two groups. The top 3 lines are separated from the bottom 6. The green lines are towns with above median selling price for Nassau county, the blue are those that sold within $50k of the median, and the red lines are those towns with below median selling prices.

And if we drill down another level we see still more variety. Not only do individual towns appreciate at different rates but so too do house styles appreciate at different rates within a town. In the graph below the towns are arranged according to median selling price with the most expensive on the right. Notice that as the price of a town goes up so does the variation in house style prices.

How Did We Pick Our 9 Towns?

In the graph below is a representative selection of Nassau county towns. Included are the towns with the lowest median selling price, towns that are within $50,000 of the median selling price, and some of the towns with the highest median selling price. As the sale price goes up the quantity goes down. Some towns with even higher median selling prices were not included  because there were too few sales to analyze. And those familiar with Nassau will know there is no such town as The Roslyns. I combined Roslyn, Roslyn Harbor, and Roslyn Heights in an effort to get enough data points and called them The Roslyns. In Nassau in 2023  the median price was $710,000. We are labeling as median any home that sells for +/- $50,000 of that $710,000. We consider our 9 towns representative of towns Below, At, or Above the median selling price.

Note: A word about pricing. The prices are not adjusted for inflation and the numbers  are what they were in the year the house sold.

More than once already we have mentioned homes selling Below, At, or Above the median price as if Nassau had a 3 tier housing market but this is barely so. Nassau looks more like a 2 tier market. There is not as much difference between the Below and At median sections of the market as compared to the Above. For instance, the median selling price of the 3 most expensive towns are multiples of both the Below and At tiers of the market.

The 9 Towns

Notice that even the least expensive towns in Nassau are well above the US median.

Here is a closer look at house styles within each town

In the most expensive towns, Colonials uniformly sold for the most. And so towns that had the most Colonials had the highest appreciation. Why are Colonials special? They are bigger. Capes, Ranches, Split Levels  are rather set in their size. Also we are honing in on another determinant: lot size. The size of a piece of property will be the ultimate determinant of just how big a home can be.

Not every house style is valued equally between towns. The left axis is how many homes were sold in each town between 2006 and 2023. The number inside the box is the median sale price of that style in that town during that period.

The Colonial Effect

Why is it that as towns get more expensive Colonials get more common? Because the biggest homes are Colonials. This is not easily substantiated since in Nassau county square footage is rarely reported. But we can approach this another way.  

Here are the differences in household income between our 9 towns. (source U.S. Census)

The income distribution is remarkably like the distribution of our Median Sold Price by Each Town. The same 3 towns are exclusively off by themselves while the remaining 6 are clustered together.

So let us reframe the question: Why do those with the largest household incomes gravitate to The Roslyns, Port Washington, and Locust Valley? It is not just that Colonials are the bigger houses. They happen to sit on the largest pieces of property. Let us look at property sizes.  For all of that additional income there are not that many places to buy bigger houses.

This graph shows how many homes were sold not per town or per style but per lot size. 

So if you are looking for a bigger house which calls for a bigger piece of property your choices are not infinite. Granted, we are only considering 9 towns but we hold they are representative of Nassau’s housing market. Many towns have properties that are 100 feet x 100 feet or smaller but as you chase bigger parcels your options narrow.

Keeping in mind that some households have substantially more money to spend on housing and only a minority of towns have substantially bigger lots, it follows that some towns would have a significantly higher median home sales price and within those towns the biggest houses would sell for more.

So what about those Locust Valley ranches? Why do these Ranches sell for so much?

These dots represent the homes sold in Locust Valley. Even though Colonials are the most expensive style of house we see examples of Ranches selling for more than colonials. It is better to have a Ranch on a bigger piece of property than a Colonial on a smaller. How do we square this circle? I suspect that those Ranches were bought with the intention of replacing them with Colonials.

To do this we first examine the variations between the 9 selected towns, each town has its own variations in household income, property size, house styles, and so on. Building off of this we then analyzed the pattern in house styles and demonstrated that as towns get more expensive Colonial houses get more common. We  also discovered that a small selection of these towns have significantly larger property sizes which funnels down buyers options when they’re looking for larger properties. Lastly, we offer an explanation as to why Ranches sometimes sell for more than Colonials.