Hudson Valley Realtors Hoping With Rising Prices Comes New Listings
John Jordan | July 2017
WHITE PLAINS—The majority of the four-county Hudson Gateway Multiple Listing Service territory continued to enjoy sales volume increases in the second quarter, however the falling levels of for-sale housing inventory have constricted the rate of sales growth in most markets.
Realtors interviewed by Real Estate In-Depth said they are hopeful rising for-sale home prices in the Hudson Valley, caused in large part by strong buyer demand and the diminishing supply of for-sale inventory, will prompt homeowners who have previously put off listing their homes for sale to enter the market. One prominent Realtor in the Hudson Valley said the market has reached “an inflection point” where either sales will begin to fall due to critical low inventory levels or more “on the fence” homeowners will see the advantages of this robust market and put their homes on the market for sale, which will supply “more fuel” for a continued robust sales market in the Hudson Valley.
According to the “2017 Second Quarter Residential Real Estate Sales Report for Westchester, Putnam, Rockland and Orange Counties” released earlier this month by the HGMLS, Realtors participating in HGMLS, a subsidiary of the Hudson Gateway Association of Realtors, Inc., reported a total of 4,726 closed residential transactions during the second quarter of 2017, an increase of 4.4% region-wide from last year.
Orange County led the four-county HGAR/HGMLS region with a 13.8% increase in sales (1,098 transactions) in the second quarter as compared to the same period last year. Rockland County netted a 9.8% rise in second quarter sales based on 705 closed transactions, followed by Westchester, the most populous of the serviced counties, which registered 2,642 sales for an increase of 1.0% over last year’s totals. Putnam County was the only county to report a decrease in single-family residential sales (5.1%) but an increase in residential sales price. Overall home sales in Putnam County were 281 closed transactions in the second quarter, down 7.0% from a year earlier.
The HGMLS report noted that the region’s inventory at the end of the second quarter of 2017 of 8,713 units was 28.3% lower than those recorded in 2014. All four counties posted double digit declines in inventory in the second quarter as compared to a year earlier—Westchester (-14.6%), Putnam (-22.5%), Rockland (-17.0%) and Orange (-16.9%).
The inventory levels certainly were a key factor in sales prices increases region-wide. In Westchester County, the second quarter median sale price of a single-family house rose 3.1% from a year earlier to $670,000. Orange County scored a second quarter single-family median price increase of 5.6% to $235,000. Rockland County’s median single-family home price for the second quarter rose 2.6% to $441,387, while Putnam Country’s single-family median price shot up nearly 10% to $345,000.
HGAR President Dorothy Botsoe, Broker/Owner of Dorothy Jensen Realty Inc. of White Plains, said that throughout the four-county HGAR market, “Inventory is tight, there are a lot multiple offers. Buyers are getting discouraged because they are getting outbid at every turn.”
She said these market conditions have fueled price increases in all four counties. While Botsoe said she believes more homeowners will put their homes on the market to take advantage of higher sales values, the market is also a “double-edged sword” for the industry because it will price many first-time homebuyers out of the market.
“Prices are going up, but quite a few people are being left behind,” Botsoe said.
She added that although interest rates have risen somewhat, the increase has not put a dent in buyer demand. If there is going to be a bump in inventory it will most likely occur in the late summer and early fall once vacations are over. She expects listings will increase later this year, which she said hopefully will provide buyers more options and put downward pressure on prices.
“The lack of inventory is taking a toll on the business,” she said. “You have a lot of busy agents, but many are not making money.” She related that in conversations with fellow Realtors at her “Pizza with the President” event held on July 11th at Four Brothers Pizza in Mahopac, they said they were busy showing homes, but many of their clients are being outbid and are beginning to get discouraged and even upset with some of their agents.
“The market has to change. Hopefully with more inventory, larger selection and people just calming down a little bit, I think the market is going to level out,” Botsoe related.
HGMLS President Renee Zurlo said in her market area of Orange County, Realtors have been expecting single-family home sales prices to rise due to low inventory levels for some time. She related that buyer demand is “very, very strong” in the $250,000 to $300,000 price range.
“In the Warwick area we are experiencing strong demand in the $500,000 to $600,000 range, which is certainly encouraging,” she added.
Another strong sector of the market in Orange County is new construction single-family home developments. “We are getting a tremendous amount of traffic at all of our projects in Orange County, which I think is a very positive sign,” said Zurlo, who is a regional manager for Orange County and manages the Central Valley office for Better Homes and Gardens Rand Realty.
She said that overall Realtors are seeing an increased amount of multiple offers for properties due to low inventory and in some cases properties selling at above asking price, which has not been the case for some time in Orange County.
Due to the rising price environment, Zurlo noted that some Realtors have experienced “appraisal issues” but she is hopeful that those cases will decrease since there are so many properties in Orange County under contract at the moment.
Orange County continues to have a good amount of supply of foreclosures and REO properties and there continues to be a significant amount of buyer demand for distressed listings. In fact, she said that many distressed properties are attracting multiple offers.
Zurlo is bullish on the continued strength of the Orange County residential market for the remainder of this year. “Because the inventory that is coming in is selling so quickly, we really don’t have anything sitting. Because buyer demand is so strong, we will continue to see prices increase.”
Joseph Rand, managing partner, Better Homes and Gardens Rand Realty, said that while sales were higher in the second quarter, the pace of sales growth in the Hudson Valley has slowed due to low inventory levels.
“For about five years we had sales going up quarter after quarter from the previous year and they are still going up, but they used to be up 15% or 10%, they are now going up around 3%,” he said.
Rand added, “We just need more inventory. At some point people are just not going to buy the homes that are out there until they drop in price.” He said that unless inventory levels change, sales declines are inevitable because “there is no fuel for the fire.”
He said that in talking with his office managers, any listing in Westchester under $600,00 and under $450,000 in Rockland County for example, are in strong demand and are being sold very quickly with multiple offers.
Prevailing market conditions of strong buyer demand and low inventory will continue to produce increases in home sales values. In fact, the sale price increases throughout the region took longer than Rand had expected, due to the prolonged period of low inventory levels.
“The housing market in Westchester and the Hudson Valley continued to show signs of meaningful price appreciation in the second quarter of 2017, with prices up in every county in the region,” Rand said. “With inventory rates dropping and demand strong, we expect this trend to continue through a robust summer and through the rest of 2017.”
In the firm’s market report, the brokerage firm noted that the regional inventory is down to 7.1 months, which is right about at the level of a “balanced” market between sellers and buyers. However, Rand Realty noted that many of the counties’ single-family markets are in the seller’s market range of six months or below, including Westchester County’s single-family home inventory at 5.9 months and Rockland County’s at 6.0 months. Both Orange and Putnam counties’ single-family home sector’s respective inventories are at 6.7 months.
The Rand report’s figures on Westchester County’s condominium and cooperative sectors point to distinct seller’s market inventory levels with condos at the 3.8-month inventory level, while co-ops stood at the 4.7-month level at the end of the second quarter.
Concerning the continued reluctance of some homeowners to put their properties on the market despite the healthy sales climate, Rand related, “I think there have been a lot of people who have been watching and waiting who now that they see prices are going up are going to start to think about putting their homes on the market.”
He added that he has a theory that there is a “whole cadre of homeowners” who were poised to list their homes, but were waiting for their children to graduate high school some years back and the housing market crashed a year too early for them in 2008. Those homeowners then saw their home values fall about 30% and are waiting for their homes to appreciate sufficiently enough to sell.
“Now the kids are five years out of college, getting married and having kids of their own and the parents just can’t wait to get down to Florida,” he theorized.
“Right now we are at an inflection point in the market where you start to see low inventory and high demand start to really put some pressure on prices and then the question will be will the high prices draw people (homeowners) back in the market?” Rand said.
He added that the only factor that could undermine the normal market dynamic that would bring more listings to the market is that if many of these prospective sellers are still under water on value and need much more significant price appreciation before they put their homes on the market.