Hudson Valley Home Prices Continue to Rise, While Sales Decline
John Jordan | October 2018
WHITE PLAINS—Home sale prices were up sharply in the third quarter in the four-county market area of the Hudson Gateway Association of Realtors, with the exception of Westchester County where sales prices were relatively flat as compared to a year earlier.
Sales volume was off marginally throughout the region, with overall third quarter sales down 5.2% in Westchester; 1.8% in Orange and 1.2% in Rockland, while Putnam County’s sales numbers were flat with an increase of 0.3%.
Market results were mixed depending on product type and location. Realtors interviewed by Real Estate In-Depth said that while some negative market influences, specifically the cap on SALT deductions, low inventory and higher interest rates, may be impacting some buying decisions, it is way too early to tell just what real impacts they will have on the market going forward.
Westchester County posted a third quarter median sale price for a single-family home of $679,000, which was slightly lower than the third quarter of 2017 ($680,000). The median sale price for a single-family home in Putnam was $360,000, up 5.9% from the third quarter of 2017; the median sale price in Rockland was $475,000, up 6.7% and the Orange County median was $275,000, up 7.8%.
Hudson Valley Home Sales—Third Quarter 2018
County Change from 2017
Paul Breunich, president and CEO of William Pitt and Julia B. Fee Sotheby’s International Real Estate, said in connection with the Westchester County market that the declining sales numbers, while noteworthy, are not a sign of a troubled market. He insisted that the market appears to be in transition and that most market observers expect home sales to fall between 4% to 6% for the year countywide.
“The market is in an adjustment period and is in flux,” Breunich said. “With what is going on in the economy—the stock market, GDP, (low) unemployment and consumer confidence through the roof, that is all pointing to a very strong, healthy real estate market, but that is not being reflected in our marketplace, yet.”
Breunich said that he is concerned about consumer market perceptions of a severe downtown in Westchester home sales based on erroneous sales numbers released recently by a local brokerage firm that garnered national media coverage.
“These news stories have contributed toward an exaggerated negative narrative about the state of the real estate market in Westchester, spreading misinformation and miseducating consumers,” Julia B. Fee Sotheby’s stated in its third quarter market report on Westchester County. “The actual picture is dramatically different, according to our own analysis, and varies greatly by town and price range.”
He noted that the market is seeing a decline in sales, but not double digits as was erroneously reported in the press. He also said that some locations are stronger than others both in terms of home sales volume and pricing.
“You have to look at the reality of it,” Breunich said. “The market is still down five to six percentage points. That is not something to pull the fire alarm on about, but it is something to be aware of.”
He added that the federal tax reform law and the cap on SALT deductions might be having some impact on demand. However, there are other factors that influence demand, such as high consumer confidence and the strong economy, for example, and the market is working through all the factors, both positive and negative.
While bullish on the future of the Westchester County residential market, Breunich said the real estate market is no longer booming, but is in transition. He said it is too early to tell the true impact of federal tax reform and added that the first indications of its effect on the market will likely show up in the next six months or so when people file their taxes in the spring of 2019.
Joseph Rand, managing partner of Better Homes and Gardens Rand Realty, said the federal tax reform law might be having a small impact on the very high end of the market where the loss of deductibility for mortgage interest and local taxes hits the hardest.
He noted that price appreciation was more pronounced in the lower‐priced markets.
In terms of the loss of the SALT deductions, he said, “We’re talking about a marginal, not a major, impact. Prices aren’t rising at the rate they are in the lower‐priced markets, they’re basically flat, not falling.”
Rand says a plus for the marketplace is that inventory levels are starting to respond to rising prices, noting that for the first time since 2012, inventory levels went up in the third quarter.
Rand notes the what is happening region wide is that after years of decline, single-family inventory was higher in almost every county in the region, stabilizing near that six‐month level that usually signals a balancing market. This market phenomenon occurs when demand is strong, and supply stays steady (or goes down) and prices go up. In response to the rising prices, eventually new inventory comes onto the market, he explained.
“Going forward, we believe that the appetite in the market can handle both the impact of tax reform and this increased inventory while still driving continued price appreciation,” Rand said. “With strong economic conditions, relatively low‐interest rates (and the specter of rate increases on the horizon), and pricing still at attractive 2004‐05 levels, we expect a robust market through the end of the year.”
Brokerage network Westchester Real Estate Inc. in its third quarter market report on Westchester County also discussed the positive and negative economic and regulatory forces affecting the housing market.
The firm concluded that with those forces factored it, it believes, “Westchester properties will always remain in high demand based on our proximity to New York City and fantastic quality of life. While we may see pullbacks or shifts at times, our housing market possesses innate strength and resilience. Prices are not decreasing, home sales are still strong, and Westchester’s real estate market is just fine!”