Hudson Valley Home Sales Market Continues Feverish Sales Pace
John Jordan | April 2016
WHITE PLAINS—The Hudson Valley home sales market in the first quarter continued its upward trajectory, with increased sales throughout the four county region. However, the market has yet to truly become a seller’s market since sale prices were flat or even decreased in the four county HGAR region.
A majority of all housing categories (single family, cooperative and condominium) are participating in this continued surge of sales activity. The notable exception is the higher-end of the luxury market, particularly in Westchester County, veteran Realtors tell Real Estate In-Depth.
According to the 2016 First Quarter Residential Real Estate Sales Report for Westchester, Putnam, Rockland and Orange Counties, released recently by the Hudson Gateway Multiple Listing Service (see full report and statistics on pages 27 and 28) overall home sales activity in the Hudson Valley in the first quarter of this year increased 18.5% from the same period last year.
Orange County posted the highest sales increase at 33%, followed by 30.1% higher sales in Putman, a 14% rise in sales in Westchester, rounded out by a 9.4% increase in Rockland County. HGMLS reported that all housing types are seeing increased demand, led by cooperatives (mainly in Westchester County), which enjoyed 17.5% higher sales than the first quarter of 2015. Condominium sales were 15.7% higher and single-family houses increased 11.2% in the first quarter as compared to the first quarter of 2015.
While the market continues to enjoy strong demand in most housing categories, median sale prices are stable at best, which some Realtors believe is a sign that the market is not overheated.
The median sale price of a single-family house in the first quarter of this year in Westchester was $569,950—down 5.0% from last year’s $600,000. Rockland County’s median sale price fell less than a percentage point to $399,000 from a year earlier. Two counties in the HGAR region saw median sale price increases—Orange County, which has seen its median sale price fall for a protracted period, enjoyed a 2.1% increase in the first quarter of 2016 to $215,000. Putnam County registered a 10.5% increase to $300,000. However, the HGMLS noted in its report that the price hike was based on a small base of sales where a dozen or so sales can yield large percentage changes.
Joseph Rand, managing partner, Better Homes and Gardens Rand Realty, noted that he previously predicted 2016 would be marked by increased sales, declining inventory and rising prices. He told Real Estate In-Depth that he was on the mark on two of his three predictions.
“The Westchester and Hudson Valley regional housing market in the first quarter of 2016 picked up where 2015 left off, with another surge in sales activity that is still not yet having a widespread impact on home prices,” he said. “With inventory declining throughout the region, though, we believe that we will start seeing meaningful price appreciation before the end of the year.”
He noted that the region closed more than 14,000 single-family sales over the past 12 months, which is the highest rolling year total since the middle of 2006, which was, he related, the tail end of the last seller’s market.
Rand said that buyers flocked to the lower and middle-priced housing. While sales in the luxury market are up, that sector is not enjoying the same robust sales activity. Rand does believe, however, that with declining inventory region-wide, price appreciation is on the horizon.
Region-wide, Rand related, “Going forward, we expect a robust spring market. All the fundamentals point to a burgeoning ‘seller’s market,’ with demand high, inventory falling, interest rates low, and a generally improving economy. Accordingly, we expect that sales will continue to go up, and that the strength in the lower-priced markets will gradually extend throughout all price points.”
Anthony Cutugno, senior vice president, director of private brokerage for Houlihan Lawrence, said, “What we’re selling is what is perceived as really good value. That is why our strategies are right now to convince sellers to price very closely to where we think these properties are worth and where we think they are going to trade.”
He said that there is a lot more sales activity in Southern Westchester than in Northern Westchester. He noted that while sales are strong in Westchester County for homes priced under $1 million, the high-end luxury market—$5 million and over in Southern Westchester and $2 million and over in Northern Westchester are not seeing strong demand at the moment.
Cutugno said that Westchester County’s luxury market’s “sweet spot” is between $2 million to $3 million. According to Houlihan Lawrence’s first quarter report, based on HGMLS statistics, there were 33 homes sold in Westchester priced between $2 million to $3 million in the first quarter of 2016, a 13% drop from the 38 homes sold in that price range a year earlier. Only nine homes were sold in Westchester County in the $3 million to $5 million-price range in the first three months of this year, a 40% decline from the 15 sold in the first quarter of 2015. The brokerage firm reports that there were six homes sold in the $5 million to $10 million range in the first quarter of this year as compared to four a year earlier.
While the lower end of the market may be eventually changing from a buyer’s to a seller’s market, the luxury end of the residential sector seems entrenched as a buyer’s market. He noted that days on market in the luxury sector have increased by 25%, which he states will often mean sellers being forced to reset their expectations in terms of pricing their home.
Westchester County’s inventory priced at $2 million and higher has surged 29% this year, he noted, which added to 19% gains the previous year. The $5 million and higher inventory swelled by a third compared to the same period last year.
“On the flipside, across the board, we have seen a drop in pending home sales. That tells us that the number of buyers for all these luxury homes is decreasing,” he said. “Supply exceeds demand, and the gap is on track to continue to widen. Most notably, buyers are aware of their advantage, and are becoming increasingly demanding and value-oriented.”
Cutugno continued, “Luxury buyers are looking for just that: luxury. But value is relative, and is dependent on the other properties on the market.”
Leah Caro, past president of the HGMLS and Broker/Owner of Bronxville Real Estate, agreed with her colleagues that in her market area of Bronxville, sections of Yonkers and Eastchester, the higher-priced homes in those markets are the slowest segment in terms of sales. She characterized those markets as: Bronxville ($4 million and above); Bronxville P.O.-Yonkers area ($1.5 million and above); and Bronxville-Eastchester ($1.7 million and above).
She added, however, that homes in the “mid-range” in terms of pricing in her firm’s Southern Westchester market area are enjoying strong sales activity.
Caro said that the housing market has not completely turned to a seller’s market because buyers are still choosy and continue to search for value. She added that homes that are priced right and in good condition, have been the subject of bidding wars and in some cases have sold over the asking price.
“But it is not every property,” she stressed. “So the buyers are a little choosy and a little picky. For the right product they are willing to step up and pay and compete.”
Caro said that inventory is “hyper-local” with some communities having low inventory, while others have a very high inventory of homes on the market for sale. Some of the tight markets are Eastchester, Tuckahoe and moderately priced homes in the Bronxville P.O.-Yonkers area.
“Co-ops have really found their footing,” Caro noted, which is welcome news since that sector of the housing market struggled the most since the end of the recession. Demand is now cutting into the excess inventory that existed over the last three to five years and this demand is leading to higher co-op sale prices, she added.
When asked her thoughts on where she thinks the residential market is heading, Caro said she believes 2016 in Southern Westchester will be a “tale of two markets” with the luxury end continuing to struggle to find buyers while the mid-range will remain “smoking hot.” She predicts sale price increases for moderately priced homes, while values will continue to fall in the luxury segment.
When asked if New York City buyers and specifically Millennials can be expected to fuel activity for the residential sales market in Westchester, Caro responded, “We all would love to think that our next housing boom will be fueled by Millennials, but you know what, the 30-something (Millennials) are not only not buying houses, they don’t even have a steady girlfriend.”
She said that until they get to the stage in life where they are getting married and having a family, the for-sale housing market will see little growth from Millennials. For the time being, that demographic will only benefit the rental housing market in the county, Caro added.