Hudson Valley Home Sales Market in Full Recovery; In Midst of Pandemic, Record Sales Volume Projected
John Jordan | September 2020
WHITE PLAINS—While the third quarter 2020 residential sales numbers will not be released by OneKey MLS until next month, the consensus from Realtor executives is that thanks to the resiliency of real estate professionals throughout the region, the Hudson Valley home sales market is on a torrid pace to perhaps shatter sales records.
The pent-up transaction pipeline, which was all but shut off in the early spring due to governmental restrictions imposed to prevent the spread of COVID-19, is now being addressed as Realtors, attorneys, title and mortgage officials and others work feverishly to finalize residential closings. In addition to stalled deals, executives interviewed by Real Estate In-Depth say that they have seen a marked increase in New York City buyers coming to the Hudson Valley to escape the current turmoil that currently exists there.
William Pitt and Julia B. Fee Sotheby’s International Realty President and CEO Paul Breunich said the sales volume and buyer demand in Westchester County and neighboring Fairfield County, CT is unprecedented.
“I’ve been in this area and in the industry for 30 years and I never would have believed this unless I had experienced it myself,” he said. The firm, which also services Litchfield County, the New Haven area in Connecticut and the Berkshires in Massachusetts, is dealing with tremendous sales volume.
“To put it into context, we have been in business since 1949, since June our business is up 140% (compared to last year) in dollar volume and around 95% in units year-over-year,” Breunich said.
If you are up 8% it’s a good sales month, he added, and the unprecedented sales volume keeps continuing. Breunich said that August is usually a slow time for contracts and the markets are still seeing dollar volume increases in the 120% to 140% range each week.
He related that the company normally has a pipeline of approximately $400 million in deals. At present, entering the fall the pipeline is valued at approximately $1 billion.
A key driver to the home sales boom is the exodus of residents of New York City to the surrounding suburbs. A host of issues impacting New York City residents in response to the pandemic are creating the influx of buyers, including density concerns.
“In New York (City) there are 27,000 people per square mile, in Westchester County it’s 1,900 per square mile and in Fairfield County it is 1,500 per square mile,” Breunich noted. That data is prompting some to look to the suburbs for health reasons. Another factor is the trend towards remote work programs and finally the protests and the increase in crime are other concerns.
Schooling problems in Manhattan and the outlying boroughs have also factored into some relocations. He noted that 17 Catholic schools closed in the New York City boroughs and another nine further north, while four of the top five private schools on Manhattan’s Upper East and West Sides are offering virtual schooling only for the year.
“All of this is creating the perfect storm in New York,” he noted. Realtors are now scrambling to secure suburban listings, because the demand is very high.
HGAR President Gail Fattizzi agreed that a sales surge is definitely taking place regionwide. The main impediment to sales and a key factor in rising median prices is the lack of inventory.
Fattizzi, who serves as the executive director of Westchester Real Estate, Inc., said, “Buyer urgency right now is being fueled by a powerful combination of pandemic urban flight, the evolving and changing needs of households, commutation adjustments and incredibly low interest rates. Should any of those factors shift, we’ll likely see the market change. I don’t see that happening in the short-term, but there’s so much uncertainty for the longer term.”
She noted that low inventory has been a long-standing issue and is still the greatest constraint to further sales volume in the Hudson Valley marketplace.
“That is proven anecdotally by all the multiple-offer situations we are witnessing, and the speed with which properties are flying off the market,” she said. “Qualified potential buyers far exceed the availability of appropriate properties in many categories of the market.”
She related that Realtors and government officials need to be concerned about balancing the needs and concerns of both tenants and landlords in the relief packages that are being crafted to aid in the economic recovery from COVID-19. Without careful consideration of both sides, the value and desirability of investment properties could be adversely affected, and ultimately that will hit the pockets of tenants as well, Fattizzi warned.
Another critical issue going forward is mortgage forbearance. She said that depending on the pace and extent of the economic recovery, the market could see a rise in foreclosures in the future.
“Expert forecasts seem to be minimizing this possibility, distancing the current global health crisis from the last financial crisis that brought about a wave of foreclosures, but we can’t assume we’re bullet proof,” Fattizzi said.
“My personal outlook is that the Hudson Valley real estate market will remain strong for the near future. But real estate is and always has been cyclical. As real estate professionals, we learn to ride the waves, understand our market, and provide the best advice we can to our clients at any given time,” Fattizzi concluded.
Better Homes and Gardens Rand Realty executive Joseph Rand said the region is currently enjoying a very robust sales market.
“The (sales) surge continues,” Rand said. He noted that in August, new deals in contract were up dramatically based on significant pent-up demand. However, although listings were up sharply for the month, inventory was still low and below last year’s levels.
He believes that the market has just about caught up with the transactions delayed during the several months of virtual shutdown in the spring due to the coronavirus.
In a Facebook live event this morning (Sept. 4), the managing partner of Better Homes and Gardens Rand Realty noted that activity in August reflected sales transactions in progress during the months of May, June, and July after most of the COVI-19 restrictions were lifted.
He noted that attorneys, title insurance companies and Realtors are very busy dealing with the transaction pipeline from the spring and early summer.
“Right now, scheduling closings is unbelievably hard. Everybody is overworked. There are so many transactions that are trying to close this month. It has been nuts,” Rand related.
Looking ahead, Rand said, “September will be the biggest closing month in history.” He later added that third quarter closings will be up sharply from last year and will result in the region reaching third quarter 2019 levels, despite the market pause in March and April due to the pandemic.
In the brokerage firm’s New York market region, which includes Westchester, Putnam, Rockland, Orange, Dutchess and Bronx counties, new contracts were up 50.9% in August as comparted to 12 months earlier.
In its New York region, after new contracts fell 53% and 42% in April and May, contracts rose 10% in May, 59% in June and approximately 51% in August. Listings on the other hand were down 73% in April, 40% in May and then rose 3% in June, 46% in July and 40% in August.
Closings regionwide were down 33% in April, 25% in May, 33% in June, 12% in July and were off just 2% in August.
A key data point from Rand’s presentation is that all of its New York markets, with the exception of the Bronx, are currently seeing double-digit percentage increases in the median sale price as compared to 2019. The Bronx, which has been hampered somewhat by the troubled Manhattan market, has still seen an average median price increase of 9%, according to the Rand presentation, which was based on figures supplied by OneKey MLS.
One market that appears to be struggling is the condominium and cooperative market in Westchester County, with sales down a combined 32.8% in August, according to the presentation.
Rand also addressed the issue of New York City residents fleeing for the suburbs. He said that there has been an increase of approximately 40% in the firm’s transactions involving New York City residents purchasing homes in the northern suburbs as compared to last year.
However, he believes that will be a short-term and not a long-term trend, adding that these city residents were likely considering a suburban move and were pushed by the onset of the coronavirus to make the move now rather than later.