Intense Demand Leads to Double-Digit Increases in Home Sales in Hudson Valley
John Jordan | July 2016
WHITE PLAINS—A perfect storm of market forces—strong buyer demand, low interest rates, soaring housing costs in New York City and a vibrant local economy helped propel residential home sales in the four-county market area of the Hudson Gateway Association of Realtors to a five-year high.
The Hudson Gateway Multiple Listing Service, Inc. reported 4,525 residential closings in the second quarter, an increase of 23% over the second quarter of 2015.
According to the 2016 Second Quarter Residential Real Estate Sales Report for Westchester, Putnam, Rockland and Orange Counties, released recently by the Hudson Gateway Multiple Listing Service all four counties posted double-digit increases in sales transactions as compared to a year earlier. Putnam County posted the largest second quarter increase at 31.9%, followed closely by Orange County at 30.1%. Rockland County registered a 24.5% rise in sales, while Westchester closed 19.9% more transactions than a year earlier.
Realtors interviewed by Real Estate In-Depth said that demand was strong across all housing types (single-family, condominiums, cooperatives and 2-4-family residences). In addition, the robust market seemed to be especially strong for moderately priced housing in each market. One drag on the market has been the luxury sector, which continues to struggle.
Three of the four counties in the HGAR market area posted single-family home median sale price increases. Putnam County recorded the largest percentage increase—8.5%—from $289,500 last year to $314,000 this year. Orange County followed with a 6% increase in its single-family median price from $209,950 in the second quarter of 2015 to $222,500 this year. Rockland County sported a 4.9% increase in the median single-family home price during that period from $410,000 to $430,000. Westchester County was the only market on the negative side of the ledger, posting a 1.6% decline in the median single-family home price from $660,500 in the second quarter of 2015 to $650,000 at the mid-point of 2016. It should be noted that the median price of a condominium dropped 1.5% to $356,438 at the end of the second quarter, while cooperatives in Westchester recorded a 6.9% increase in price to $155,000.
Realtors interviewed by Real Estate In-Depth agreed that home buying demand has been robust so far in 2016. The strong sales environment has begun to erode for-sale inventory, particularly in the affordable to moderate-priced home sectors, they say.
HGAR President Marcene Hedayati said that the continued high volume of sales in the Hudson Valley has naturally had a downward effect on inventory. She said that homeowners are in a “holding pattern” at the moment. She noted that some are reluctant to put their home on the market due to the volatility in the stock market caused by Brexit or are unsure where the economy will go after the upcoming election.
Hedayati, who is Principal Broker/Owner of William Raveis Legends Realty Group in Hastings, Irvington and Tarrytown, said, “On the buy side, the high-end markets are definitely more sluggish than the more affordable price ranges and that is evident in the ‘flat’ or minimal decline in the median single-family home price in Westchester as opposed to increases in the median price further north.”
She said that low inventory levels could cause a short-term slowdown in sales and a continued trend of higher prices in most markets.
“My hope is that as things stabilize, sellers will feel more comfortable about their future and start listing, which will provide more choices for the buyer and lead us into a more balanced market,” Hedayati said.
Joseph Rand, managing partner, Better Homes and Gardens Rand Realty, said that continued high sales activity has finally had an impact on pricing, particularly in the mid- to entry-priced markets throughout the HGAR market area.
“We’ve now had sales going up for over four years, with regional transactions rising in 16 out of the last 18 quarters,” Rand said. “Most importantly, we’re now seeing sustained sales increases driving sales totals to levels that rival the height of the last seller’s market, with almost 15,000 single-family home and 3,000 condos sold over the past 12 months.”
Inventory levels are tightening and are trending toward possibly transforming the market into a seller’s market when available inventory reaches six months or less of available housing stock. “Well, we are not yet under six months in any of our regional markets, but we’re moving in that direction, with months of single-family inventory down 24% in Westchester, 38% in Putnam, 32% in Rockland, and 39% in Orange. Condo inventory was also down, falling 38% in Westchester, 48% in Putnam, 9% in Rockland, and 29% in Orange. Both Westchester and Putnam condos are now below six months worth of inventory, and other counties are closing in on the threshold,” Rand noted.
He added that the sustained sales surges in the region have not had widespread impacts on pricing. He noted that prices rose in the second quarter in Putnam, Rockland and Orange. “It was only in Westchester that we had prices go down, but even there we believe that the drop was largely caused by a relative lack of demand in the very high end of the market, for homes selling above $3 million. In other words, the price drop in Westchester is partly caused by the relative strength of lower-priced markets compared to higher-priced markets throughout the region,” Rand said.
He expects the robust sales market to continue this year due to strong fundamentals in the regional market—rising demand, lower inventory, interest rates at near historic lows, and the overall economy performing well. “Accordingly, we expect that sales will continue to outpace 2015 levels, and believe it’s only a matter of time before the sustained increases in buyer demand starts driving meaningful price appreciation throughout the region,” Rand predicted.
Joseph Valvano, president of Coldwell Banker Residential Brokerage in Connecticut and Westchester, agreed with his colleagues that the high-priced market in Westchester continues to struggle, while demand for affordable and moderate-priced homes is very high, fueled by extremely low interest rates. Another contributor to strong sales in the lower priced home sector is the strong regional economy. Demand for not only single-family homes, but also for more affordable condominium and co-operative homes, has also been very keen and led to higher sales in the second quarter.
He said the struggles of the luxury market are not Westchester County’s alone, noting that luxury market sales are down in many major markets nationwide, including New York City.
“The luxury market is sluggish right now in Westchester. There is plenty of inventory available. This is a key time to work with your Realtor to make sure that the pricing strategy for your luxury property is spot on,” he said.
The ample inventory has also produced a discerning or selective buyer, Valvano noted. “We have found that a lot of luxury buyers don’t want to do much work. They want to move into a place that is in mint condition and is priced properly. They have choices.”
He added that the depletion of available inventory over this current sales surge is creating issues and reducing choices in some price points, housing types and in some markets.
According to the HGMLS second quarter report, overall inventory was down 15.6% in Westchester, 22.3% in Putnam, 10.9% in Rockland and 17.8% in Orange as compared to the second quarter of 2015.
Valvano said that demand has continued to be strong in the early days of the third quarter and if all positive market forces remain in place, home sales should continue to be strong.
Roberto Vannucchi, executive vice president of Douglas Elliman in Connecticut and Westchester, said of the second quarter, “Overall the market is pretty strong. The well known trend that just continues is the lack of affordability in New York City that is driving people to Westchester.”
Vannucchi said that the homes under contract at the moment in Westchester are very strong, which points to a likely strong sales climate in the third quarter of this year.
He added that a lack of “good inventory” has become an issue in some markets and in some price points in Westchester.
The luxury market (generally priced over $3 million) is the exception as this sector continued to underperform with ample inventory. “I would say that if I am a buyer in the luxury market I have a great opportunity that hasn’t been seen in the past few years,” he said.
In contrast, Vannucci said that Douglas Elliman has seen “a healthy multiple offer environment for homes priced under $1 million and even in some markets above $1 million.”
He noted that all market drivers are positive and that at least thus far Brexit has not caused any sales deals to fall through. However, he said that Brexit and its potential impacts are definitely on some buyers’ radar screen at the moment.