Low Inventory is Chief Culprit for Lower Sales, Higher Home Prices in Majority of HGAR Region

John Jordan | July 2018

WHITE PLAINS—Continued low for-sale inventory caused home sales to fall and home prices to continue to trend higher in most of the Lower Hudson Valley in the second quarter.Overall home sales fell 5.7% in Westchester, 4.6% in Putnam and 11.3% in Rockland counties in the second quarter, according to the recently released “2018 Second Quarter Residential Real Estate Sales Report for Westchester, Putnam, Rockland and Orange Counties, New York” report authored by the Hudson Gateway Multiple Listing Service Inc.

Home sales in Orange County bucked the negative trend and were up 1.9% in the second quarter.

Hudson Valley Second Quarter 2018 Home Sales

Orange  

Putnam 

Westchester

Rockland

+1.9%

-4.6%

-5.7%

-11.3%

 The HGMLS report stated that at the mid-year point, sales were down in two HGAR counties;  Westchester home sales fell 4.0% and Rockland sales were 12.2% lower as compared to the mid-point of 2017. Putnam home sales were 1.3% higher as compared to a year earlier, while Orange County home sales year-to-date were all but flat at 0.7% higher than 12 months earlier.Single-family home prices in all four HGAR market areas were higher in the second quarter, the HGMLS sales report stated. The median sale price for a single-family home in Westchester County rose sharply by 6.1% to $710,800. The Putnam County single-family median price increased 1.4% in the second quarter to $350,000. The median price for a single-family home in Rockland County increased by 6.2% to $468,750 and the median single-family home price shot up 6.4% in Orange County to $250,000 in the second quarter.

Inventory in all four counties were lower in the second quarter as compared to the same period in 2017: Westchester -0.5%; Putnam, -9.5%; Rockland, -4.0% and Orange, -8.0%.

HGAR President Barry Kramer, co-owner of Westchester Choice Realty with offices in Scarsdale and Hartsdale, which specializes in cooperative sales, noted that co-op sales fell 10.6% in Westchester in the second quarter, due chiefly to low inventory (down 23.3% as compared to the second quarter of 2017). He characterized the overall home sales market as good, but noted that the luxury home market is lagging a bit behind the middle market.

Kramer said that at the moment it is difficult to gage the impact of the federal tax reform law passed earlier this year on the market. He added that Realtors are also waiting to see what effect rising interest rates will have on demand.

Debra Budetti, co-principal broker of ERA Insite Realty, said the current home sales market in Westchester is “very neighborhood driven” with some areas posting stronger sales than others. She said that consumers are expressing some concern about taxes in connection with the federal tax reform law’s impact on New York State.

While those concerns have not cut into demand as yet, Budetti noted, “Many more are asking how to grieve their taxes and plan to start the process.”

She added that inventory in the median-priced range is lacking. “There are buyers hoping to buy, but are not finding anything suitable to buy in their price range.”

Houlihan Lawrence in its second quarter luxury market report stated the luxury market sales in Westchester County ($2 million and higher) improved after posting a 20% decline in the first quarter. Year-to-date, luxury sales were down 7% and second quarter sales kept pace with the same period last year. Putnam and Dutchess County luxury sales ($1 million and higher) were unchanged. Greenwich, CT posted an 18% gain in luxury sales ($3 million and higher) in the second quarter and year-to-date sales were in positive territory, the brokerage stated.

Despite a decline in Westchester’s luxury market, the ultra-luxury segment of the market ($5 million and higher) is performing better than it has in years. Through June 30th, there were a total of 21 closed and pended sales of homes priced above $5 million, compared to 19 sales in 2016 and 18 sales in 2017. The sales activity for homes priced at $10 million or higher was also above last year’s levels. Two deals have closed and three are pending—a striking increase from 2016 and 2017, when a single home sale in this price sector closed each year, Houlihan Lawrence reported.

Westchester Real Estate Inc. in its second quarter market report also acknowledged the inventory problem and suggested to frustrated buyers looking for moderately-priced homes to check out opportunities that exist in homes in need of renovation and related there are attractive financing options for fixer-upper properties.

The firm stated in the report that while the federal tax reform law has caused some buyers to “adjust their game plan, it hasn’t derailed sales completely as some speculated it might. Some of those buyers are now just choosing to buy less expensive properties with lower taxes, adding to the softness in the high-end of the market.”

Joseph Rand, managing partner of Better Homes and Gardens Rand Realty, said, “I have heard people saying that tax reform caused the decline in sales in Westchester. That’s ridiculous. Sales are down or flat across the region, even in lower-priced areas, because of the lack of inventory. If reform had blunted buyer demand in Westchester, we wouldn’t have seen a spike in prices this quarter. People still want to buy in Westchester, we just need more homes to sell.”

He added that the HGAR region is clearly a seller’s market. “The main story in the market right now is a textbook illustration of basic economic principles: when demand is high, and supply is low, prices go up. This is essentially what a seller’s market looks like, with low levels of inventory coupled with high demand holding sales down while driving prices up. And that’s exactly what we’re seeing throughout the region.”

John Jordan
Editor, Real Estate In-Depth