Realtors Bullish on Housing Market Prospects But Concerned Over Falling For-Sale Inventory
John Jordan | April 2017
WHITE PLAINS—Hudson Valley Realtors are overwhelmingly confident the heady times of strong sales and rising prices will continue throughout this year. However, there is also a consensus that continued declines in for-sale inventory will limit buyer options and could put a damper on buyer demand sometime in the future.
First quarter home sales in the four-county region of the Hudson Gateway Association of Realtors were 9.1% higher than the first three months of 2016. The Hudson Valley residential market has been enjoying a protracted period of higher sales, but it has been only recently that home values have increased as well. For example, in the first quarter of 2016, sales rose an impressive 18.5%, however, overall sale prices were flat for the region.
A year later, that is no longer the case. Rockland County led the region with a 29.3% increase in first quarter sales and a 6.5% increase in the median sale price of its single-family house to $425,000, according to a report released earlier this month by HGAR subsidiary the Hudson Gateway Multiple Listing Service, Inc. Westchester posted a 4.4% increase in sales and a 5.3% increase in the single-family house median sale price to $600,000. Orange County registered another impressive sales quarter, with an 11.6% increase in sales and continues to see higher home values as well with a 7% increase in the median sale price of a single-family house to $230,000.
Putnam County was the only HGAR region on the negative side of the ledger, posting a 2.0% decline in home sales and a 1.7% dip in the single-family median price to $295,000. Statistics were based on sales activity in the winter months of 2016 and early 2017, HGMLS stated in the report.
The only qualification to what many expect will be continued strong buyer demand and sales going forward is significant declines in for-sale inventory region-wide. Westchester County saw a 20.6% decline in inventory at the end of the first quarter as compared to 12 months earlier, Putnam’s inventory fell 24.1% during that same period. Rockland and Orange County’s for-sale housing stock fell 20.4% and 20.6% respectively at the end of the first quarter of this year.
HGAR President Dorothy Botsoe tells Real Estate In-Depth that strong buyer demand and low inventory have resulted in many multiple-buyer offer scenarios of late.
Botsoe related that sales are strong, inventory levels continue to drop in Westchester County, which is having an impact on sales transactions. She noted that for sale inventory in Westchester is dropping precipitously and limiting buyer options. Inventory in the single-family sector fell 17.3% in the first quarter of this year as compared to the same period in 2016. For-sale inventory in the condominium and cooperative sectors fell by 28.3% and 23.8% respectively in Westchester during the same time period.
“The market is fluid and the lack of inventory is really giving buyers a sense of urgency and prompting some to make their buying decisions quickly,” she noted. Botsoe later added, “My advice to both prospective buyers and sellers is to take the time to set a solid plan of action before making the decision to sell or buy.”
Sharlene Forman, office manager, associate broker at Peter J. Riolo Real Estate in Hastings on Hudson, said declining inventory has dampened sales activity in the Hudson Rivertowns.
She said that in Hastings and other Rivertown communities, sales at the firm are down as compared to a year ago, while prices are increasing. She said lack of options due to low inventory has slowed sales activity there. Thus far in 2017, the firm posted 17 closed transactions as compared to 26 closed sales during the same period in 2016.
One market sector that has seen a resurgence in Westchester is multifamily properties. Forman noted that has been the case in the Rivertowns region. She shared that one multifamily property that was taken off the market some time ago after failing to attract a buyer, went on the market earlier this month and had three or four offers during its first week of listing.
Forman said that the buyer demand is strong in the Rivertowns, particularly from Millennials, but for some reason existing homeowners have yet to put their homes on the market in sufficient numbers to take advantage of what many are now considering a “seller’s market.”
“I think one of the things that may be affecting our local market here in the Rivertowns is that we are in the Town of Greenburgh, which had a total reassessment of (property) taxes and now that the properties are assessed at full market value, we are finding that many of our older homes that were very popular for a big part of our market and had lower taxes, will see their taxes go up considerably,” Forman said.
While the full impact of the reassessment will be phased in over the next three years, Forman noted that with Westchester County residential taxes being among the highest in the nation, any significant property tax increase would no doubt impact that local market.
HGMLS President Renee Zurlo said that continued strong sales activity in Orange County is encouraging. She echoed her Realtor colleagues in noting that in Orange County buyer demand is high and inventory remains relatively low. “It’s safe to say, we are finally in a ‘seller’s market,’” she related.
Competition is also on the rise with many multiple offer situations now taking place. She noted that its now very important for agents to adapt to these changing and often-times challenging market conditions by properly guiding their clients through the process. Zurlo is a regional manager for Better Homes and Gardens Rand Realty.
“I’m also hearing some frustration and sometimes confusion from agents on our MLS rules regarding disclosing accepted offers,” she said. “Our MLS does not have a status for an accepted offer and does not require a listing agent to disclose ‘in MLS,’ the existence of an accepted offer. The listing agent/agency must disclose that accepted offer, even if there are contingencies, once an inquiry is made from either an agent or a potential purchaser, but it does not have to be disclosed in MLS until the status is under contract, meaning a fully executed attorney’s contract.”
Zurlo, who predicts that Orange County will continue to enjoy strong sales and price increases for the remainder of 2017, estimated that approximately 20% of the more than 1,800 single-family homes on the market in Orange County are REOs.
“I’m finding the desire for fresh new inventory in Orange County is creating some buyer demand for new construction,” Zurlo said. “In some cases this demand, in addition to rising construction costs, is resulting in increasing prices for new home sales.”
Joseph Rand, managing partner, Better Homes and Gardens Rand Realty, said that the first quarter was a clear example of “Economics 101 in action” with rising demand and falling supply leading to higher sale prices.
While prices are higher in Westchester, Rockland and Orange, he noted that sales prices fell in Putnam and neighboring Dutchess counties, but added that even in those markets the yearlong trend was promising. “Essentially, the market is capable of even greater sales growth, but only if it gets more fuel for the fire,” he said.
Rand said the market continues to experience strong sales growth due to heavy buyer demand. “Sales have been going up quarter after quarter after quarter,” he related. “We have now sales figures at a level that we have not seen since the height of the seller’s market in 2005.”
While sales have been growing for five years, there had been a lag on price appreciation in the Hudson Valley residential market until recently.
“The market is now a full-blown seller’s market,” Rand said. “We are seeing sales continue to go up. We are starting to see prices go up pretty much across the board in all of the markets and in most of the market types. Inventory is now down below six months in most of these markets and six months is the border area where we usually demarcate a seller’s market from a balanced market.”
According to figures supplied by Better Homes and Gardens Rand Realty, there is five months inventory of single-family homes in Westchester. Rockland County’s single-family inventory was at 4.8 months at the end of the first quarter. Putnam County’s inventory was at 5.6 months and Orange County was just slightly above the six-month seller’s market demarcation line at 6.1 months of single-family home inventory.
Rand said that low inventory levels are showing up mostly in the entry-level markets. “Agents tell me that when you get a well-priced listing in Westchester under $600,000 you are going to have multiple offers within a week,” he said.
Rand believes that basic economics will win out in the Hudson Valley residential marketplace with more homeowners listing their residences to take advantage of higher home values, which will help alleviate the inventory problem.
“There are people all over this region who were very close to selling their homes 10 years ago and then the bottom fell out of the market and they decided to hold onto it,” Rand said. “They said, ‘I am going to hold onto it until the market comes back.’ And now that they see the market is coming back they are long overdue to get out of that house.”
He continued, “I believe there is a ton of pent-up demand right now of empty nesters” particularly homeowners that had children in high school in 2007 that were poised to sell, but were forced to delay the sale due to the collapse of the market in 2008, 2009. Now that market conditions have dramatically improved, Rand believes those homeowners will list their homes to take advantage of market demand and pricing.
Rand predicts that based on current market conditions, “The next three years are going to be really good for real estate.”