All Indicators Point to Growing Rockland Housing Market
J.P. Endres | December 2016
How do you summarize the 2016 real estate market in Rockland county in three words or less? On the Move! My prediction for 2017 is that Rockland County’s residential market will continue to keep on moving.
We have seen very strong indicators of a growing market and we have posted some of the strongest numbers since before the economic downturn in 2009. Home prices continue to show small, but steady year-over-year gains. So where are we going in 2017? All signs point to a continuation of promise and growth in our market.
Prices are stable, and in most sections of Rockland home sale prices are slowly increasing. We all know that real estate is local and even in Rockland County we have pockets of areas and markets where price movement and inventory is out preforming the median county numbers. Overall, 2016 resulted in market inventory decreasing… anything coming on priced to market value was gone almost overnight. Low inventory has held prices back. Normally it drives prices up, but when you have very little to sell there is not enough product to move the needle.
In my opinion, if a house is sitting on the market in Rockland… it is overpriced. We have pent-up demand that appears to be increasing because of the tight supply. When we have more product, prices should increase at a faster pace.
If I could ask for one wish in 2017 it would be more listings!! While the decrease in inventory has been dramatic, the price changes have been modest at best. Historically when inventory shrinks, prices rise. This however is not something we have seen happen at anywhere near the pace of the previous boom market of 2005-2008. We are fighting a bit with the basic theory of Economics 101, which tells us that if demand is strong, and supply goes down, prices go up. We are seeing some price increases… just not at the same rates of the previous market. The Hudson Gateway Multiple Listing Service reported sales in the third quarter year-over-year were up just over 12% but the price increase in Rockland County was a very modest 1% in the third quarter of 2016. We have been seeing on average low single-digit increases year-over-year consistently since 2013.
Why so slow? Well, for one thing even though mortgage liquidity has opened and constraints have relaxed a bit, we are still held back by missing products in the stated income and no income arenas. We have also not seen mortgage rates increase until recently. We have been hearing about the threat of interest rate increases, but never really saw movement until now thus causing buyers to become complacent and keeping many buyers content with continuing to look, but feeling no real pressure to buy.
The expected increase in mortgage rates I believe will be beneficial to the market. Buyers who have been on the proverbial fence will jump off and enter the market. Higher rates and lower inventory generally increase prices in the marketplace. The second major reason for the slow growth in home sale values in Rockland is that we have had a large amount of short sales and bank foreclosures/REO properties which have held prices back in several sectors. The price points of bank properties and short sales often post a lower sales price than market value and thus hold the growth of prices back as they become comparable sales, albeit with notations.
The real surprise has been the re birth of the mansion sales. And boy do I mean a birth of a new market. The Rockland County high-end market has been slow since 2008. We have seen a tremendous uptick in this sector in Rockland in 2016 and there is no evidence of this changing anytime soon.
The $1-million and over market in Rockland is on the move and as these properties are sold more and more activity will take place in the middle-priced sector. Many times, we see the start of a market form bottom to top, but Rockland is working in the opposite manner with the rebounding market in the high-end and the strong sales activity appearing to be trickling down to lower-priced housing. This year, sales in the $1 million and over niche are up 14%, and more importantly, those homes are selling at a much better premium then in years past. The price-per-square-foot for $1million and over sales in the third quarter was $338-per-square-foot, which was 23% higher than last year’s third quarter sales. Moreover, the days on market numbers have come drastically down. Homes are selling much faster and the DOM in the over $1 million category has fallen to 155 days—the lowest we have seen in a quarter in almost 10 years and right alongside the DOM for under $1 million. This is not something we see frequently.
2017… Now that the election is over there is added confidence in the economy illustrated by the strengthened stock market. This also extends to the real estate market. Mortgages will rise, more buyers will enter the market before rates continue to rise and prices should follow. All evidence and indicators point in one direction…UP!