Strong Economy, Low Interest Rates Bolstered Hudson Valley Home Sales Markets in 2019
John Jordan | January 2020
WHITE PLAINS—A continued strong economy with low unemployment and plenty of credit at historically low interest rates, blunted most of the impact of federal tax reform that included a cap on state and local taxes (SALT) in the Hudson Valley region.
Fourth quarter and full-year market statistics and analysis released recently by the Hudson Gateway Multiple Listing Service, Inc. and various regional residential brokerage firms agree that the 10% SALT cap has impacted sales volume somewhat and the sale price of higher-priced properties in the region.
Another driver in terms of price appreciation has been the continued low levels of available inventory.
The HGMLS reported that overall home sales (which includes single-family, condominium, co-op and 2-4 family units) rose in Rockland County by 3.3% for the year. However, Rockland was the exception to the rule as Westchester County saw a 1.5% decline in sales in 2019 as compared to the previous year and Putnam registered a 1.1% drop in home sales during that same period.
Orange County in 2019 saw overall sales decline by 2.6%, while Sullivan County suffered a 3.2% overall decline in sales in 2019 as compared to 12 months earlier.
Hudson Valley Home Sales
Full-Year 2019 Totals
Rockland County +3/3%
Putnam County -1.1%
Westchester County -1.5%
Orange County -2.6%
Sullivan County -3.2%
The median single-family home price was relatively flat in Westchester County for the year, up 0.8% to $655,000. Single-family home sale prices rose 2.4% in 2019 to $358,500 in Putnam County, while Orange County’s median sale price shot up another 4.8% last year to $271,000.
While Rockland was the only county in the HGMLS market area that posted in the black in terms of overall sales, the same could not be said about its median sale price, which fell 1.1% to $455,000 at the close of 2019.
Overall inventory declined in the following markets, exacerbating already tight market conditions: Westchester (-9.1%); Orange (-5.9%) and Sullivan (-12.3%). Inventory in Putnam rose 10.4% year-over-year, while the available for-sale stock in Rockland rose 5.3% in 2019.
Joseph Rand, managing partner of Better Homes and Gardens Rand Realty, believes the markets would have been even stronger if the SALT Cap was no longer in effect.
“My take on the SALT Cap is that it’s still having an impact on the high end. Basically, the market is in the midst of a strong seller market cycle, but growth is being stifled by weakness in the high end that is largely caused by the SALT Cap,” Rand said. “I really do think that without the SALT Cap, we’d be looking at a significantly higher rate of appreciation throughout the market.”
Noting that the overall Hudson Valley home sales market ended 2019 on a high note with strong sales, Better Homes and Gardens stated in its year-end report on the region that the market is poised for a “relatively robust 2020. Housing fundamentals are all positive: prices are still at attractive levels compared to the last seller’s market, interest rates are back down to historic lows, the economy is solid and inventory might be loosening up.”
The brokerage firm concluded, “Accordingly, we believe that demand will continue to grow and that as the lingering effects of the SALT Cap dissipate, we will see more widespread price appreciation going into the spring market.”
Westchester Real Estate in its Fourth Quarter 2019 Market Report, noted that the region saw strong activity in November and December, after a slow month of activity posted in October.
“Interest rates have played a signiﬁcant role in keeping the real estate market strong these past few years. Despite forecasts of rate increases at the start of 2019, they never materialized, and 30-year ﬁxed-rate loans ended the year still below 4%. Industry experts currently are predicting that rates will remain at similar lows for the balance of 2020, which bodes well for prospective buyers,” Westchester Real Estate stated in the report.
Despite some predictions of an impending recession, the economy is fundamentally strong and consumer confidence remains high. The National Association of Realtors is forecasting that home sales in 2020 should increase approximately 3.4% over 2019 sales levels.
“Predictions are for continued positive price appreciation in the housing market; perhaps lower than in recent years but still in the low single digits. Contrasting the positives, there is still a signiﬁcant amount of global volatility, the Westchester Real Estate report noted. “The U.S. is in an election year, which often has people in a holding pattern until the outcome is determined. Right now, we feel conﬁdent that the positives will outweigh any negatives and the local housing market will continue strong for the coming year.”
Houlihan Lawrence noted that sales activity picked up in the second half of 2019. In Westchester County, luxury sales ($2 million and higher) dipped by 25% in the first half of 2019, a symptom the brokerage firm’s report blamed on “buyer malaise and concern about tax reform.” Buyers returned to the market after tax returns were filed and the impact of tax reform on their personal balance sheet was clarified. Sales moved into positive territory in the third quarter and momentum continued to build in the fourth quarter. Second half gains offset most of first half declines and luxury sales in 2019 posted a modest decline, Houlihan Lawrence noted in the report.
The ultra-luxury segment of the market ($5 million and higher) was level with 2018, but a sharp drop in selling prices made 2019 look very different from 2018. In 2019 there were no sales over $10 million and the highest sale, originally offered at $12 million, closed at $8.1 million. Most ultra-luxury sales took one or more price reductions and sold on average 26% off the original list price underscoring buyers’ value-driven mentality at the high-end and conservative attitude towards real estate, the brokerage firm stated.
Luxury sales ($1 million and higher) declined in Putnam and Dutchess counties although pending sales in Putnam County increased significantly by year’s end, which Houlihan Lawrence stated was a hopeful sign for 2020.