Realtors Expect Robust, Not Supercharged Housing Market in 2022
John Jordan | December 16, 2021
NEWBURGH—The consensus from a panel of veteran New York Realtors is that while some headwinds exist for the housing market in 2022, conditions are favorable for continued strong sales and rising prices. One panelist said that despite a slowdown in sales, “there is still a lot of meat on the bone” in the current strong seller’s home sales market in the New York metro region.
The Pattern for Progress Center for Housing Solutions, which is based in Newburgh, held a virtual panel discussion on Nov. 30 entitled “Housing Update | The Housing Market Outlook for 2022,” which featured David Legaz, President of the New York State Association of Realtors, Leah Caro, Principal and President at Park Sterling Realty, and Joseph Rand, Chief Creative Officer at Howard Hanna | Rand Realty and Executive Director for Broker Public Portal. The session was moderated by Joe Czajka, director of the Center for Housing Solutions.
NYSAR’s Legaz noted that national home sales in October were very strong with 82% of the homes sold were on the market for less than a month. Demand for single-family rentals was also robust with asking rents rising due to low inventory on the for-sale side. Sales of new single-family homes hit a six-month high, he added. Legaz noted that single-family home sales in New York State after having risen for 13 straight months, have fallen the previous two months. As of October 2021, year-over-year sales in New York State fell approximately 10% as compared to the super-charged pandemic-induced sales volume registered in 2020. New listings fell during the 2020-2021 period 15.9%, median sale prices rose 10% to $370,000 statewide and inventory fell 23.1%.
Caro and Rand pointed to the possible reform of the SALT Cap as a positive for the market in 2022. She noted that the House of Representatives recently approved the Biden Administration’s Build Back Better Bill which would raise the SALT Cap from its current $10,000 to $80,000 through 2030.
If passed by the Senate, Caro said, “It would be a huge win” for New York State and other impacted states.
While predicting that 2022 will continue to be a strong market, Caro did point out some issues that could put some downward pressure on activity.
Caro said rising inflation is giving her some pause when looking out into the future, especially in light of New York State’s high property taxes and home prices and consumer products.
Those increased costs “makes me wonder if folks might not take a step back and see where inflation goes in 2022 or maybe put their plans on hold, I hope not, but I think that is something we might see.”
She also noted that due to low inventory, some people who wish to stay in the area may not put their homes on the market due to limited options and high prices.
“I understand that in some of the more northern counties that locals are really being priced out of their own towns because you have this influx from the boroughs and the city who are driving prices up,” she added.
Rand said that the increase in the SALT Cap will help wealthy Manhattan homeowners as well as those in Westchester County. He theorized that the New York suburban markets adjusted to the impacts of the SALT Cap since 2017. He added that if the cap is raised, it would have a moderate impact on the local markets.
Rand in his statistical presentation, stressed that while third quarter sales activity in the lower Hudson Valley was down from the “tidal wave” of sales volume in 2020, when compared with the 2019 “normal, but growing seller’s” market, listings were up, pending sales were almost 20% higher and closings were up almost 33%.
In his analysis, Rand noted that new listings are just not keeping up with the demand, prompting him to say, “We are not getting enough fuel for the fire so that is pushing some of the pricing (higher). It is also just making it a tough time to buy a house.”
Caro believes the housing market will continue to be dogged by low inventory, although levels will increase somewhat in 2022.
She thinks buyers will continue to come out of the city and buy homes in the Hudson Valley, but at a slower pace than 2020 and 2021.
“I am not a pessimist so I am hoping that supply chain and inflation (issues) are short term because I think if that is long term we will have downward pressure (on home sales),” Caro said.
Legaz said that if New York State “continues to overreach and de-incentivize homeownership, we are going to see more people leave New York State” because in part “our children can’t afford to live here.”
Rand said that he is a believer in economic cycles and thinks that the region’s real estate market is in the latter third of the seller’s market.
“I think we have a couple of years left (of the seller’s market),” Rand said. “Unless we have an interest rate spike that might affect things, COVID rebounds… I think the market will continue to grow.”
He continued that sales will be above 2019 levels through the end of 2022 and expects inventory to increase as prices continue to rise. Rand noted that prices have only now come back to levels seen at the height of the previous seller’s market in 2005.
“It’s taken 16 years to get us back to the prices of the last seller’s market, so I think there is still a lot of meat on that bone,” Rand said.
He concluded his remarks by saying that in response to those who criticize New York for its high taxes and costs, “You get what you pay for. This is a great place to live,” pointing out the Empire State’s fine restaurants, entertainment, parks, rivers etc. “You pay more to live in a place that is as wonderful as New York State, with all its flaws.”