Home Sales Fall Sharply in Hudson Valley in Second Quarter
John Jordan | July 21, 2022
WHITE PLAINS—If Realtors are feeling a sense of deja vu when it comes to current home sales activity, perhaps they are recalling how conditions were back in 2018 and 2019, which were both considered strong markets at the time.
However, the boom market of 2021, with surging sales and soaring prices throughout the region, has markedly changed in 2022. Realtors blame rising interest rates, a turbulent Wall Street and a 9.1% inflation rate—the highest rate of inflation in more than four decades—as chief reasons behind the drop-off in activity.
The residential market in the Hudson Gateway Association of Realtors’ market area, with the exception of the Bronx, saw sharp declines in sales transactions in the second quarter, most posting overall double-digit declines in volume, according to the second quarter home sales report released earlier this month by OneKey MLS.
While sales volume is down in the Hudson Valley counties, median sale prices continued to climb, fueled in large part by the low inventory of homes on the market. In Westchester County, the second quarter single-family home sales of 1,583 declined 14.2% compared to the second quarter of 2021. However, when compared to the second quarter of 2019, single-family home sales in Westchester were up 5.5%. Condo sales in Westchester for the second quarter of 2022 were ahead of 2021 by 4.7% and co-op sales came in 14.8% higher than the 2021 second quarter numbers. The single-family median sale price of $885,000 was 6% higher than last year, the condo median sale price of $450,000 was 11.1% higher than 2021, and the co-op median sale price of $203,000 was 6.8% higher than the previous year.
In Putnam County, single-family home sales of 243 were down 19.8% compared to the second quarter of 2021, but when compared to 2019, the number of sales were identical. The median sales price of $480,000 was 8.6% higher than the second quarter of 2021. Rockland County experienced a steeper fall-off, with single family home sales down 22.8% and condo sales lower by 31.3%, however, when compared to the second quarter of 2019, the 2022 second quarter numbers were slightly ahead. The single-family median sales price of $645,000 for the second quarter of 2022 in Rockland County was 17.3% higher than 2021.
In Orange County, the second quarter single-family home sales number of 846 was down 12.3% over the 2021 second quarter, and the condo sales number of 119 was off 4.9%. The single-family home median sales price was up 15.3% at $415,000 and the median condo sales price of $275,000 for the second quarter was a 25% increase over the 2021 second quarter. In Sullivan County the single-family sales number of 273 was off 19% over the previous year but was up more than 25% when compared to the second quarter of 2019.
The Bronx market was the outlier in the Hudson Gateway Association of Realtors market area in the second quarter of 2022 with overall sales up 6% from 12 months earlier. Single-family home sales increased 19.7% over the second quarter of 2021. The median sales price of $617,500 was 9.3% ahead of last year.
HGAR President Anthony Domathoti said that the Federal Reserve’s push to raise rates to control inflation has impacted the overall market. Domathoti, who is Broker/Owner of EXIT Realty Premium in the Bronx, said that some first-time homebuyers are being priced out of the market.
He also noted that contract retractions are on the rise because buyers monthly payments have increased to unaffordable levels. Domathoti advised buyers to persevere and that conditions will eventually return to a more normal market.
When asked about why the Bronx is outperforming neighboring suburban markets, Domathoti said, “The Bronx is literally on fire,” noting that foreign investment has fueled the strong sales activity in the Bronx and he doesn’t see any major let-up going forward.
Joseph Rand, chief creative officer and managing partner at Howard Hanna | Rand Realty, said the second quarter homes sales numbers in the Hudson Valley “tell a clear story of a seller’s market cooling, chilled by a surge in interest rates and increasingly skeptical buyers scared off by what two years of double-digit appreciation have done to pricing in the region.”
Rand echoed sentiments by OneKey MLS that the current market is still strong, and is comparable to the sales volume posted in 2018 and 2019.
“The seller’s market might be fading, but that doesn’t mean we’re going to see an immediate shift to a buyer’s market,” Rand noted. “Indeed, we see several signs that the market might just be returning to a more normal, balanced state following an abnormally large two-year tidal wave of activity following the end of lockdown restrictions, a surge in pandemic-driven urban to suburban migration and the desire to lock in what were at the time historically-low interest rates.”
In terms of where he sees the home sales market going forward, he expects activity will track near 2019 levels. “As for prices, we believe that we won’t see double-digit price appreciation again this year, but expect that low inventory will continue to drive meaningful price increases through the rest of the year and into 2023,” Rand predicts.
Houlihan Lawrence in its second quarter reports pointed to low inventory as a key issue in the current market.
“The supply and demand ratio at every price point has remained unsustainably high for several years. Inventory levels are expected to rise slowly, but right now remain historically low. Paired with current demand, prices should endure. Uncertainty in the economy, however, has caused buyers to be more cautious and discerning. As a result, sellers will have to pay close attention to pricing,” said Liz Nunan, president and CEO of Houlihan Lawrence.
The region’s luxury market has slowed as well and a closer look indicates that rising rates are having an impact, according to Houlihan Lawrence.
“Rising mortgage rates impact the decision to stay or move. The luxury buyer has the resources to absorb higher payments, however many would-be buyers who recently refinanced or purchased at a 3% mortgage are reluctant to trade their existing home and assume a significantly higher mortgage on a new purchase. Should their desire for a new home be stronger than practical implications, many don’t want to compete in such a supply-constrained market,” said Anthony P. Cutugno, senior vice president and director of private brokerage for Houlihan Lawrence.
He added that there are other factors that are causing some luxury buyers to stay on the sidelines at the moment. “Most new buyers want to put their personal mark on a new home, but material delays, supply chain issues and labor shortages keep homeowners out of the market,” Cutugno noted. “Low supply translates into competition, and sellers still have the upper hand. However, a sense of discipline has returned to the market as buyers contend with rising interest rates, stock market volatility and record high inflation.”