NYC-Hudson Valley Housing Markets Continue To Post Low Sales, Inventory, Higher Prices
John Jordan | January 19, 2023
WHITE PLAINS—The residential sales market in the Hudson Valley and New York City continues to transition from the COVID-19 pandemic-induced frenzied period where buyers flocked to take advantage of historically low interest rates. In 2022, high inflation and the Federal Reserve’s actions of hiking interest rates to tamp down the inflation rate that reached a peak of 9.1% in June have taken their toll on buyer demand.
The latest figures supplied by OneKey MLS on the six-county market area of the Hudson Gateway Association of Realtors paints a clear picture of a sales slowdown as each county posted double digit declines in the fourth quarter and year-to-year overall sales, with one exception—The Bronx, which posted a 3.3% overall year-to-year sales decrease in 2022 as compared to 2021.
HGAR officials and area Realtors agree that while sales volume declined in 2022, in fact, sales activity was higher than transactions posted pre-pandemic in 2019. While all expect a market that will continue to adapt to higher interest rates, as one veteran Realtor cautioned, “The sky is not falling.”
Total residential sales in the counties to the north of New York City decreased year-over-year with The Bronx County leading the HGAR market area with a decrease of only -3.3% (2,485 units compared to 2,571 in 2021). More significant year-over-year decreases included Westchester County with a decrease of -12.6% (10,367 units compared to 11,866 in 2021); Sullivan County with a decrease of -15% (1,188 units compared to 1,398 in 2021); Orange County with a decrease of -15.9% (4,554 units compared to 5,417 in 2021); Rockland County with a decrease of -19.9% (2,919 units compared to 3,644 in 2021); and Putnam County with a decline of -20.5% (1,277 units compared to 1,607 in 2021).
Sales of single-family residential units year-over-year decreased across the board. The median price of a single-family residence rose in every county, with the largest being a 13.8% increase in Rockland County to $637,000 from $560,000 in 2021, yet Rockland County’s single-family home sales decreased by -21.2% for the year to 2,121 units (compared to 2,693 in 2021). Notably, Westchester County, with the highest prices in the region, had the smallest percentage increase in the median single-family home price for the year at 4.5% ($815,000 as compared to $780,000 in 2021).
Putnam County saw its single-family median price rise 11.3% to $489,500 (from $440,000 in 2021), yet Putnam County had the largest percentage decrease (-21.9%) in single-family home sales year-over-year (1,074 units vs. 1,375 in 2021). Orange County saw a 9% increase in its single-family median price to $400,000 (from $367,000 in 2021), but saw a -15.6% decrease in sales (3,754 units vs. 4,450 in 2021). Editor’s Note: Read the full HGAR Fourth Quarter and Year-to-Date 2022 Sales Report
Entering 2022, while many housing economists and analysts believe sales activity will continue to fall, at least for the short-term, there are some hopeful signs that perhaps the factors that have contributed to the downturn in the market are showing signs of improvement.
For example, NAR Chief Economist Lawrence Yun had some favorable comments after the most recent Consumer Price Index figures for December were released recently, showing the inflation rate had fallen once again. Yun said, “Inflation has been coming down. Mortgage rates will also, therefore, come down. The latest Consumer Price Index of 6.45% in December is in the sixth consecutive month of deceleration after peak inflation of 9.1% in June 2022. Housing inflation due to rising rents is the one major item still showing acceleration but is soon expected to come down as well. Rents increased by 8.35% in December, its highest reading in more than 40 years. Private sector data in recent months have been pointing to near-zero rent growth in some major cities, and robust apartment construction will raise rental vacancy rates.”
He later stated, “The 30-year mortgage rate dropping under 6% is now a distinct possibility. The gate is beginning to open for homebuyers who got shut out in October and November when the rates went above 7%. However, there is still a housing shortage and not enough listings.”
HGAR President Tony D’Anzica told Real Estate In-Depth that he believes 2023 will be a year of continued change for the residential real estate market. “I don’t think it will be transformational in a bad way,” he said, noting that buyer demand continues to be influenced by higher interest rates, low inventory and high home values.
“I think we are transforming back into what I hope will be reality because interest rates for about a decade have been at historic lows,” he said. “And I don’t think that reflects a strong and healthy market.”
D’Anzica, who is being installed as 2023 HGAR President on Feb. 2 at an event to be held at the Marina del Rey in the Bronx, added that the low interest rates were the result of “The Great Depression” that took place in 2008 and 2009 and were kept in place to keep the economy afloat at the time.” He added that he does not expect lending rates to be that low for some time, unless some major event warrants the Federal Reserve to bolster a struggling economy.
He said that for the past 30 to 40 years, mortgage rates have probably averaged between 7% and 8%, which he noted were more reflective of a normal market. He said that some Realtors were probably not in the business back in 2006, 2007, 2008 and 2009 when rates were higher and therefore have no frame of reference of what a healthy market was in years gone by.
“We should embrace a normal, stable, healthy interest rate,” said D’Anzica, who is the Broker-Owner of Dynamax Realty NYC in New York City. He said Realtors need to educate buyers and sellers on the realities of the changing market and that he expects sales will moderate, as will the pace of home value increases in the region.
Looking ahead to the rest of 2023, D’Anzica expects the structural changes to continue in the real estate market and over the long term as rates stabilize at their current level and prices of some homes will become more affordable. “In 2023, we will see more moderate sales. There might be growth, but much more moderate,” he predicted.
He said there are a number of potential headwinds that could impact the real estate market in 2023, including the ongoing war in Ukraine.
Veteran Realtor Leah Caro, who is president of Park Sterling Realty in Bronxville, appearing on the Building and Realty Institute’s “Building Knowledge” radio program on WVOX on Friday, Jan. 13, told listeners that sales in single-family homes, condominiums and cooperatives were significantly higher in 2022 as compared to the pre-pandemic period in 2019. However, listings are significantly down year-over-year in comparison to 2021.
“The sky is not falling,” Caro said, “despite what you may be seeing on the news about the economy and real estate, it is actually not in bad shape.” She said market conditions going into 2023 are in fact better in many cases than 2019, which at the time was considered a healthy market. Caro added that in 2023 the market “seems to be heading back into some normalcy.”
Houlihan Lawrence in its recent market report for the region also pointed to some market shifts that may be signaling a more normalized market. “As we enter 2023, conditions remain ideal for sellers who properly price their homes, as discouraged yet price-savvy buyers continue to wait for new inventory,” said Liz Nunan, President and CEO of Houlihan Lawrence. “Our communities across Westchester, Putnam, and Dutchess counties continue to attract new residents looking to establish new roots and inspire existing residents to move within our towns.”
In the brokerage firm’s luxury market report, Anthony P. Cutugno, Sr. Vice President, Private Brokerage of Houlihan Lawrence, said that pressure from employers to return to the office, lay-offs at technology companies, and smaller Wall Street bonuses may temper the luxury housing market in 2023.
“The market is admittedly complicated. The first half of 2023 will likely see a decline in sales north of New York City, though even a sharp drop does not mean the market is collapsing,” said Cutugno. He explained that the past two years of luxury sales in Westchester are about equal to the aggregate homes sold in 2016, 2017, 2018, and 2019. “Perhaps 2023 will recalibrate our expectations of a healthy real estate market as the shadow of the pandemic recedes.”