WHITE PLAINS—The continuing decline in for-sale residential housing inventory in the Hudson Valley has put a crimp in overall sales, but has also placed upward pressure on home values.
Realtors interviewed by Real Estate In-Depth say the current seller’s market is expected to remain static for most of this year, with strong buyer demand and low inventory levels throughout the four-county region of the Hudson Gateway Association of Realtors.
HGAR subsidiary the Hudson Gateway Multiple Listing Service Inc. released its “First Quarter Residential Real Estate Sales Report for Westchester, Putnam, Rockland and Orange Counties, New York” report earlier this month that showed mostly mixed sales results, but higher sale prices in all four counties.
The inventory of a single-family residence fell sharply in the first quarter, down 7.3% in Westchester, 12% in Rockland, 21.5% in Putnam and 17.1% in Orange County as compared to the first quarter of 2017.
Strong demand and the inventory shortage fueled in some cases sharp increases in the median single-family home price in all four counties—Westchester’s single-family home median rose 2.2% to $613,250; Putnam County posted a 9.4% rise in the single-family median to $323,750; Rockland County’s single-family median inched up 2.4% to $435,000 and Orange County’s single-family home median rose 4.3% to $240,000.
That lack of inventory was at least a contributing cause to Westchester County’s 2.3% decline in overall residential sales. A bright spot for that market was a 1.1% increase in cooperative sales for the quarter. Single-family home sales in Westchester fell 5.6% over the first quarter of 2017, however.
Rockland County experienced the largest decrease in residential sales in the region at 13.7%. Orange County’s overall residential sales fell 1.4% in the first quarter, while Putnam County posted the only sales increase in the region at 7.2%.
HGAR President Barry Kramer, co-owner of Westchester Choice Realty of Scarsdale, said that low inventory is affecting both the single-family home market as well as the more affordable cooperative sector, which actually saw both sales and price increases in the first quarter.
Kramer said that demand is high and noted that cooperatives likely saw a sales increase because co-ops provide a viable option for those looking for more affordable housing in Westchester County.
In terms of the overall market, Kramer said, “If a property is priced right, you are seeing multiple bids, which I think is a reflection of the low inventory.”
He said that demand is strong in all market segments, including multifamily. Kramer noted that there are many investors in the market looking to purchase multifamily. “What is also happening in regard to multifamily is there are a lot of people who cannot necessarily afford a single-family home who are looking to purchase a multifamily because then they can have a source of income with the second apartment.”
Kramer said the market is healthy, despite the inventory issues. He is hopeful that with the warmer weather, more homeowners will decide to take advantage of the seller’s market and put their properties up for sale.
Better Homes and Gardens Rand Realty, in its quarterly market report for the lower Hudson Valley region specifically pointed to the lack of inventory as a key issue in slower sales growth and higher sale prices.
“The housing market in the New York City northern suburbs of Westchester and the Hudson Valley has become a fully-realized seller’s market, with declining inventory stifling sales growth while driving meaningful price appreciation throughout the region,” the Rand report stated.
Joseph Rand managing partner, Better Homes and Gardens Rand Realty, said in reference to the high demand, coupled with low inventory levels region-wide, “There is no fuel for the fire.”
One market that is thriving, despite depleted inventory levels is Orange County. Rand said that Orange County is now enjoying sustained price appreciation in both the single-family and condominium sectors. He noted that Orange County has seen seven straight quarters of rising home prices, and he expects that streak to continue in what he believes will be a robust spring market in Orange County.
He noted in the report, “Going forward, this is what a seller’s market looks like.” Rand predicted that at least for the short term, Realtors can expect lower sales levels and higher sale prices due to constrained inventory. However, he did offer some hope for conditions to begin to change later this year.
“At some point in 2018, this price appreciation will attract more sellers into the market, which will increase supply, bring sales up, and moderate price increases,” he said. “But that will not happen right away, so we expect a spring market with even lower levels of inventory, which will stifle sales growth, but continue to drive robust price appreciation.”
Rand warned that if inventory levels don’t increase sufficiently later this year, the market could see significant increases in home prices.
J Philip Faranda, Broker/Owner of J. Philip Faranda Real Estate of Briarcliff Manor, echoed the sentiments of his colleagues that low inventory levels have been a drag on sales activity in the region. Faranda also operates real estate brokerage branch offices in Pelham and Mahopac.
“As good as the numbers might be, if inventory were higher they would just be so much better,” he said.
The constrained inventory and the multiple bid environment for quality properties has been a source of significant frustration for buyers. Faranda said pent-up demand, particularly for entry-level housing in the lower Hudson Valley is enormous.
“We have lost clients who have gotten frustrated because they lost out in two or three bidding wars,” Faranda shared.
In fact, demand is so keen, Faranda said that sellers of quality properties can expect to secure multiple offers over asking price almost immediately.
“The frustration among the buyer’s agents and buyers who have been out there for a while is palpable,” he added.
Faranda believes that the low inventory levels, combined with the extended period of artificially low borrowing rates, have created “upward pressure on prices for reasons other than organic.”
Some other headwinds for the market include higher interest rates and high property taxes that might prompt homeowners to remain in their homes and delay their next home purchase.
“Think about this, if you refinanced into a 3% or 2.75% interest rate five years ago, and you would organically move about now, but you are looking at rates that are almost 50% higher than what you are currently paying, you could mow the lawn for another year, you could deal with empty bedrooms for another year,” Faranda said.
Faranda, like Rand, believes that eventually homeowners will jump off the fence to take advantage of the seller’s market.
“I think there will be an 18-month lag where the consumer population catches up on the fact that it is a good time to sell, and unfortunately they will have lofty expectations born of the spike that we are in,” he predicted. “That could complicate things.”
For 2018, Faranda believes that more sellers will put their properties on the market toward the tail end of this year. “I think we are going to have a strong finish for the year and hopefully there will be some balance as we enter the next few cycles,” he noted.