April, 2021

Hi all,

Spring Market is kicking in and we are TIGHT in inventory throughout the Hudson Valley region. For one example, Dutchess County is down 31.6% in inventory first quarter 2021 versus first quarter 2020, per Mid Hudson MLS. By any standard, that is significant. This is not just about low inventory, though. There are dynamics at play and realities in the sidelines that warrant contemplation when considering how to realistically set expectations and best leverage the market ahead.

Inventory Levels, Median Prices and Sustainability

The Hudson Valley region is up in sales and down in inventory across the board. According to Real Estate In-Depth, a publication produced by Hudson Gateway/OneKey Association of Realtors, Westchester was up 35.3% in units sold first quarter 2021 over first quarter 2020. Orange County 54.2%, Putnam and Sullivan Counties up 62% each and Rockland County 36.5%. Per Mid Hudson multiple listing service, Dutchess County is up 46.6% in units sold first quarter 2021 versus first quarter 2020.

The first quarter median sale price for Dutchess County is up 24.3% to $369,875. Westchester County realized a more conservative median sale price rise compared to Dutchess County in first quarter with a 10.8% increase. The "hottest spots" in Dutchess County continue to be Beacon and the Northern Tier, per Mid Hudson MLS.

To see the full report from Hudson Gateway/OneKey Association entitled "Staggering First Quarter Sales," click here. To see more on real estate projections, there is another article further down "In the Press" section, which includes several interview excerpts with yours truly.

The City

Q3 Rally in the Hudson Valley was Q3 Slump in Manhattan. Per UrbanDigs, closings were up 66% in Manhattan versus Q3 2020. The Manhattan real estate market is quite busy these days with one source quoting the busiest March in 14 years. While still in a buyer's market (defined as low prices/high inventory), Manhattan appears to have licked their wounds with slow rise from the bottom low. Conversely, the Hudson Valley is still very much a sellers market with frustratingly tight inventory. It's well established the city has been the driving factor for off the charts influx into our area. The City and Hudson Valley have an underlying commonality that is currently keeping the tank full in both market types: low interest rates.

Interest Rates

The all time interest rate low hit in January, 2021 at 2.65% (per Freddie Mac Weekly Survey) As of April 1, 2021, it was 3.18%. There was a slight drop from the steady rise today, but overall the interest rates have risen nearly one half a percentage point since January. As of today, the interest rates are still considered favorable. Several of my cash clients have and continue to opt to invest their liquidity elsewhere and finance, but this stance could change quickly if rates continue to rise.

Interest rates have a direct impact on buying power and by extension, the real estate market as a whole. Should interest rates continue to increase as speculated, some buyers could be out of the rings all together with others dramatically altering price range sought. Just under two years ago, in May, 2018, interest rates hit 4.66%, which was the highest in seven years. The start of that year, only four months prior, saw 3.95% while in September, 2017, the interest rates hit a low of 3.78%. In an eight month span, interest rates increased by nearly a full percentage point. In this instance, rates have risen nearly a half a percentage point in three months. There are more than a few wild cards in the sidelines with that one having the aptitude to alter the real estate market climate in short order. Needless to say, I'm keeping a watchful eye on interest rates.

Expired and WIthdrawn Listings

An expired listing is a house that did not sell during the term of the listing agreement. Withdrawn listings are a mixed bag. A Realtor could mark a listing as withdrawn prior to expiration or a seller could direct to withdraw the listing for other reasons. I included withdrawn listings in the count as there are a healthy enough amount that were listings set to expire to be relevant for the following discussion.

While these numbers could be pulled in all counties, Dutchess County will be used as example. The amount of expired and withdrawn single family home listings in Dutchess County April 1. 2020-April 1, 2021 was 1,395. To share perspective, April 1, 2019-April 1, 2020 (pre-Covid) only saw a marginal increase in that number. In my opinion, the current inventory shortage offsets the difference between years. This means that even during the height of inventory shortage, just about the same amount of houses expired or withdrew as in the pre-covid year prior.

What does that mean? I know I've said this before, but the numbers only further drive the point. Buyers will generally walk before subjecting themselves to an overpriced listing, even in a heated market with significantly tight inventory.

Case Study on Pricing

The March edition of The Brick, featured one of my "just on the market" listings at 56 Livingston Street, Rhinebeck, (click here to see listing with house tour video link under photos). My client enjoyed an accepted cash offer well over asking price with impressive back ups within four days and fully executed contract in seven. Yet the other listings that were not mine and on the market at the same time in the Village of Rhinebeck still sit and have realized either price reductions or expirations during the same period mine flew off the shelf. I knew the other listings were overpriced and leveraged that fact to my clients benefit. Another case in point, the Red Hook listing I sold in the Fall. That listing sold for 43% over ask and set a record in Dutchess County. The comp I prepared for my clients' accountant prior to closing revealed price reductions prior to selling with ALL six houses in the comparative. This isn't a "pat on the back moment." These sales and those around them clearly demonstrate multiple offers and over ask are still absolutely happening (at least for my clients! :), but quietly in the sidelines there are homes sitting, expiring and/or reducing in price before ultimately selling even in this tight inventory environment.

The emotionally charged "frenzy" of 2020 has given way to what I believe is more accurately now defined as "heightened interest" in 2021. In my observation, buyers have become more patient and considered in their purchase than in 2020, which frankly, I think is healthier for both buyers and sellers. There were an inordinate amount of "back on market" emails that circulated due to buyers getting cold feet after "winning" a bidding war in 2020. Going back on the market is generally not ideal for sellers.

I spoke with a fellow Realtor about the homes that are not selling. The Realtor's response encapsulated at least a part of the problem. The "strategy" this Realtor shared was to "price high and then reduce." This is an entirely different approach than I employ with my client base. I set two records in 2020 with my clients' sales so I feel pretty confident about my strategies and anal attention to pricing, but in fairness, I took a look at that agents sales history. Guess what? A bunch of expirations and price reductions. This was not a surprise and unfortunately some sellers may be feeding into the situation with direction to Realtors to price higher than sound Realtor counsel. I am hopeful there will be mindset adjustments in these instances as there are a healthy amount of buyers that are ready to buy and accept Covid adjusted prices; within reason. It would be a shame for sellers who truly want to sell to miss such a favorable sellers market by holding out for unrealistically high prices as I don't think this party will last forever.
In the Press - "Record Breaking Sales"

Included in last issue, but carried over into this edition in case it was missed as it is still highly relevant, Times Union (www.timesunion.com), published an article that I contributed quite a bit to: "Record breaking Hudson Valley real estate market pace continues". Click on that link if you would like to read more.

Get While the Going is Good!

I don't see a crash, but I do see an adjustment coming. I worked through the bubble and burst in the early 2000's. There is no precedence that indicates the current trajectory can or will sustain. For buyers, the favorable interest rates mean increased buying power. What I have been telling my buyer clients is that it's the time to buy if we find what they are looking for at a comfortable price. I tell my seller clients, if you're interested in selling, get while the going is good!

There is much going on in the sidelines. The forbearance and eviction moratoriums readying for lift will likely feed more inventory into the market, which can impact supply/demand, interest rates increasing, etc.. Spring Market 2021 is simply not a market to miss.

I maintain offices in Lagrangeville and Rhinebeck to best accommodate my varied client base of sellers and buyers throughout Dutchess County. I have added areas in Ulster and Columbia to broaden options for my client base. Drop a line if you prefer a seasoned real estate professional to help navigate these waters.
Most Recent Issues of The Brick (Click on month of interest)

March, 2021: "Spring Market Here We Come!" (with feature on Rhinebeck and Red Hook)
February, 2021: "Ticking Time Bomb for 2021 Housing?"
January, 2021: "Year End Round Up"
The Straight Talk Series on YouTube @hudsonvalleynest
with Sandi and expert panelists

Wishing you and your families the best of health and happiness during our challenged times and beyond. I appreciate your referrals and will take very good care of those entrusted with my services.

Best always,

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Sandi Park
Associate Real Estate Broker
Berkshire Hathaway Home Services
Hudson Valley Properties
M: 914-522-6282
Serving the Dutchess County market with offices in LaGrangeville and Rhinebeck, NY