Reminder: Thorny Stems? The Brick: Hudson Valley Real Estate

March, 2023

Thorny Stems?

Hello all,

The Hudson River blanketed in reflections of clouds and Catskills was a beautiful Sunday treat. The last time I captured clouds on water with this clarity was on Sylvan Lake in Hopewell Junction when I represented the Stonegate subdivision a few years ago.

Is a bell going to ring and suddenly the market turns full throttle with Realtors buzzing along skip in step? The market has demonstrated varied iterations of funky since 2020. I don't think 2023 will be the finale year of the upside down real estate market era since Covid. I would love to be wrong, but I believe there is more to come that could easily extend beyond 2023 before the pendulum finally rests.

Interest rates have been demonstrating continued aptitude to alter market conditions. The "lock-in effect" refers to approximately two thirds of homeowners nationwide holding mortgages that are 2.5 percentage points or more less than they would qualify for today, per Black Knight research. This lock-in will likely continue to disincentivized sellers in need of mortgage for subsequent purchase. There's more brewing, though. Even with higher interest rates, what has the capacity to shift this lock-in effect to sell regardless?

One of the key drivers for outbound migration since well before Covid. Taxes. I discussed outbound migration and taxes in the February, 2021 edition of The Brick. Click here for the back issue. With many towns reassessing last May and additional reassessments expected in certain municipalities this May, taxes can prove problematic for certain buyers and sellers.

Could the lure of lower taxes in other areas of the country boost outbound migration in the days ahead? I stand by my stance in the December, 2022 edition of The Brick: "Rubble and Ruins?" when noting a county in North Carolina as prolific for waiting until 2025 for reassessments. Click here for the back issue.

What's happening in the Kingston rental market that could make US history?

Let's go for it...

Supply and Demand

There are less buyers in the market, but still enough to create multiple offer situations on certain properties. More the norm these days appears a much tighter margin when going over asking. I have also heard limited instance of multiple offers under asking.

This is all logical considering there are far more mortgaged than cash buyers in the market these days with need to consider the appraisal, unless the buyer secures an appraisal waiver from the lender. Sensitivity to the notion of overpaying has existed all along with consistent buyer aversion to overpricing. The buyers of today have become more cognizant when climbing the pricing ladder against each other between affordability issues and potential of holding an overvalued property, which can also impact taxes.

There was a real estate section cover story in the New York Times that I was featured in discussing this very issue. The story was back in July, 2021 and is still relevant in many facets today. In that story, I referred to it as an "overpriced potato". Not sure where that "Sandi-ism" (as my clients call it) came from. Click below to read the New York Times article referenced "Finding a Home in this Overheated Market." This article was repurposed by the New York Times a year later in June, 2022 for its continued relevance.

While I do believe there should be expectation of closed sales not realizing the flights over asking experienced during frenzy height, so far this has not been the experience with my listings, including now in contract Traver Road in Pleasant Valley. That listing went on the market in the beginning of February and is slated to close later this month for nearly six figures over asking. I thought those days were done, but apparently not yet for certain listings. Here's the listing.

I am anal about solid pricing and effective marketing. When my clients enter the market, I know all activity around their price point and fully leverage homes languishing on the market (aka "Sitters") to my clients benefit. Why not give purpose to those sitters, right?!

With this particular listing, there was a competing home around the corner. That house came on the market last June and had its most recent price reduction five months prior, in October. Traver Road entered the market at $469,000 the first week in February, eight months after the "sitter" entered the market around the corner.

With twelve offers, eleven other buyers did not gain acceptance, proving there are still multiple buyers looking in this price point and location. Yet to this day, that other home remains sitting on the market. In current market conditions in Dutchess County, if the home is priced solid, marketed effectively, void of real condition and/or location issues and priced under $500,000 - an accepted offer should generally be expected in less than two weeks. This reality combined with continued lack in inventory and heightened demand has been holding our area in a sellers market.

I often have personal goals for my clients that I do not vocalize as comparatives most often do not support them. I stay the course with comparatives combined with market knowledge and advise a solid price range to enter the market strong. Regardless of my sales track record, which has seen multiple offers over asking for nearly every listing, buyer behavior cannot be promised. I share this reality with all clients.

If I priced the properties at my "personal goal" price, the property would likely have sat on the market and ended up reducing in price with a singular buyer. However, since I rather favor the paper comparatives/market knowledge combination over personal goals when counseling suggested range, the price hits mark for targeted buyers and client after client have enjoyed returns aligning with personal goals while exceeding comparative logic. The strategies employed for my clients have yielded consistent, and often record breaking, results.

The days of multiple offers are showing signs of settle down, but the premise all along of solid pricing and effective marketing have proven relevant in ANY market condition.

The Numbers

Single family detached in Dutchess County is showing only moderate increase in median sale price of 2.5% YTD and 5.2% current, both February 2023. This speaks to an overall notion of "leveling off" anticipated.

Attached residences realized much larger YTD gains for February with YTD up 12.4% and current 13.7%. Both single family detached and attached residences are down in closed sales.

There have been some real moments of crickets in the market as inventory drips onto the market. Per Mid-Hudson MLS, Dutchess County is up 29.8% with 429 active and available listings on the market as of February, 2023 versus 329 in February, 2022. Don't get too excited, though.

Comparisons to heightened inventory shortage are not the best perspective. Let's go back to February, 2020. The month before Covid shut down. That was the last "normal" month in real estate. In February, 2020, 871 listings were available on the market, which was down 7.7% from 944 in February, 2019. Net net - Dutchess County is still down by over half normal inventory levels, even though "up" 29.8% from last year.

There are other parts of the country that are experiencing heightened levels of inventory and price adjustments. The country is experiencing adjustments in pockets, much like it did going into the frenzy. In New York, frenzy hit late May/early June, 2020. In Austin, Texas, for example, the frenzy did not kick in until January, 2021. I recently interviewed top producing Austin Realtor Shannon Mangin for a series I host on Instagram "Coast to Coast." (@hudsonvalleynest)

In the interview, Mangin shared Austin had a median sale price of $350,000 in January, 2020. By January, 2022 the median sale price had exploded to $650,000. Hearing that jump in interview took my breath away. Overall, Austin realized an increase of approximately 85% in median sale price 2020-2022.

Dutchess County realized an increase over that same period of 39%, which may not be as high as Austin, but is still significantly higher than normal trending in the area, Austin is now experiencing an adjustment with prices down approximately 20%. For full interview, click here.

Florida is up next for interview and I'm working on London as the first International perspective in the series. Follow along on Instagram for more @HudsonValleyNest.

Interest rates or taxes?

Interest rates have garnered much focus, as well the volatility should, but taxes are eating away at buyers, too. For homeowners, I would not be surprised to see an increase in tax liens in the days ahead and grievance department overload.

Real estate in our area in 2023, and at a minimum 2024, could realize real impact as levies compute against adjusted assessed values and municipalities in towns without assessment adjustment carry higher rates.

I have buyers that were interested in a $1,250,000 home currently on the market. They love the home and if it weren't for the taxes, would have pursued. However, the home is currently being taxed at nearly $17,000 per year at an assessment just under $750,000 in a 100% assessed municipality (read: assessment will likely adjust after closing.)

To stay in budget, my clients are passing on the house and lowering price point with focus on certain towns carrying lower tax rates in order to stay in budget. Most municipalities are at 100% in Dutchess County. There are some nearing 100%, but then there are three municipalities with the highest school tax rate in the county and have also not reassessed in up to over three decades. Current assessment percentage in parentheses: Dover (42%), Hyde Park (44.75%) and Pawling (38.75%). Those who know me know I'm a Hyde Park cheerleader as a long term play, but I do have to say, not loving the current tax situation as further discussed below.

Assessments

Tax computations, which vary by municipality, can be confusing. I routinely speak with tax departments and still have moments of confusion myself and I'm a Realtor. Not being at 100% opens the door for more drastic bumps when reassessed while also carrying higher tax rates. The amount actually taxed comes down to the levy/rate.

With the lowest assessment percentages in the county, below are school tax rates per 2023 Dutchess Real Property Tax Services pamphlet available here.

Dover: $40.35, Pawling: $52.70 and Hyde Park: $43.29. Hyde Park residents in Arlington CSD: $57.02. Pawling residents in Arlington CSD: up to a whooping $65.85.

For comparison, here are the lowest school tax rates in the county (who happen to all be assessing at 100%): Webutuck (Town of Amenia): $10.28, Pine Plains $11.36 and Rhinebeck $12.14.

Taxes have shown themselves to be just as high in repellent for buyers as overpricing. Even if a home from a comparative perspective should yield a higher sale price more and more buyers are walking if the assessment spread from sale price leaves an anticipated lack of affordability upon assessment adjustment post closing. This will likely push certain properties for sale to more contained asking prices. Highly likely this will be the case for the $1,250,000 property noted above that my clients took a pass on.

Tax Deductions

While on taxes, don't forget certain real estate tax deduction options that may be available when filing returns. Kiplinger put out an informative article "13 Tax Breaks for Homeowners and Buyers."

"Best of" Realtor nomination by readers choice! Woohoo!

This was a good run in one week - a nomination and award. I was very touched by the Chronogrammy nomination as I didn't even know a nomination was going on. This was a readers choice award out of thousands that was completely unsolicited.

Chronogrammy is a yearly "best of" Hudson Valley vote in different categories from Chronogram Magazine, a division of Chronogram Media, with over 2.5 million readers.

I was nominated into the "Top 5 Best Realtor" bucket. Voting starts April 1st. I am horrible about asking for reviews and have never asked for a nomination vote, but I appreciate that people took time to put me in the hat. I'm going to provide the link to vote in the next edition. If you're feeling it and happen to be casting votes before the next edition, throw me a vote! Votes are allowed once a day starting April 1.

Testimonial

"Sandi Park is not a salesperson, but a partner along with you on your journey."

K. Luber

Stay or Leap?

Logistics, finances and circumstances are top driving factors, whether considering buying, selling or both.

If just one factor lacks clarity, a state of suspension can easily take homage. The decision is highly individualistic. If you’re in the space of stay or leap, let’s talk it through. I will thoughtfully consider your specific situation and call a spade a spade.

With interest rates continuing to show volatility and valuations still holding in our area, it is most prudent to gain timely clarity and peace with decision, one way or the other.

Should affordability in current housing be an issue, one of the worst things can be avoidance. Proactive tends to be a much stronger position than letting things play out.

Give a call or email.

Builder/Developer Push Back?

The success of suburbs hinges on the ability to speak to current resident needs and projected changing demographics. Could municipalities have anticipated the level of demand since Covid? I don't see how. However, was Covid really the start of housing issues in our area? Were builders and developers being pushed out? Click here to watch two minute "Sandi's Not So Politically Correct Take." I am referencing a project in southern Dutchess in the video.

KINGSTON

Stay or Go?

During the height of frenzy, in July 2021, the National Association of Realtors posted Kingston as the hottest real estate market in the entire country. The average price in the city was posting 34% growth year over year with sales volume in residential sales up over 90%.

Backing up to the year prior in August, 2020, Sara Franklin, journalist with The New York Times, shared what now appears a prolific perspective on the tenant situation already brewing before Kingstons popularity went full throttle. Click to read article: "Kingston - a City Remade by the Coronavirus."

Fast forward. Tenant affordability in Kingston has hit spotlight. The Guardian just released an article 'It's legal, there's just no precedent'; the first US town to demand a rent decrease." I'll let the article speak for itself, but Kingston may be making history and setting a precedent for other areas throughout the country with this one. Read the article.

ULTRA LUXURY

Currently, there are only two ultra luxury ($10,000,000+) residences on the market in Dutchess, Columbia and Ulster counties, per Mid Hudson MLS. I am working on introducing a third (ssshhhh ;).

In case I haven't mentioned, I am a Global Luxury Specialist with extensive direct worldwide network and results driven marketing. My brand, Hudson Valley Nest, focuses on properties $1,000,000 and below. Properties $1,000,000+ are handled through my other brand: The SPA Luxury Group with premium offerings available in conjunction with my global luxury team at Coldwell Banker Realty. Both Hudson Valley Nest and The SPA Luxury Group offer clients unparalleled service and exposure (read: you're getting white glove from me either way)

Here's the link to the two ultra luxury listings currently on the market: ULTRA LUX

Year End or Other Back Issues?

The Brick community keeps growing! If you are a new or established subscriber and would like to reference the January edition which took a Year End look town by town or other back issues, visit The Brick landing page on my website here.

Just click on the "x" in the upper right corner of the pop up box to close it out and you'll see back issues.

It's a wrap! I have some interesting listings coming up. I'll keep you posted. Should you be interested in selling your property, let's talk! I deliver proven results for my clients, backed by solid testimonials.

Should you have any questions on the market, feel free to reach out. I post updates, tips and advice, house tours and tidbits on Instagram (@HudsonValleyNest), follow along!

I am never too busy for your referrals and will take very good care of those sent my way.

Happy Spring Market!

Sandi