Housing Inventory Plummets
Prices Plateau
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Hello all,
The current dynamics in our marketplace as we enter Spring Market 2022 have my mind racing. I find it imperative to keep a firm pulse on the market for my buyer and seller clients. This is how The Brick was born in the first place. Revealing stats coupled with market knowledge unearthed information I have yet to see post in this manner so Brick subscribers, I do believe you're first up!
Also in this issue...
NYC has historically been a housing feeder market to the Hudson Valley. This past year saw an inbound residential increase to the city with sales skyrocketing during certain months. Can this impact buyer demand in our area? Where are the top states people are relocating to? Are the migration patterns different from pre-Covid?
Want to sell, but concerned about finding your next home in such a competitive housing environment? I get it and that's addressed, too!
Here we go...
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Housing Plummets to New Historic Low in February, 2022
In April, 2021, Dutchess County hit its first historic record low of 30% below the last recorded historic low of May, 2004 in housing inventory, per the Mid-Hudson multiple listing service ("MHMLS"). Since that time, housing inventory first teetered at this low and then began descent into a whole other level of historic low. The MHMLS reported February, 2022 ended with housing inventory falling another 46% BELOW the April, 2021 first record low. Meaning housing inventory in February, 2022 in Dutchess County was approximately 76% below the last recorded historic housing low of May, 2004. This is a serious housing issue that's plagued many states throughout the country on varying levels.
Interestingly, there's another highly relevant stat in the sidelines discussed next that without market knowledge could be perplexing. How can there be an extreme housing shortage on one hand yet a solid indicator we are reaching pricing plateau on the other? Has pricing pressed the limits of the supply and demand paradigm?
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Price Plateau?
Multiple offers continue to be alive and well for homes that are solidly priced and effectively marketed; particularly if they check coveted boxes. There are homes still realizing sales over comparative value. My winery/vineyard impending sale in New Paltz will most likely set a record for highest percentage over ask in Ulster County. I already hold that record in Dutchess County for a sale in Red Hook. With inventory in such short supply and multiple offers still happening, how could suggesting a price plateau make any sense?
As shared over a year ago in the February, 2021 edition of The Brick, "The buyers have grown very sensitive to overpricing and will most often walk before subjecting themselves to an overpriced listing." Fast forward a year and this buyer sentiment not only remains, but has gotten even stronger. Hence, homes sitting in the sidelines and not selling in this heated market. I knew this without stats, but the stats have now caught up to support this reality.
Beginning in February, 2020, the month prior to the Covid and real estate shutdown of March, 2020, the MHMLS reported a 48.5% increase in average sale price in Dutchess County between February, 2020 and February, 2021. That is a serious jump for one year in any investment, particularly real estate! After the explosive first year with Covid, February 2021 to February, 2022 saw only a 1.3% increase in average home sale prices. "The pace of housing price increases may slow from double to single percentages this year" noted Danielle Hale, the chief economist for Realtor.com in a February, 2022 New York Times article. Ms. Hale was speaking on a national level as many areas are still experiencing double digit growth. It appears our double digit ship may have sailed.
There has been no historical precedence to suggest the explosive trajectory will sustain. The average home price in February, 2020 (considered pre-Covid) in Dutchess County per MHMLS was $316,304. The average price for a home in February, 2021 was $469,854. In February, 2022, $475,489. I believe we could still see some level of increase yet as buyer demand is still quite high with inventory very tight, but it will most likely continue on a marginal path in comparison to 2020 to 2021.
The buyers are out in great number. Many buyers that did not secure housing in 2021 are in the market today and they are hungry. Additionally, local buyers have increased in the market. Buyers will climb the pricing ladder against each other and we will likely see some continued upward movement in sale prices for what I predict limited time before we hit full plateau. Buyers are worn down from bidding wars. They have drawn a line in the sand with limits on asking prices that are not solidly priced. Buyers would rather wait than pay above Covid adjusted pricing. Love the sitting houses for my buyer clients, tho. I get to negotiate again!
This is exactly why I walked from a $1.2 million dollar listing a month or so ago that insisted on overpricing. I value my time and the time I have to dedicate to my clients too much to take on overpriced listings that just sit on the market. Sure, I could have gotten great buyer leads for other houses with it, but that's not the way my mindset rolls with my clients. I'm in it to reach my clients goals. That house has been sitting on the market now for well over a month (which is forever in this market.). I have four buyers in that price range alone so I have to surmise there are an abundance of buyers in that price range overall.
The first two weeks of market entry are crucial if a skilled multi-prong marketing strategy is employed from Day One to support the sale. That home is just an example of those that compromised the crucial market entry window with overpricing and will most likely end up reducing in price and/or negotiating down with a singular buyer rather than choosing the best offer and terms from multiple buyers. Ironically, if priced on mark, buyers would have likely climbed the pricing ladder against each other and may have even gotten to the inflated price the seller wanted had it been priced on mark out of the gate. My bet is that ship has sailed.
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Migration
New York State has realized a steady percentage of outbound migration since well before Covid. People leaving for, among other reasons, warmer weather, lifestyle choice and lower taxes. This is not new. Lifestyle changes bringing new full time and part time residents to the Hudson Valley isn't new, either. The Hudson Valley was on a steady incline prior to Covid. Many have discovered since Covid remote work can be just as, if not more, productive. Accessibility remained a factor for many, but overall not nearly to the point of daily commute consideration.
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But I have nowhere to go...? |
Just last weekend, I was in Wrightsville Beach, North Carolina and stopped in at the open house for a duplex home listed a few days prior. Less than 2300 square feet, 3 bedrooms on the smaller side upstairs, 1 full bath, small kitchen and street view balcony. Lower level has 2 bedrooms, 1 full bathroom, small kitchen and laundry. Small plot out back totaling .11 acre. Maintained well. $2,000,000. Partial distant view of the Inter-coastal waterway. Five or so minute drive to the beach. Click here to see. Prices have gone up exponentially everywhere it seems.
There are only two guarantees in life and one is taxes. I liked the response from the New Hanover County, North Carolina tax department when I asked how they planned to handle the $895,000 assessment if it sells for $2,000,000 on the house noted above. "Nothing" was what the tax accessor said to me. I have heard all different iterations of how taxes are going to be handled by towns throughout Dutchess County. New Hanover does things a bit different. It ends up they are doing a county wide reassessment in 2025 and waiting until then for any changes at all. With taxes being another trigger that could impact the real estate market, that solution has my vote. It's not a long term fix but it does allow us to have a better understanding of what's ahead.
Florida, South Carolina, Texas, Arizona, Colorado, Montana, etc... States that once provided refuge from high dollar housing price tags have realized exponential growth themselves since Covid. Taxes are still their saving grace (that $2,000,000 had a total tax bill of little over $5,000, including school), but it has been much more difficult to cash out in New York and find suitable housing locally or out of state. What to do?
If you are interested in selling and either staying local or relocating out of state, reach out and let's discuss your specific situation. In a sellers market, the seller is in the drivers seat. Terms will be important to help promote a smooth transition. I need to understand the full situation in order to advise. This is a challenging market to buy in. There is no doubt a chunk of the inventory shortage are people who want to sell but are afraid to without having a "Plan B" solidly in place. This is understandable, but it's all filtering in to be a bit of a jam. With buyer demand so high and housing options so low, it feels like a dam about to burst. I want to say "Please burst and bring more houses on the market!!!" but I'm a bit concerned about what the trigger might be. Bit of a quandary.
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Choosing your Realtor
For most, real estate is the singular largest investment. Trust, integrity, knowledge and transparency are key when choosing a realtor. There needs to be a connection and trust that the realtor would have your back, accurately represent and candidly advise.
Background skills to look for: project management, sales/negotiations, marketing (ask to see samples) and market knowledge. Additional skills: Luxury experience (if a luxury property), public relations, copywriting (ask to see samples), photography (I hire photographers and also take my own shots, but at a minimum a good eye for photography. Photography and videography are very important. Ask to see work samples.) and a history of working with attorneys, town/city staff, engineers, architects, historical appreciation/knowledge (if circa property) etc. Check the Department of State Licensing Services site to make sure no ethics complaints have been filed.
As is in any profession, realtors are not created equal.
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Luxury Listings
I am now representing global luxury with Coldwell Banker Realty along with modest homes and everywhere in between. I thought you may like to look at top luxury listings by county, so here you go. Here are the top 3 currently active highest priced luxury listings in (click on county name):
Just as an aside, Dutchess County continues to have the highest active luxury listing on the market out of all four counties for $45,000,000. Do keep in mind, you can ask whatever you want, but it is the buyers who ultimately determine value through the sale price.
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Coming on the Market Next Week
City of Poughkeepsie - South Side
1) This sprawling 3500 square foot split level home rests on .49 acre with in-ground pool in the coveted South side of the City of Poughkeepsie. The layout affords mother/daughter living options, if desired. Expansive finished walkout basement. Quiet, neighborhood location. City sewer/water.
Just outside of Hudson
2). Two parcels of commercial land within minutes of hopping Hudson (adjacent 2 acres and 2.8 acres with one being a corner lot) that could be purchased individually or in assemblage with up to approximately 40 additional commercial/residential/office cleared acres with Catskill views in a prime location (sneak peek of general location in pic above)
There are additional listings from modest through luxury in the hopper coming soon. The above are next up. Reach out if any of these properties would be of interest for more information and I'll keep you posted or follow me on Instagram (@HudsonValleyNest), where I often post advance "teasers" and always post as soon as properties hit the market.
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I've spoken about "wildcards" and "triggers" that can impact the real estate market in past newsletters. The first wildcard coming to the table has shown itself to be interest rates. Buying power erodes for mortgaged buyers as interest rates rise. Sprinkle in war, oil, Inflation. I don't mean to be Debbie Downer, but we exist in a highly fluid world that has shown itself to change on a dime. If you're thinking about selling, reach out and we can discuss options until we find your/family comfort.
Take good care all. Please keep me in mind for referrals. I will take very good care of those sent my way.
Best,
Sandi
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Sandi Park
Associate Real Estate Broker
Coldwell Banker Realty & Global Luxury
M: 914-522-6282
Email: spark@hudsonvalleynest.com
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Serving the Mid Hudson Valley and Global Luxury Markets |
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