The Westchester and Hudson Valley regional housing market surged again in the second quarter of 2016, with sharply rising sales finally starting to have an impact on pricing, particularly in the mid- and entry‑priced markets throughout the region.
Sales. Activity continues to surge, with regional sales up over 26% compared to the second quarter of last year, and rising in every county in the Rand Report. We’ve now had sales going up for over four years, with regional transactions rising in 16 out of the last 18 quarters. Most importantly, we’re now seeing sustained sales increases driving sales totals to levels that rival the height of the last seller’s market, with almost 15,000 single‑family homes and 3,000 condos sold over the past 12 months.
Inventory. Available inventory continues to tighten throughout the region. In the real estate industry, we measure inventory levels by looking at the “months of inventory” available at any given time on the market, and consider anything under six months of inventory as an indicator of a “seller’s market.” Well, we are not yet under six months in any of our regional markets, but we’re moving in that direction, with months of single‑family inventory down 24% in Westchester, 38% in Putnam, 32% in Rockland, 39% in Orange, and 25% in Dutchess. Condo inventory was also down, falling 38% in Westchester, 48% in Putnam, 9% in Rockland, 29% in Orange, and 18% in Dutchess. Both Westchester and Putnam condos are now below six months worth of inventory, and other counties are closing in on the threshold.
Prices. These sustained surges in sales activity are not, though, yet having a widespread impact on pricing. You’ll notice on the accompanying graph that regional average prices have been ticking down for the past year or so. This is a little surprising, given that basic economics tells us that increasing demand coupled with falling inventory should drive prices higher. But we caution you not to read too much into the regional price decline, because the relative strength of activity in the lower priced markets (Putnam, Rockland, Orange, Dutchess) compared to Westchester has changed the mix of properties sold over the past year. Indeed, if you look at individual counties, we had price appreciation in Putnam, Rockland, and Dutchess, and mixed results in Orange. It was only in Westchester that we had prices go down, but even there we believe that the drop was largely caused by a relative lack of demand in the very high end of the market, for homes selling above $3 million. In other words, both the regional price decline and the price drop in Westchester are partly caused by the relative strength of lower‑priced markets compared to higher‑priced markets throughout the region.
Going forward, we expect a robust summer market. The fundamentals of our regional market are strong: demand is rising, inventory is falling, interest rates are near historic lows, and the overall economy is doing fine. Accordingly, we expect that sales will continue to outpace 2015 levels, and believe it’s only a matter of time before the sustained increases in buyer demand start driving meaningful price appreciation throughout the region.