Real Estate Market Report: Third Quarter 2016 – Westchester & Hudson Valley Market Overview

overview-bhg_ny-west-hv_q3-2016-qmr-digitalThe housing market in Westchester and the Hudson Valley in the third quarter of 2016 defied the standard economic laws of supply and demand. Sales were up and inventory was down, but prices were flat across the board. Why? Maybe buyers are just leery of making a move during a tumultuous presidential election year.

Sales activity continues to increase throughout the region. Sales were up compared to the third quarter of last year in every county in the Report, ranging from a modest 2% increase in Westchester to a robust 18% rise in Orange. We’ve now seen sustained sales increases for almost five years, with regional yearonyear sales going up in 17 out of the last 19 quarters. And we’re reaching transactional totals we haven’t seen since the height of the last seller’s market, with the region hitting 15,000 singlefamily home sales for the first time since 2016. We did see some signs, though, that the pace of growth might be slowing: regional sales were up only 8% for the quarter, relatively disappointing in a rolling year where sales rose almost 17%.

Inventory continues to tighten throughout the region. The supply of homes for sale is falling throughout the region, down in almost every county in the Report: dropping 20% in Westchester, 31% in Putnam, 17% in Rockland, and 21% in Orange. And if you look at the months of inventory available given the current rate of sales, we are already approaching the sixmonth inventory level that usually signals a tight seller’s market. For singlefamily homes, Westchester is already below six months at 5.8, and the other counties are getting close: Putnam at 7.3, Rockland at 6.4, and Orange at 8.1. And for condos, it’s the same story: Westchester at 3.7, Putnam at 4.7, Rockland at 7.1, and Orange right at 6.0.

So with demand up and supply down, why aren’t prices rising?  Prices were down modestly throughout the region, and in most of the counties in this Report. We can think of three reasons.

  1. Disproportionate strength in the lowerend markets. The fact that sales were up 18% in lowerpriced Orange and only 2% in higherpriced Westchester might be a sign that demand is stronger at the entrylevel. That would tend to drive overall pricing down a bit.
  2. Buyers are still spooked by the financial crisis and meltdown of 200809. Maybe buyers aren’t yet willing to give in to seller demands for higher prices – that would blunt the impact of declines in inventory, and might also explain why sales increases have tapered a bit.
  3. The impact of a particularly tumultuous presidential election year. It’s tough to get data on this, because we have so few presidential election years to use as comparison points. But real estate agents have traditionally complained about the difficulty of selling homes during a presidential election – and we expect that this election is especially fraught for home buyers (on both sides).

Going forward, we are hopeful that the market will close the year well. The fundamentals of our regional market are strong: demand is high, 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 these falling inventory levels start driving meaningful price appreciation throughout the region.

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Posted on October 7, 2016 at 11:46 am
James Troia | Category: Rand Country Blog | Tagged , , , , , , , , ,

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