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Second-Quarter 2016 Real Estate Market Report: Westchester & Hudson Valley Market Overview
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.
To learn more about Better Homes and Gardens Rand Realty, visit their website and Facebook page, and make sure to “Like” their page. You can also follow them on Twitter.
Why is the Westchester Average Sales Price Down, When Sales Are Way Up?
Why are Westchester prices down?
If you look at the Westchester single-family housing market, comparing the year-to-date 2016 to 2015 as of the end of May, what you find is a little perplexing: sales are up 12%, but prices are sharply down across the board: down 7% on average, 5% at the median, and 4% in the price-per-square-foot.
And by “perplexing,” I mean “if I was a Westchester homeowner, this would kind of freak me out!”
| Westchester | 2015YTD | 2016YTD | Change |
| Sales | 1,688 | 1,891 | 12% |
| Average | $837,313 | $775,879 | -7% |
| Median | $610,000 | $582,500 | -5% |
| PPSF | $320 | $307 | -4% |
| Original | 92.7% | 93.2% | 0.5% |
| Last | 96.3% | 96.7% | 0.4% |
| DOM | 190 | 176 | -7% |
| Inventory | 3,505 | 3,408 | -3% |
It’s really very strange. I mean, all the other indicators, including the existing inventory, the days-on-market, and the listing retention rate, show that fewer homes are hitting the market, the ones on the market are selling more quickly, and they’re selling for closer to the asking price — the hallmarks of a seller’s market.
So if sales are up, inventory is down, and homes are selling more briskly, how can prices be down? That doesn’t make sense, if you thiknk about basic economic fundamentals: if inventory is down, and demand is up, price should go up. Right?
Well, if you look a little deeper at the results, you can see what’s going on. Essentially, the market in Westchester is really strong right now, but it’s disproportionately strong in the lower end of the market.
Take a look at this stratification of the market over the first five months of 2015 versus 2016:
| Sales in Each Pricing Range | May 2015YTD | May 2016YTD | Change |
| $-$499,999 | 603 | 724 | 20.1% |
| $500,000-$999,999 | 704 | 787 | 11.8% |
| $1M-$1,499,999 | 181 | 202 | 11.6% |
| $1.5M-$1,999,999 | 87 | 79 | -9.2% |
| $2M+ | 104 | 89 | -14.4% |
What you can see is that sales below $500,000 are up about 20%, while sales above $1.5M are actually down about 9%. That is, while Westchester single-family sales are up 12% from last year, that increase is largely coming in the lower end of the market.
Indeed, if you just break it down by the million-dollar mark, here’s what you get:
| Sales in Each Pricing Range | May 2015YTD | May 2016YTD | Change |
| 0-$999,999 | 1,307 | 1,511 | 15.6% |
| $1M+ | 372 | 370 | -0.5% |
Just look at that: sales below $1M are up 15.6, but sales above $1M are basically flat.
So that’s why the average price in Westchester is down right now: we’re seeing a change in the mix of properties, with entry-level or lower-priced homes selling more briskly than high-end homes. Now, that doesn’t mean that the high-end is “slow.” It’s actually doing just fine, down just a tick from last year. But it’s not as “hot” as the lower-end of the market, and that influx of lower-priced homes is skewing the average sales price down.
Indeed, if you look at the change of the average sales price within each pricing strata, what you see is this:
| Sales in Each Pricing Range | May 2015YTD | May 2016YTD | Change |
| $-$499,999 | $364,528 | $350,993 | -3.7% |
| $500,000-$999,999 | $708,706 | $697,799 | -1.5% |
| $1M-$1,499,999 | $1,240,365 | $1,226,895 | -1.1% |
| $1.5M-$1,999,999 | $1,679,957 | $1,701,445 | 1.3% |
| $2M+ | $3,091,409 | $3,120,334 | 0.9% |
In other words, even though the average price in all of Westchester is down 7%, the average price in the individual price ranges is relatively flat. In fact, the average price of homes sold above $1.5M is actually up, which tells us that the upper end is not suffering at all from a lack of demand.
And when you see that the average price for sales in the sub-$500,000 range are down almost 4%, even while sales are up over 20%, you have to conclude that we’re seeing the same dynamic at play. Even within the segment, sales at the lower end are more brisk, driving the average price of that pricing strata down.
In other words, if you’re a homeowner in Westchester, don’t panic when you see that the average price is down from last year. Most likely, the value of your home is probably up a bit. It’s just that the average is comprised of a lot more lower-end sales than we had last year.
Meanwhile, sales are way up and inventory is way down. Homes are selling quickly and for relatively closer to the asking price. If you’re a homeowner in Westchester right now, this is very good news.
It’s all going to be okay.
Joe Rand is a Managing Partner for Better Homes and Gardens Rand Realty, and writes the Rand Quarterly Market Report, which will be coming out in July.
Homes in Westchester and the Hudson Valley are More Affordable Than in a Generation
I have always hated it when real estate professionals say “it’s a great time to buy.” It always seems so self-serving, and I know it immediately causes suspicion.
So I’m not going to SAY that it’s a great time to buy a home right now. I’m just going to show you.
Specifically, I’m going to show you that the monthly payment you need to make to buy an averaged priced home in Westchester and the Hudson Valley is about as low as it’s been in a generation.
Think about what I’m saying for a second. I’m NOT saying that homes are cheaper than they’ve ever been. That’s not true. Depending on the year, homes have appreciated, and if you go back more than 15 years, they’ve appreciated pretty dramatically. I’m just saying that the MONTHLY PAYMENT you need to make to buy the AVERAGE PRICED HOME is lower right now than it’s been in a generation — that is, if you control for inflation.
If you look at the graph below for Westchester County, you’ll see what I mean.
On that graph, as we’ve done before, we’ve plotted the monthly payment that a purchaser in the county would have to make to purchase the average-priced home at various points over the years. After all, affordability is not just a matter of the sales price – it’s a matter of the monthly payment you’re going to have to make, which is partly a function of the prevailing interest rate. And then to measure the change in the monthly payment over time, we factored in the effects of inflation.
So we took the following data points:
- The average price of a single family home up to the end of 2015 – from the local MLS data.
- The average interest rate for a 30-year fixed-rate mortgage for every calendar year up to 2015 – from Freddie Mac.
- The prevailing inflation rate for every calendar year up to 2015– from the US Department of Labor.
You can see the results on the graph. The monthly payment you have to make to purchase the average-priced home in Westchester is just about as low as it’s been in years. We saw the slightest uptick from 2012-2014, partially because of a slight increase in pricing and a slow inflating of interest rates. But the payment came down again in 2015, with rates falling and prices stalling.
Generally, though, we’re talking about a monthly payment that is as low as anytime in the past 35 years – and as low as it was in the mid-1990s, during a crippling buyer’s market.
Why? Part of it is that we have not seen prices go up in any measurable way in almost 10 years, during which inflation has reduced the “true” cost of purchasing a home.
But more importantly, rates are significantly lower than they’ve been at any time in modern history. After all, about ten years ago, the average interest rate was about 6%. It’s now below 4%. That’s a huge difference in your monthly payment.
And the same is true throughout the Hudson Valley. I showed you Westchester first because we have good data on prices for the county going back all the way to 1981. In other counties, our data doesn’t go back as far, but if we look at each of those counties you can see that it’s pretty much the same story for the time period we have.
Orange County. Here’s Orange County, where we have data going back to 1994:
You can see that the monthly payment to buy an average-priced home in Orange County is lower right now than it’s been in over 20 years.
Rockland County. In Rockland, we have data going back to 2002, over 13 years of data.
Again, you can see that even with a slight rise in the past few years, the monthly payment you have to make to buy the average-priced home in Rockland is lower right now than it’s been in 13 years.
Putnam County. Similarly, we have data going back to 2002 in Putnam, and the story is the same:
Dutchess County. Again, same story in Dutchess County for that same 2002-15 period:
And although we don’t have data for Orange, Rockland, Putnam, or Dutchess going back as far as Westchester, the fact that the curve over the recent decade or so is very consistent with Westchester’s results suggests that, like in Westchester, the monthly payment you need to make throughout the Hudson Valley is lower right now than it’s been since the Carter administration.
Condos and Coops. All that’s for single-family homes. What about condos and coops? Well, we don’t have data going back as far, but in each county, condos (and coops in Westchester) show the same trend — the monthly payment to buy an average priced condo or coop in the region is lower right now than it’s been at any time since the 2005 era. Here are the graphs:
You can see that except for Westchester and Putnam condos, which have seen some pricing changes in the past two years, the monthly payments are lower than any time since 2005. And even in Wesstchester and Putnam, they’re lower now than at any time in the last decade, just a little higher than the last two years.
Our expectation is that most of the graphs in this blog post are going to start changing this year, and we’ll look back at this time period as the low point for average monthly payments in the region.
Conclusion
Again, I HATE it when real estate professionals say that “this is a great time to buy,” because at many times in our history that has been bad advice. But if you measure a “great time to buy” by looking at the monthly payment you’ll have to make to buy a home, then we’re talking about as good a time to buy as any in the past decades. Prices have been flat for almost 10 years, and they’re down significantly if you factor in the effects of inflation. And interest rates are still as low as we’ve ever seen them. Unless we see some major shock to the economy, I think we’re looking at a near-decade of reasonable price appreciation coupled with increasing interest rates – both of which are going to drive that monthly payment up over the next few years.
So I’m not going to tell you what to do. That’s not my job. But if you’ve been thinking about buying a home, I think these graphs speak for themselves.
Joe Rand is one of the Managing Members of Better Homes and Gardens Real Estate | Rand Realty, and compiles and writes the Rand Quarterly Market Report.
First Quarter 2016 Real Estate Market Report: Sussex Market Overview
The Sussex County housing market surged again in the first quarter of 2016, with a dramatic spike in sales that continued a long.term trend of markedly higher transaction rates. Nevertheless, we are still not seeing these sustained levels of buyer demand have their expected impact on pricing, which was down yet again.
Sales. Sussex sales were up sharply in the first quarter, rising over 32% from last year and finishing the year up almost 23%. This continued a trend that we’ve been watching for the past four years, with year-on-year sales up almost every quarter since 2012. Indeed, Essex closings are now reaching levels that we have not seen since the tail end of the last seller’s market, with sales now up almost 80% from their 2011 bottom. So the market is in much stronger shape than it has been at any time since the 2008-09 market correction, with sustained levels of buyer demand.
Prices. This spike in sales, though, has not yet had an impact on pricing, which has deteriorated even while buyer demand increased. Average and median sales prices were down again in the first quarter, falling almost 9% on average and almost 2% at the median. Moreover, prices have been trending downward now for several years, in defiance of what we would expect from normal economic behavior. Generally, it takes time for increases in demand to drive pricing changes, so we believe this will turn around if buyer demand remains at its current levels.
Inventory. The “months of inventory” indicator measures how long it would take to sell out the existing inventory of homes at the current rate of home sales. In the industry, we generally consider anything below six months as a signal for a seller’s market, where tight inventory leads to multiple-offer situations, bidding wars, and ultimately appreciating prices. Sussex inventory remains well above that threshold, at 9.6 months, but that’s down almost 17% from last year, so it’s generally tightening.
Negotiability. The negotiability indicators – the amount of time sold homes were on the market, and the rate at which sellers were able to retain their full asking price – suggested the sellers might be gaining a little bit of negotiating leverage. The days on market fell over 5%, indicating that homes were selling more quickly. And the listing price retention rate was up over a full point, indicating that homes are selling for closer to the asking price.
Going forward, we do expect better things for the Sussex market. We believe that buyer demand will stay strong through 2016, especially with a relatively strong economy, homes priced at attractive levels, and near historically low interest rates. And if buyer demand stays at its current levels, we expect that Sussex will at least see prices stabilize during the year, with a chance at meaningful price appreciation by 2017.
To learn more about Better Homes and Gardens Rand Realty, visit their website and Facebook page, and make sure to “Like” their page. You can also follow them on Twitter.
First Quarter 2016 Real Estate Market Report: Essex Market Overview
The Essex County housing market started the year strong, with a surge of sales activity. But even with demand up, prices went down sharply, indicating that the county has not yet developed into a “seller’s market.”
Sales. Essex County sales were up sharply in the first quarter, rising over 13% for the quarter, marking the fifth straight quarter of year on year sales growth. The long.term trend is also encouraging, with sales up over 10% for the rolling.year and now regularly clearing almost 5,000 yearlong sales, which is comparable to what we saw at the tail end of the last seller’s market.
Prices. This spike in sales activity did not, though, have its expected impact on pricing. Prices were down sharply, dropping over 8% in the average and 4% at the median. And after some modest price appreciation in 2015, the long.term trend turned downward, with the weak first quarter driving the rolling year average and median both down almost 1%. Why would prices go down as sales go up? One explanation could be that the market was relatively stronger in the lower priced entry level markets, which would change the mix of the properties sold and drive down the overall pricing. We will keep our eye on this dynamic for the next Report.
Inventory. The “months of inventory” indicator measures how long it would take to sell out the existing inventory of homes at the current rate of home sales. In the industry, we generally consider anything below six months as a signal for a seller’s market, where tight inventory leads to multiple-offer situations, bidding wars, and ultimately appreciating prices. Essex has already crossed that threshold, which is what makes the decline in pricing so surprising. Given how tight inventory is, we do expect to see some meaningful appreciation in the spring market.
Negotiability. The negotiability indicators – the amount of time sold homes were on the market, and the rate at which sellers were able to retain their full asking price – suggested the sellers might be gaining a little bit of negotiating leverage. The days on market fell almost 5%, indicating that homes were selling more quickly. And the listing price retention rate was up sharply, cresting 98%, indicating that homes are selling for closer to the asking price.
Going forward, we expect that Essex County’s sales activity will eventually have a meaningful impact on pricing. With homes still at historically affordable prices, interest rates low, and a generally improving economy, we believe that buyer demand will strengthen and drive more meaningful price appreciation in a robust spring market and throughout 2016.
To learn more about Better Homes and Gardens Rand Realty, visit their website and Facebook page, and make sure to “Like” their page. You can also follow them on Twitter.
First Quarter 2016 Real Estate Market Report: Morris Market Overview
The Morris County housing market recovered from some late 2015 doldrums to post a robust start to 2016, with a spike in sales. Even with this surge in activity, though, pricing was disappointing.
Sales. Morris County sales were up sharply in the first quarter, rising almost 17% for the quarter, marking the sixth straight quarter of year-on-year sales growth. The long-term trend is also encouraging, with sales up over 9% for the rolling year and now regularly clearing over 5,500 yearlong sales, which is comparable to what we saw at the tail end of the last seller’s market.
Prices. This spike in sales activity did not, though, have its expected impact on pricing. Prices were down sharply, dropping over 5% in both the average and the median. And after some meaningful price appreciation in 2015, the long-term trend turned downward, with the weak first quarter driving the rolling year average and median price into negative territory. Why would prices go down as sales go up? One explanation could be that the market was relatively stronger in the lower priced entry-level markets, which would change the mix of the properties sold and drive down the overall pricing. We will keep our eye on this dynamic for the next Report.
Inventory. The “months of inventory” indicator measures how long it would take to sell out the existing inventory of homes at the current rate of home sales. In the industry, we generally consider anything below six months as a signal for a seller’s market, where tight inventory leads to multiple offer situations, bidding wars, and ultimately appreciating prices. Morris has already crossed that threshold, which is what makes the decline in pricing so surprising. Given how tight inventory is, we do expect to see some meaningful appreciation in the spring market.
Negotiability. The negotiability indicators–the amount of time sold homes were on the market, and the rate at which sellers were able to retain their full asking price–tracked the decline in the pricing. Neither indicator showed the expected result: the days on market went up a tick, and the listing retention rate went down. In other words, sellers lost a little bit of negotiating leverage, a dynamic that doesn’t make any sense in a quarter where sales were up 17%. We think this is a short-term blip, and expect homes to sell more quickly and for closer to asking price in the spring market.
Going forward, we expect that Morris County’s sales activity will eventually have a meaningful impact on pricing. With homes still at historically affordable prices, interest rates low, and a generally improving economy, we believe that buyer demand will strengthen and drive more meaningful price appreciation in a robust spring market and throughout 2016.
To learn more about Better Homes and Gardens Rand Realty, visit their website and Facebook page, and make sure to “Like” their page. You can also follow them on Twitter.
First Quarter 2016 Real Estate Market Report: Passaic Market Overview
The Passaic County housing market started off 2016 with an increase in sales coupled with mixed results in pricing. Most indicators, though, signal that Passaic continues to develop as a classic “seller’s market” that will likely drive sales and prices up through the rest of the year.
Sales. Passaic sales were up again in the first quarter of 2016, rising over 8% from last year and finishing the rolling year up almost 11%. Indeed, we’ve now seen sustained increases in buyer demand for almost five years, with quarterly sales up in 18 out of the last 20 quarters. As a result, the almost 3,000 sales over the past rolling year approaches the kinds of sales totals we last saw during the last seller’s market. Demand in Passaic shows no signs of abating.
Prices. Prices were mixed, with the average price falling while the median price was up a tick. We would normally expect sustained increases in buyer demand to have a stronger impact on driving prices up, but Passaic pricing has been bouncing around a bit over the past few years. Looking at the longer term trend, the rolling year prices are up more convincingly, with the average rising almost 2% and the median up over 3%. Those are sustainable levels of price appreciation, so we expect that to continue through 2016.
Inventory. The “months of inventory” indicator measures how long it would take to sell out the existing inventory of homes at the current rate of home sales. In the industry, we generally consider anything below six months as a signal for a seller’s market, where tight inventory leads to multiple-offer situations, bidding wars, and ultimately appreciating prices. Passaic County is approaching that level, and inventory is clearly tightening quarter by quarter.
Negotiability. The negotiability indicators both showed that sellers are gaining leverage with buyers. The days on market were down slightly for the quarter, signaling that homes were selling a little more quickly. And the listing retention rate was also up, indicating that sellers were getting closer to their asking price. Together, they show that sellers are slowly gaining some bargaining power with buyers.
Going forward, we believe that Passaic’s fundamentals are sound, with homes priced at relatively attractive levels, rates near historic lows, and a stable economy. Accordingly, we expect that Passaic County will continue to flower into a fully realized seller’s market in 2016, marked by sustainable increases in both sales and prices.
To learn more about Better Homes and Gardens Rand Realty, visit their website and Facebook page, and make sure to “Like” their page. You can also follow them on Twitter.
First Quarter 2016 Real Estate Market Report: Bergen Market Overview
The Bergen County housing market started 2016 off strong, with sales way up and clear indications of increasing buyer demand.
Sales. Bergen single-family home sales started the year with a flourish, rising over 19% for the quarter and marking the sixth straight quarter of year-on-year sales increases. Indeed, we are starting to see transactions at “seller market” levels, with over 6,000 sales over the rolling year, which is comparable to the sales totals during the last seller’s market.
Prices. Although prices were basically flat for the quarter, we are continuing to see consistent, if modest, long-term price appreciation. Over the past rolling year, prices have been up almost 2% on average and over 4% at the median, which is the type of long term appreciation that is generally sustainable. We’re still seeing pricing at non-inflation adjusted 2004 levels, about 15% below the height of the market in 2006, but we’re moving in the right direction.
Inventory. The “months of inventory” indicator measures how long it would take to sell out the existing inventory of homes at the current rate of home sales. In the industry, we generally consider anything below six months as a signal for a seller’s market, where tight inventory leads to multiple-offer situations, bidding wars, and ultimately appreciating prices. So the fact that Bergen single-family homes crossed over that threshold in this quarter is a clear indication that we’re looking at a burgeoning seller’s market in the county.
Negotiability. The negotiability indicators showed that sellers might be gaining a bit of leverage with buyers. In the quarter, the average days on market were flat, but they’re now down 6.5% for the rolling year. So homes are getting into contract more quickly. Similarly, sellers were becoming slightly more demanding on pricing, with the listing retention rate closing on 96%.
Condos & Coops. The Bergen condo market was up sharply, with both sales and prices surging. Condo sales were up almost 26% for the quarter, finishing the rolling year up over 11%. But the real story was prices, with both the average and median price spiking over 7% for the quarter and now in positive territory for the year. Those types of price increases are probably not sustainable, but we do believe that Bergen condos will experience meaningful price appreciation through the end of the year.
Going forward, we remain confident that Bergen County is slowly moving into a strong seller’s market. Buyer demand is strong, which is driving up sales and starting to have a long-term impact on pricing. With pricing close to 2004 levels, rates near historic lows, and the economy relatively stable, we expect demand to stay strong through a robust spring market and throughout 2016.
To learn more about Better Homes and Gardens Rand Realty, visit their website and Facebook page, and make sure to “Like” their page. You can also follow them on Twitter.
First Quarter 2016 Real Estate Market Report: Northern New Jersey Market Overview
The Northern New Jersey housing market got off to a strong start in 2016, with sales up again throughout the region. But this sustained surge in buyer demand is not yet having any real impact on pricing, which was flat or down in each of the counties.
Sales were up over 10% for the region, rising in every county in the Report. Closings have now been trending up for about five years, ever since the market stabilized after the correction precipitated by the financial crisis of 2008-09. Although we are not yet at transactional levels that we saw during the last seller’s market of the mid 2000’s, sales are up about 40% from the bottom of the market and are moving in a positive direction.
We are also seeing inventory continue to tighten. The industry measures the impact of inventory by calculating the “months of inventory” remaining on the market: i.e., the number of homes for sale divided by the average monthly transactions. So, for example, if we have 1,000 homes for sale and we close about 100 sales a month, we say that’s about 10 months of inventory. According to industry standards, six months worth of inventory signals a balanced market: any less, and we are likely to see too many buyers chasing too few homes, which will tend to lead to multiple-offer situations, then bidding wars, and ultimately higher prices. Well, right now, we’re starting to see inventory tighten across the region. Bergen, Morris, and Essex are all below the 6-month threshold, and Passaic is right on the cusp. Only Sussex is trailing, but even inventory there is tightening and has dropped from 11.5 months to 9.6 months in the past year.
Even with sales up and inventory down, though, average prices dropped throughout the region. In our last Report, we said that we were seeing the first signs of “green shoots” of price appreciation. Well, in the first quarter, those green shoots withered away. Prices were down throughout the region, in some cases sharply. This was surprising, given that all the other indicators suggest that we should be seeing meaningful price appreciation at this point. It might be that the market is simply stronger in the lower end than the middle or higher end, which is changing the mix of properties sold and skewing the average. Or it could just be a short term blip in the data during the slowest time of the year. Either way, we will keep our eye on it for the next Report, which will cover the spring market and give us a better read on things.
Going forward, we still believe that we are heading for a seller’s market. Sales have now been increasing for almost five years, which has brought inventory to the seller’s market threshold. Basic economics tells us that high demand and declining supply is bound to drive up pricing at some point. The economic fundamentals are all good: homes are priced at 2004 levels (without even adjusting for inflation), interest rates are still near historic lows, and the regional economy is stable. Accordingly, we expect that the price declines in the first quarter were an anomaly, and that the region will experience rising sales and prices through a robust spring market and throughout 2016.
To learn more about Better Homes and Gardens Rand Realty, visit their website and Facebook page, and make sure to “Like” their page. You can also follow them on Twitter.
First Quarter 2016: Real Estate Market Report: Dutchess Market Overview
The Dutchess County housing market started the year with a massive spike in sales activity, which had only a modest impact on pricing.
Sales. Dutchess County single.family home sales surged again in the first quarter, with transactions up a whopping 43% from last year. This marked the sixth quarter in a row with year on year sales increases, leading to a rolling year where sales were up almost 30%. With 2,300 sales over the rolling year, Dutchess is now closing homes at a rate that rivals what we saw during the last seller’s market.
Prices. In our last Report, we noted that we were starting to see the first “green shoots” of price appreciation in Dutchess. That continued in the first quarter, with the average and median price both up a tick. The rolling year numbers are still not positive, but we think it’s only a matter of time. With these types of sustained increases in sales activity, we are bound to see an impact on pricing this year.
Inventory. We measure inventory by looking at the “months of inventory” that are available, given the current absorption rate of properties on the market. Generally, the industry regards six months of inventory as a demarcation for a seller’s market. In Dutchess, we are nowhere near that, with inventory still above 14 months. But the market is definitely tightening, with the months of inventory falling over 25% in the past year. As inventory tightens, we would expect prices to start going up.
Negotiability. The negotiability indicators show that Dutchess sellers might be starting to get some leverage. Homes were selling for a little closer to the asking price, with the listing retention rate up above 95% for the first time since the last seller’s market. And the days on market fell again, now down below six months, indicating that homes are selling a little more quickly. If homes are selling more quickly, and for closer to the asking price, that means sellers are gaining a bargaining position with buyers.
Condominiums. The condo market was also robust, with sales up over 28% compared to the fourth quarter of last year, and up over 22% for the year. Pricing was disappointing, though, with the average and median down for both the quarter and the year. Inventory continues to tighten, though, which could stabilize pricing in 2016.
Going forward, we believe that if Dutchess continues to see sustained increases in sale activity, we are bound to see meaningful price appreciation by the end of the year. With a stable economy, low-interest rates, and homes still priced at appealing 2004 levels (without even controlling for inflation), we believe that Dutchess is poised for a strong 2016.
To learn more about Better Homes and Gardens Rand Realty, visit their website and Facebook page, and make sure to “Like” their page. You can also follow them on Twitter.
