WPCNR HOUSING NEWS. From Mary Prenon, Hudson Gateway Multiple Listing Services. July 8, 2013:
The Lower Hudson Valley’s residential real estate market posted a significant increase in activity during the second quarter of 2013. Realtors participating in the Hudson Gateway Multiple Listing Service* reported a grand total of 3,445 closed residential transactions in the four-county MLS service territory consisting of Westchester, Putnam, Rockland and Orange Counties, New York. The residential properties consisted of single family houses, condominiums, cooperatives, and 2-4 family buildings.
The sales volume represented a 24% increase from the comparable period in 2012 and was the highest second quarter posting since 2010. These closed transactions largely flowed from properties that were marketed in the early months of this year.
Among the four counties, Orange County posted the largest percentage increase, 34.0%, in its single family house sector where there were 528 sales this quarter as compared to 394 sales in the second quarter of 2012.
Westchester County, which accounts for nearly two-thirds of all sales in the region, posted a 23.8% increase in its single family house sector, and 27.8% in its cooperative unit sector.
Putnam and Rockland County posted sales gains in their single family house sectors of 10.6% and 7.2% respectively. This level of activity, if maintained for the rest of the year, and taking into account the slower paced first quarter, will result in an estimated year-end volume of about 13,000 units throughout the region, taking us back to pre-recessionary levels posted in 2007 and earlier.
One of the major consequences of the quickened pace of sales is that inventory (the supply of units available for sale) is under pressure in all four counties.
Homes Available for Sale Decline
In Westchester, the county having the largest volumes, the end-of-quarter 6,156 available properties were 13.1% fewer than last year at this date, and fewer than in 2010 and 2011 as well.
In the post recessionary period since 2008 we have ascribed low levels of inventory to prospective sellers’ reticence to enter what to them appeared to be an unpromising market. Now, however, it appears that a more classic supply and demand condition is informing the market as new listings barely keep up with sales.
Besides Westchester, the Rockland and Putnam markets both experienced further reductions (5.5% and 2.7% respectively) in inventory since 2011 and 2012.
Only in Orange County has the decline of inventory been arrested, a surprising result from the market having the fastest turnover from high sales rates. Very possibly, prospective sellers in Orange are observing the robust sales activity around them and are therefore more inclined to list their properties than before, a proposition whose accuracy will be tested when the third quarter results are in.
Realtors report that the squeeze on inventory is pressing buyers to act more quickly and decisively in their search for suitable properties, but the Multiple Listing Service has not received a comparable number of reports that low inventory is causing any sort of outsize price inflation.
Sale Prices Rise Modestly
This second quarter report documents price increases throughout the region, but those increases are moderate and also must be seen against the background of flat or even declining prices over the past several years.
The strongest performer in the single family house market was Westchester County, where the second quarter median sale price of $650,000 was 5.0% higher than in 2012; this was the highest second quarter median since 2008.
The meansale price of $859,861 was only 0.8% higher. The two factors together suggest that high-end sales are maintaining but not increasing their market share or prices for the most part. For example, Westchester houses selling for $1 million or more accounted for 23.4% of total house sales, but this was near the range of 21-23% that has obtained since 2010.
Rockland County was a close second to Westchester with a 4.8% increase in its single family median price to $395,000. Its condominium sector median, however, $205,000, was 9.4% less than last year. In Putnam County, the median house price was $308,000 or 2.8% higher than last year. It, too, experienced a price decrease in its condo sector, by 6.5% to $201,000.
Of the four counties, Orange has experienced the most persistent bout of low or declining house prices. The second quarter median for a single family house was $240,000, down 0.9% from last year. It is believed that Orange has a higher rate than the rest of the region of REO (real estate or bank owned properties) and short sales in its sales mix, which would tend to hold down the averages. However, given its fast pace of sales and steady inventory, Orange may be rapidly burning through its supply of stressed housing and will see a price jump next quarter. Also, it should be noted that Orange County enjoyed a 10.7% price increase in its condominium sector, where the second quarter median closed at $179,000.
Overall the Lower Hudson Region is doing well in its recovery from the “great recession.” Sales volumes have been accelerating and prices have begun to increase, but at sensible rates. However, the one major threat to a full recovery could be mortgage interest rates that increase too rapidly.
Consumers over many months have become accustomed to rates averaging less than 4.0% on 30-year conventional loans, but in response to recent Federal Reserve policies and pronouncements, that 4% threshold was re-crossed on the upward swing in late May and the average conventional rate is now closer to 5% than 4%.
Ascending mortgage interest rates sometimes boost the market in the short run by stimulating prospective purchasers to advance their planning, but in the longer run a too sharp rate of increase can damage the recovering market by reducing the number of consumers who can afford the higher monthly mortgage expenses.
On the plus side in our region, the unemployment rates in each of the four counties has decreased by a full percentage point or more since last year, and all are below the statewide average of 7.3% for the last several months. With a careful eye on mortgage interest rates, and with steady improvement in the region’s general economic conditions, we are likely to see more sales and firmed-up pricing in the coming quarters.