Residential Real Estate Mid-Year Review: The Right Direction

Residential Real Estate Mid-Year Review: Headed in the Right Direction
By Vanessa Saunders, CEO of Global Property Systems

When the ball at Times Square dropped to announce 2019 last January, people in the real estate community were apprehensive about the upcoming twelve months. There was plenty to be worried about. The market was nervously awaiting the impact of SALT, the 10 percent cap on mortgage interest deductions. There was a serious drought of listing inventory in 2018, and it didn't look as if there was anything on the horizon promising to kick more homes on the market. New York and New Jersey had been battling back from ten years of recession, and mortgage rates had started to rise. Even the weather was against us.
Half-way through the year, the scenery hasn't changed much, but it has brightened slightly. One bit of good news is that interest rates have dropped back into the threes. As of June 19, the benchmark 30-year fixed-rate mortgage fell to 3.99 percent from 4.04 percent, according to Bankrate's weekly survey of large lenders. A year ago, it was 4.70 percent. Four weeks ago, the rate was 4.27 percent. The 30-year fixed-rate average for this week is 1.11 percentage points below the 52-week high of 5.10 percent and is identical to the 52-week low of 3.99 percent.

Other statistics point to slight gains in the market. First quarter new listings in Westchester County were up 2.9 percent over Q-1 2018 according to recent data from the Hudson Gateway Multiple Listing Service (HGMLS), a subsidiary of the Hudson Gateway Association of Realtors. Westchester County is seeing a drop in housing prices, particularly in the luxury home market. The average sales price of a Westchester home dropped 7.3% to $588,250. The median price for a single-family home was $604,900 in Westchester, a 1.2% decline from a year ago. In Rockland, the median price was $445,000, up by 2.3% from 2018. Though modest, the gains have brought about a sense of optimism and relief spreading in the suburbs of New York.
But that old problem of low inventory still casts a big shadow on the housing market in the Hudson Valley. Low to mid-range homes on the market are at historic lows, making competition particularly fierce among buyers. According to a February 2019 report by Freddie Mac, the federally backed mortgage lender, one reason for the shortage seen nationwide is that seniors are staying in their homes longer. "Seniors born after 1931 are staying in their homes longer than previous generations, instead choosing to "age in place." Still, NYSAR research shows inventory inching up for the sixth consecutive month ending May 31. There were 69,118 homes for sale in the month of May – the most in New York State since October 2018.

SALT, the $10,000 cap on state and local tax deductions and mortgage interest imposed by the federal tax reform law is knocking down sales in some segments of the housing market in the Hudson Valley which may explain the drop in luxury home prices.
One statistic that points to SALT's impact comes from the State of New York Mortgage Tax Semi-Annual Report prepared by the Westchester County Clerk's Office. It states that for the months of October 2018 through March 2019, mortgage tax collections were down more than $500,000 from the same period last year.
Westchester County Clerk Timothy C. Idoni, who was quoted in a report by the Hudson Gateway MLS publication Real Estate in Depth explained, "We are seeing the effects of the SALT reduction here in Westchester County. Winter months always see a decline in home sales, and the weather was particularly bad this winter. But it's hard to deny that the new tax laws are a significant factor. The drop in the volume of sales was noticeable, as prices were relatively consistent." Idoni's office collects mortgage taxes for Westchester County.
Affordable housing continues to be a significant problem in New York State. A June 6 report by New York State Comptroller Thomas DiNapoli stated that 1.4 million households paid half or more of their monthly income in 2017 to housing costs. New York currently ranks third in the nation for both renters and homeowners. 26.6 percent of renters and 12.4% of homeowners are burdened by housing costs that consume more than half their income.
At the midpoint of the year, we are starting to get an idea where the market may be heading for the foreseeable future. Even though prices are rising, albeit slowly, and inventory is low, the trends seem to be heading in the right direction. Hopefully when the ball drops in Times Square again next year, we be getting ready for a better season in the Hudson Valley and New York real estate markets.
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Vanessa Saunders is the Founder, Principal Broker and CEO of Global Property Systems (GPS), a full-service real estate brokerage specializing in selling properties in New York's Hudson Valley and around the world. Saunders holds numerous designations including Commercial & Investment Real Estate Certified, Certified Distressed Property Expert, Certified International Property Specialist, Federation of International Real Estate, and Certified Pricing Strategy Advisor. In addition to FIABCI, Saunders is a member of the Asian Real Estate Association of America (AREAA) and Association for Foreign Investors of Real Estate (AFIRE). Saunders speaks at real estate conferences around the world and is a member of the International Round Table of Knowledge which holds special consultative status within the United Nations. GPS is headquartered in White Plains, NY and also has an office in Manhattan, a corporate relocation team in Munich, Germany and an Asian team of Transaction Coordinators and website techs in Manila, Philippines. For more information, please visit http://www.globalpropertysystems.com/ or call 914-368-0022.
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