ALBANIA – Realtors described 2022 as a “near-perfect storm” defined by low inventories and declining home sales, painting a cooling market in New York State, but supply and demand will continue to dictate shifting climates – with some local markets growing while others struggle to a halt – by the Empire State.
According to The New York State Association of Realtors, Inc. would-be homeowners stand on the sidelines, waiting for volatile inflation and rising mortgage rates. The same is said about potential sellers who, despite rising sales prices, stay put.
Last December was the 38th month in a row in which the number of available owner-occupied homes fell in month-on-month comparisons. By the end of the year, the stock was down 8.7 percent from December last year.
Inventory issues hardly hindered sales in 2021, with brokers reporting a 17.9 percent increase in closed sales that year. Mortgage rates remained low after the pandemic, as low as 2.68 percent on a 30-year fixed mortgage, encouraging relocations.
“Mortgage rates were near historic lows, competition between buyers was fierce, and homes were selling at a breakneck pace, often with multiple cash bids and offers, due to pent-up demand and a shortage of housing supply, driving up sales prices to new heights”, stated the Association last week in its annual residential real estate report.
The climate changed as the Federal Reserve made a series of increases in its prime rate, which led to mortgage rates following suit. On Saturday, January 21, the national average 30-year mortgage is 6.48 percent, according to Bankrate. New listings fell 25 percent — from 7,970 units in December 2021 to 5,979 available homes a month ago. Turnover also plummeted by 31 percent in the same period.
“As mortgage rates rose and market conditions changed, many homeowners were reluctant to sell their homes, and with buyer demand falling, homebuilders eased production, further constraining the already limited supply of housing,” the association said.
Homes selling for $150,000 or less fell off the market last year more than any other cohort — a 24.7 percent year-over-year decline represented the weakest one-year change in sales.
Gov. Kathy Hochul called affordable housing a pressing issue in her State of the State address earlier this month. In it, she proposed 800,000 new housing units over the next decade in her New York Housing Compact.
“One of the reasons rents are so high is that there aren’t enough rental properties,” she said. “Why are house prices so high? There are not enough houses on the market because they are not built.”
The demand for housing in the Capital Region continues. Last week, Hochul announced more than $390 million — awarded through bonds and grants — to create or maintain more than 1,600 affordable, sustainable and supportive homes in the state. $61.6 million has already been earmarked for Tait Lane Reserve in the city of Saratoga Springs. The project will create 202 affordable apartments in a mix of townhomes and three-story buildings. Another $51.5 million is planned for Taylor I Apartments in the city of Troy.
“Currently, the decline in sales can be attributed more to the lack of homes for sale than to a lack of buyers,” said Kendal Baker, president of the Greater Capital Association of Realtors, chief broker of Marker’s Octagon Realty. “The Capital Region continues to experience not only an influx of remote workers, but also tech workers moving due to the growing needs of the Tech Valley, other positive business expansions and start-ups across the region.”
New listings in Albany County fell 12.7 percent in November last year — from 2,955 to 2,579 closed sales. According to GCAR, that didn’t make homes more affordable for potential buyers. The median sale price was still $286,000.
In the Housing Affordability Index, the association measures median home prices against median household income. The higher the number on the index, the more affordable the housing market is. In the example, an index of 120 means that the income was 120 percent of what is needed to qualify for a mid-price home. Last September, the index fell to 107, the index’s lowest point since it was first measured in 2005.
In the city of Bethlehem, where an 18-month moratorium on new home construction ended last June, closed sales outpaced provincial figures, but still fell 11.8 percent (407 to 359). The median sale price still rose 13.3 percent to $375,000.
In North Colonie, where residents approved a $106.3 million comprehensive investment plan in 2017, new listings fell 29.9 percent. That is still almost double the number of homes sold in Bethlehem (782). The median sales price also rose 13.1 percent to $340,500.
“The impact of reduced affordability can be a challenge not only for first-time homebuyers looking to convert their high rent into a mortgage payment, but also for buyers ready for their ‘move-in’ home purchase,” said GCAR CEO Laura Burns.
Prices can rise in communities such as Bethlehem and North Colonie, both of which are among the top school districts in the state. But realtors are starting to see prices fall statewide. The median home sales price dropped from $356,250 in December 2022 to $375,000 in December 2021, a five percent decline in year-over-year comparisons. It’s starting to paint a more variable market where some buyers are moving from bigger, more expensive cities to smaller, more affordable areas, and others are turning to the rental market.
“Looking ahead to 2023, much depends on inflation, mortgage interest rates and the broader state of the economy,” the association summarized in its report. “While economists predict that many of the housing trends of 2022 will continue into the new year: home sales will slow, price growth will moderate, inventories will remain tight, and there will be more variation between markets at the national level, with some regions possibly will see price drops, while others, more affordable parts of the country remain in demand and experience price increases.”
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