In Flux: Summer 2023 Hudson Valley Housing Market

By   |     |  Hudson Valley Real Estate Market

We’ve spent the past few issues discussing the low-inventory real estate market, but how did we get here, and what needs to change to move forward? We asked real estate experts Sandi Park, an associate real estate broker with Coldwell Banker Realty & Global Luxury who lives in Rhinebeck, and Brian Cafferty, an associate real estate broker with Halter Associates Realty in Kingston, to get their viewpoints.

We Need Homes

“We continue to be very tight in inventory which is holding us up,” says Park. “Some pockets of the country, and even in Westchester County, are finding themselves transitioning out of a seller’s market and moving more toward a neutral market, but I haven’t seen that happening as much in Dutchess County.”

Cafferty says that today’s real estate market is still unpleasant for everybody involved, except maybe for the sellers still getting record home prices. “It has been a very difficult time for several years now for buyers, particularly buyers dependent on getting a mortgage that involves a mortgage contingency,” he says. “The environment remains competitive, because there really has been no movement in the inventory.”

Cafferty, who compiles research on the Ulster County real estate market, says that comparing 2022 to 2021, the total number of units sold was down by 320. “Fifty percent of that decline came from the lower end of the market—homes below $200,000,” he says. “The number of available homes priced between $200,000 to $300,000 dropped by 37 percent, and then it starts to trail off as it gets into the higher prices.”

This directly affects those who live and work in Ulster County and just need a place to live. “These aren’t people looking for a second home, and the inventory for them is just gone,” he says. “The problems with today’s inventory started in 2008, with the collapse of the real estate market. When that market crashed, prices stayed down for years, homebuilders stopped building homes, and developments stopped.”

Bumps to New Builds

Today, Cafferty says it’s still hard to get new homes built. “I’m involved in a development project of 154 homes in the town of Rosendale, and it took seven and a half years just to get through the environmental review process,” he explains. “Another project to build 1,700 homes didn’t get built, and Sailor’s Cove, a mixed-use development project on the City of Kingston’s waterfront which consisted of 350 housing units, hasn’t gotten built. It gives you an idea of just how difficult it is to get large-scale projects built.”

Prices Are Still Climbing

Cafferty says that the available resale homes are now causing a new problem. “Prices are up 40 percent from 2020 and the mortgage rates are double that now,” he says. “So there are people who want to sell their home but who can’t afford to because they are going to have to pay a 7 percent mortgage instead of their current mortgage rate of 3.5 percent. So unless you’re significantly downsizing, it’s challenging to sell a home and replace it with a new home in the same market.”

Looking back only five years ago, Cafferty explains that you could buy a home for $250,000 that didn’t need to be completely rehabbed. “Now, $250,000 is a fixer-upper—it’s habitable, but needs work.”

Overpriced Listings Will Sit

Even though sellers are getting bids above their asking price, buyers are more knowledgeable about the right price. “If a house comes in aggressively overpriced, the chances of it sitting on the market are high,” says Park, who has been in the business for over 20 years. “You can lead a horse to water with the most effective marketing, but if the house is not priced right, the buyers will walk.”

Fortunately for sellers, the market still includes multiple offers over the asking price. “Houses that come on the market in desirable areas, uptown Kingston, for instance, and are priced reasonably, will get many offers,” Cafferty says. “I listed one for $419,000 and there were seven offers over the asking price.”

Sitting Listings Look Pretty

With some homes sitting on the market for a longer period of time now, compared to 2022 and 2023, Park says this works to the buyer’s advantage. “I love sitting listings that have been on the market for over 30 days,” she says. “Buyers think something must be wrong with the house, but there might be condition or location issues that factor into pricing, so I urge my buyers to go after these listings.”

Locals Looking

The biggest shift Park has noticed is the increase in local buyers. “They may be looking to sell in one town and buy in another, but regardless, they are local,” she says.

This is a big difference from the market during the pandemic, when many buyers were escapees from New York City and other suburbs, looking for bigger homes and more outdoor space in the Hudson Valley.

“Before the pandemic, buyers came to Northern Dutchess and Northern Ulster to have their weekend homes—their retreats. But with remote work, it made these areas a much more viable option for buyers to live full-time,” says Park. “Certain towns, such as Rhinebeck, were already in favor, but Millbrook, Woodstock, New Paltz, and Kingston have grown substantially. ”

Cash is (Not Always) King

There’s an expression—“cash is king”—and while that might have been an accurate statement a few years ago, it’s changed in today’s market. “There was a period a few months ago where there were noticeably more cash buyers who were trying to negotiate prices down further because they had cash,” says Park. “Cash still has leverage, but sellers aren’t willing to take a big difference in the purchase price for a cash buyer.”

Park explains that nobody has a crystal ball to see into the market’s future, but she predicts continued corrections that will lead toward a more neutral market in 2024. “2025 will be the first year the market is normalized,” she says. “There will be milestones, and there will still be some setbacks to get there.”

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