Welcome to the 2023 edition of “What will happen in the Hudson Valley housing market this year?” Will buyers stop panicking and overbidding for homes? Will there even be enough homes to buy? Will the market flip over and start favoring buyers? Will some unforeseen circumstances cause another major upheaval in the market or will there finally be some peace and quiet and normalcy after a tumultuous few years?
In this edition, we’ve asked four Hudson Valley real estate experts to give us their opinions as to what they see happening this year. But before we look at the future, how are things now?
Adam Bosch, president of Hudson Valley Pattern for Progress, has his own analysis of the current market, but says that the answer will change depending on who you ask. “It’s all relative,” says Bosch, “If you ask a homeowner, the market over the past year has been great, because they accumulated more wealth as the present value of their home has gone up. However, If you ask someone who works in a service job, has a family, and pays for child care but is still looking to achieve the dream of homeownership, the market has been the worst thing to happen to them. The cost of a house has sprinted away from them faster than they’re able to catch up to it.”
Market Continues to Be Strong
“We’re returning to more of a normal market and it’s a welcome relief to some of the agents and to the buyers and sellers, because the pace has slowed down somewhat,” says Lisa Halter, the principal broker and owner of Halter Associates Realty, who adds that Ulster and Dutchess Counties are the strongest markets right now. “However, it’s still a competitive market because of the lack of inventory.”
Inventory—or lack thereof—will continue to be one of the stars of the show this year, unless something changes. “Across the region, most of our counties are hanging around two or three months’ worth of stock, which is really bad; and out of the purchases that were made, 20 percent of them were in cash,” Bosch explains.
“I think the market is stronger than people realize,” says Hayes Clement, Associate Real Estate Broker with Berkshire Hathaway Home Services in Kingston. “There’s a lot of activity, but the corresponding decrease in inventory has made it as competitive as ever, so we’re not seeing price decreases at all at this point. We’re also still seeing multiple-offer situations, although those are a little less frequent than they were two years ago.”
Interest Rate Hike
Partnering with lack of inventory is higher interest rates. As of this writing, the average interest rate for a 30-year fixed mortgage is just over six-and-a-half percent. “No one is expecting interest rates to go back down to three percent, but I think it’s going to settle somewhere between five-and-a-half and six percent for the rest of the year,” says Lino Mendogni, owner/broker of Exit Realty in Wappingers Falls
“One of the problems with higher interest rates is a homeowner is trapped in their house, not wanting to give up a three-percent mortgage for a six-percent mortgage. So the higher interest rates have had as big an effect on inventory as it’s had on the buyer demand,” says Clement.
Bosch anticipates that the market will improve later this year. “We’re starting to hear from housing folks, lenders, and appraisers that some of the appraisals are coming in too high for what people are qualifying for on a mortgage—and that’s usually the first sign that prices will begin to come down. They have outgrown people’s ability to pay.”
However, he says it’s hard to see a scenario where home inventory prices return to where they were pre-pandemic. “But we expect to see some backtracking on the prices either in the first or second quarter of this year,” he says.
But the prices of what? “There is very little housing supply, so unless we have interest from developers, planning boards, and town boards it’s going to be hard to see prices correct themselves this year into the range of what our neighbors can truly afford,” says Bosch.
An American Dream Deferred
The good news, Halter says, is there’s less panic buying than there was before, so she’s also hoping that if there is a drop in interest rates, it helps the inventory problem. “Lower interest rates will also help people decide to put their homes on the market because now they will be able to afford to move somewhere else,” says Halter.
Even though he anticipates a little improvement, Bosch says that overall homeownership is becoming more difficult for middle-income buyers. “It’s farther out of reach for those who would traditionally own a home, and that’s really troubling because homeownership creates stability and better health and education outcomes. It’s the foundation for community wellness,” says Bosch.
Mendogni also takes his predictions of the housing market in stride. “I can’t predict pandemics and one-time world events, but I do think I think the Hudson Valley is really a sweet spot,” he says. “It’s out of the city and buyers get more space here, so if interest rates go down, buyers will come back in droves.”