New York’s resilience and the rebound of the real estate market in the city as well as throughout the Hudson Valley came under scrutiny in a webinar produced by the Hudson Gateway Association of Realtors (HGAR) in the series “Getting the Deal Done”.
HGAR CEO Richard Haggerty said: “We ended last year with record numbers. The post-Covid surge and recovery continued through 2021. Comparing 2021 home sales to 2019 home sales, Westchester was up 19%, Putnam County 10.6%, Rockland 19%, Orange 11%, Dutchess 20%, Suffolk almost 12%. Interestingly, Queens and the Bronx have seen an incredible rebound: Queens 65.7%, 2021 of 2020 and Bronx 61% of 2020.”
Haggerty reported that there was some market easing in the fourth quarter of 2021.
“I really expected that to happen, quite frankly, because we just couldn’t keep up this breakneck pace. I think what we really saw in the fourth quarter of 2021 was a return to seasonality in the market that we lost in 2019,” Haggerty said. “In 2019 we knew the market had totally closed for all intents and purposes in the second quarter, came back strong in terms of projections and accepted offers in the third quarter and that led to a ton of closures in the fourth quarter.”
Haggerty said people shouldn’t be misled by the softness of Q4 2021.
“I’m very optimistic heading into 2022,” Haggerty said.
Jonathan Miller, of Manhattan-based real estate appraisers and consultants, Miller Samuel Inc., said: “Westchester and the counties north of the city were just rockets as I described it in terms of activity and Manhattan was sleeping. The city is now the outlier in the sense that they still haven’t caught up with what’s happened in surrounding counties and I think we’re going to see that in the first half of 2022; heavy heavy volume going on, bidding wars going up, all that intensity.
Miller said the suburbs have a problem the city doesn’t.
“The city…it has more to sell,” Miller said. “The hallmark of suburbia and most countries is that inventory is not just low, it’s incredibly low.”
Marissa Tracey, director and global private banker at Citi Private Bank, said demand for residential real estate in Manhattan was driven in part in the second and third quarters of 2021 by the reopening of schools for in-person learning.
“If you wanted your kid to stay in school in New York, you had to go back to the city,” Tracey said. “Suddenly you were going to work from home with kids going back to school and you needed something bigger, bigger. Your conception of what it was like to live in an apartment in New York and the space you you needed has changed dramatically.
Tracey said at Citi they see the Federal Reserve tightening interest rates in small steps through 2024 to control inflation, which will lead to increases in mortgage rates. She said the bank expects 10-year variable rate mortgages at around 2.1% by the end of the year. She said the bank doesn’t see mortgage rates going into the 6, 7, and 8 percent range.
Joe Rand, Chief Creative Officer of Howard Hanna-Rand Realty and Executive Director of Broker Public Portal, said, “At a time when people are seeing inflation coming, real estate is generally a good inflation hedge. This should help the market as a whole.
Rand said that instead of focusing on interest rates, people need to pay attention to the true cost of carrying a home in terms of dollars spent each month.
“Right now, in real dollars, the monthly payments to buy a home in the Hudson Valley and northern New Jersey are… as low as they’ve been at any time and well below the middle 2000s and much lower than the mid-1980s. because the rates have been so low,” Rand said. “Now the rates are going up. It’s going to take a bit off and the fact is that the prices have gone up.”
Miller said the recovery in the residential rental market is tracking the level of office reopenings.
“All of these central business districts are going to benefit from greater rental because at the end of the day, if I have to come a few days a week instead of five days a week at home, I may live closer office,” Miller said.
Tracey said financial services companies want to see their employees in the office.
“I don’t think it’s one day a week. I think three days a week might be the new normal,” Tracey said. “Some people might be able to get two, some might be able to get four, but I think at the price of buying a studio/one bedroom and the rental market, you’re going to see increased demand there because that…younger people, thirties and under, who now need to be in the office, are going to need a place to live and during those two days a week when they work from home, they want somewhere nice where to live and they are willing to spend more money on it.