It’s a wobbly national economy right now, with the federal government partially shut down, the standoff between the executive and legislative branches in Washington continuing, and uncertainty as to the direction of interest rates. One senses that the national mood could shift in a heartbeat. So prediction about what’s likely to happen in the real-estate market in 2019 — or in any other major asset class, for that matter — is difficult.
But hey, why not?
Mortgage rates are starting off 2019 at very good levels, said National Association of Realtors research economist Nadia Evangelou two weeks ago. Thirty-year fixed-rate Freddie Mac mortgage rates dipped to 4.5 percent at year-end from the five percent it had been drifting toward during late 2018. The average homebuyer in the Kingston, New York market would pay $1017 per month for a mortgage at the lower interest rate rather than $1078 at the higher rate, according to Evangelou. Buyers could afford more house for their bucks.
The struggle in Washington over interest rates is unresolved. The Federal Reserve finds the American economy strong enough to want to continue quarter-point hikes in the overall interest rate. President Donald Trump has always been a low-interest-is-best guy.
Based on more than 1628 transactions, the median Ulster County single-family residence increased 8.15 percent in value, from $211,750 in 2017 to $229,000 in 2018, according to Multiple Listing Service data compiled this month. Don’t break out the Champagne quite yet, though. Despite that price hike being higher than the 2016 Ulster County rate, and maybe the highest here since the Great Recession, it is modest compared to the price escalations seen in other parts of the country.
The number of listings for Ulster County residences amounted to 1309 in November 2018, down considerably from 1642 listings in November 2017. Though the number of Ulster County homes for sale has been decreasing steadily for the past several years, the existing inventory of homes still amounts to a supply of 7.3 months. This compares to a six-month average supply in the state as a whole. Though there may be a scarcity of listings in some Ulster County categories and localities, the overall supply appears adequate.
But that’s the overall Ulster County market. Lack of supply is a major factor, explained broker Hayes Clement, in markets like the Kingston Stockade neighborhood and the Rondout, and in Woodstock, Marbletown and New Paltz. “There’s a severe inventory problem,” he said.
Even though fewer houses sold in 2018 than in 2017, they sold for higher prices. Average sale prices for Ulster County residences (average, not median) increased from $253,353 in 2017 to $281,457 in 2018, an 11.1 percent jump. Some $435.8 million worth of residential real estate sold in 2017, and $458.2 million in 2018. Fewer sales but higher prices.
High-end activity continues to be a significant segment of the market. There were 168 Ulster County residential sales recorded in 2018 for $500,000 or more as compared to 128 in 2017. And there were 28 million-dollar residential sales in 2018 versus 16 in 2017.
Most of these wealthy buyers of Ulster County residential real estate were from the New York City area. By no means were all of them middle-aged purchasers of second homes. Jon Hoyt, a local attorney and broker who does a lot of closings, cited among the buyers of million-dollar properties a relatively young trust-fund beneficiary who complained he got insufficient cash from a huge inheritance, a tech entrepreneur with fond memories of summering in a particular community, and an enterprising fellow in his early thirties who had cornered a significant share of the New York City market for a particular service. Most wealthy people are acutely aware of tax bills, maintenance costs and insurance obligations, noted Clement; he thinks those that are not are the exception.
First-time Ulster County homebuyers, often young families without much income and feeling the burden of paying rent without building home equity, are finding few opportunities to get started. The stock of do-it-yourself properties is continuing to shrink. Only 159 buyers were able to secure Ulster County properties for less than $100,000 in 2018, according to the local Multiple Listing Service, as compared to 235 who were able to do so the previous year.
What about geography? Brokers tell us that potential buyers seeking to locate in specific communities usually widen their searches as they explore the marketplace. Because the numbers of transactions in each jurisdiction are smaller, the data is less reliable. One should be cautious in jumping to conclusions from it.
If anything, the data shows a consistency in the relative standing of Ulster County communities in regard to each other. The communities where real estate is more expensive — Woodstock, New Paltz, Marbletown — and the communities where it is less expensive — Kingston, Ulster and Saugerties, for example — tend to remain in the same ranking over longer periods of time.
The young urban pioneers wanting to move from New York City and start families in Ulster County may be more numerous, but what they’re paying to buy houses in Kingston or Saugerties hasn’t been pushing prices up much. In this past year, the percentage appreciation in the more expensive communities has been significantly higher than in the less expensive ones. But the data is so fragmentary that the opposite trend may well be true in 2019.
What would one say if one had to guess about the direction of Ulster County residential real estate in 2019? My guess for the asset class would be that 2019 will be about the same as 2018 — an encouraging and positive if not quite a spectacular year.
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