It takes several months for real-estate closings to reflect changes in direction in the marketplace. Many if not most Ulster County second-quarter closings were of deals consummated before the full impact of the pandemic was established. The June numbers, widely touted though they were as , did not reflect the full impact of the pandemic on the outmigration pattern from New York City.
The Brooklyn North theme has long held the interest of Hudson Valley researchers. “In a few short months the global pandemic achieved far more than all of the ad agencies could over many years,” wrote Joshua Simons in a recent BenCenter blog out of SUNY New Paltz. “It accelerated a northward migration of people from the city the likes of which hasn’t been seen since the cholera epidemic of 1832. And just like back then, it is people of means who are fleeing.”
Simons repeated a theme that probably originated with Bloomberg News, the lead sentence of whose August 12 article trumpeted that “a picturesque Hudson Valley town north of New York City has the fastest-rising home prices in the U.S.”
How did that trend fare in July and August? Was the impact on prices a one-time occurrence or a slightly longer-term process?
To find out, we decided to divide the 46 days through mid-August into three semi-monthly periods. There were 226 transactions recorded by the Ulster County MLS during that period (as compared to 264 in the same period in 2019, probably reflecting a decrease in housing supply year to year).
The median closed sales price in July was $329,000, as compared to $275,000 last July and $213,000 back in 2017, according to our data. Amazingly, it was in an upward trajectory even within the 46-day period from July 1 to August 15: $318,000 in the first half of July, $332,500 in the second half of July, and $345.250 in the first half of August. Such a steep rise in such a short time, a reflection of intense competition among buyers, may be unprecedented. We’ll find out in coming months whether such a level is sustainable.
In the same 46-day period in 2019, Ulster MLS recorded 31 half-million-dollar sales. The equivalent period this year saw 62 such sales. There were ten closings priced at $750,000 and above for residences in the 46-day period last year and 23 this year.
Buying a house in Kingston
The two couples knew each other from somewhere. One pair, sitting at one of the four outdoor tables in the rough enclosure outside Rough Draft bookstore and bar on the corner of Crown and John streets in uptown Kingston last Saturday a few minutes after noon, was watching the antics of the tail-wagging canine society at the other tables greeting passersby of their own kind in their own way (“They’re all friendly. You can pat them. They won’t bite”). The other pair, with two small babies in tow, was passing by on foot.
The seated couple was more familiar with Kingston. The other couple was on a first visit. The two sets exchanged contact information.
What they had in common was that they had lived in the same apartment building in Brooklyn Heights. The seated couple, Drew English and Amy Stein, had just closed last Wednesday on a house on a quiet street just outside the Stockade area, just a couple of blocks away from Rough Draft. English wanted to make it clear that the house they had bought was not a second home. It’s to be their primary residence.
Now in their late thirties and just engaged, these new Kingstonians are part of the huge new wave of knowledge workers streaming out of New York City in the wake of the Covid pandemic. A recent Zillow study found that 56 percent of employed Americans who have had the opportunity to work from home during the pandemic would prefer to continue that pattern after it subsides. And Zillow added that the recovery could “drive a boom in secondary cities and exurbs prompted not by fear of density but by a seismic shift toward remote work.”
Both English and Stein have lived in New York City for about a decade. They’ve each established business relationships with a handful of regular clients who depend on them for services.
English owns a film production company that provides the independent film industry specialty services and equipment. He operates in an entrepreneurial environment that requires service businesses to cultivate the ability to find solutions that work for their clients.
Stein’s a graphic artist by profession. She’s found her niche in a competitive marketplace,
None of their clients particularly care where their services are located. These new Kingstonians are expecting to go down to New York City perhaps once or twice a month.
Their path to home ownership in Kingston was not an uneventful one. They’ve been coming up to the Hudson Valley for several years. They can tell you about Hudson and Beacon. When they zeroed in on Kingston as their preferred choice, they signed a short-term lease at the Shirt Factory on Cornell Street in Midtown, and started looking more intensively at local properties. Their offer of full price on one house lost out to a higher bidder. Another Kingston house turned out to have serious structural issues.
But they finally succeeded last week.
English talks about giving back to the community. New residents, he says, have a responsibility to contribute to where they live. It’s not hard to imagine him finding or developing local talent with whom his company will work. Stein’s immediate dream is to find a low-rent space in which to start her own art gallery.
New networking patterns
Scholar Susan Wachter of the Wharton School thinks that the shift to remote work will create more capacity for growing industries as well as helping knowledge workers escape absurdly high housing costs in the major cities. She as argued that the post-pandemic era will expand opportunities not in the geographic sense but in a networking sense. She envisioned what she termed “neighborhood nodes,” where knowledge workers would constellate in a range of smaller communities. The major cities will still be the hubs, but their geographic dominance may lessen as the new nodes rise.
Wachter doesn’t see the new trend as entirely positive. For instance, entry-level workers “gain tremendously from being part of a geographically clustered pool,’ she said. “For them, this is not good.”
Rumors of records roil market
“Ulster County was a hot real-estate market prior to this year, but the pandemic has escalated that trajectory,” Simons of the BenCen blogged. “The National Association of Realtors [NAR] reported on August 12 that home prices grew in 96 percent of metropolitan areas in the U.S. in the second quarter of 2020. Most shocking, of the 181 metropolitan areas tracked by the association, Ulster County’s 17.6 percent spike was the largest growth in the entire country for median home price since the beginning of the year. In 2017, the median home price was $213,000. Today it is $276,100.”
The “largest-growth” narrative relies on statistical sleight of hand. The New York consolidated metropolitan area happens to have 23,700,000 people and includes some of the biggest cities in Connecticut and New Jersey as well as significant exurbs on Long Island and the Hudson Valley none of which are listed as separate metros. (Eat your heart out, Hamptons.) The NRA’s list includes the nation’s most populous areas in aggregate (a mix of rich and poor places) and a few smaller metro areas on their fringes (like Ulster and Columbia counties) as separate. In winning its top ranking, Ulster County – the Kingston metropolitan area — was only moving from well below the New York State median sales price for residential housing up to the state median.
It’s going to continue rising up the county rankings.
What about gentrification?
“While it is in some ways easier to comment on how the character of the place is changing, it is important to know and understand the human toll this trend will take if left unchecked,” blogged Simons. “Affordable housing was already far too scarce before the pandemic. All of this is only going to get worse. Gentrification is the other side of the revitalization coin.”
This spring, Bard College professor of urban studies Kwame Holmes and the 13 students in his urban studies class took a revolutionary approach to the study of home ownership in the neighborhood of Midtown Kingston on the south of Broadway roughly from the new traffic circle under construction down to the railroad tracks of the West Shore line, They counted who owned what. It turned out that 275 out of the 481 properties in the area were owned by non-local landlords.
“We’re interested to learn the impact of ownership from afar upon living conditions of renters, particularly in working-class areas,” wrote Holmes. “Are non-local landowners more likely to sell for an immediate profit, exposing renters to an involuntary displacement? More transparency in and analysis of ownership patterns are essential for the maintenance of public health.”
Holmes’ Kingston Housing Lab promises further studies.