BY SUSAN E. CAMPBELL
Whether the economy moves up, down
or sideways, there is always opportunity
to make money in real estate, especially
when the real estate is in Saratoga, those
in the field say.
As the rest of the nation suffered from
financial woes that began in 2007, the
Saratoga area was not totally insulated
from falling home values. But it has made
a strong recovery, according to Scott Varley
of The Scott Varley Team, Realty USA.
“Residential values have risen every
month over the past consecutive 30
months,” said Varley, translating to “at least
10 percent average increase in Saratoga,
compared to 5-7 percent in the Capital
District” as a whole.
Professionals agree that 2014 got off to
a slow start because of the harsh winter,
but “more than made up for it in the second
quarter through mid-summer” in the
residential market, Varley said.
Following a typical die-off as horse racing
season ends, September usually starts
off slow. This year, though, the final quarter
“is off a little bit compared to last year due
to a lack of foreclosures and therefore less
inventory,” he said.
“The current market is off about 6 percent in the dollar value of transactions,”
said Bruce McClellan of Pinnacle Realty.
“It has been a good summer, but I am not
overly optimistic.”
McClellan said that while it is “a great
time to be a buyer, people still need to get
a mortgage. It is still harder to qualify,
which is residual from having suffered
those bad years.”
A stronger national economy will bear
positively on everyone, but McClellan said
“there is not enough wind beneath the
wings” of the economy yet to help lending
institutions ease requirements. “There is
a good balance between buyers and sellers
and plenty of opportunity to market a home,
but some reality has to set in.”
Low inventory is followed by new construction,
which is in demand among some
segments of buyers.
“New home prices are reasonable,” said
Varley. “Buyers may pay an additional
$20,000 on the average home that comes
with a warranty and no maintenance.”
“New construction is always exciting and
a good indicator” of the health of the real
estate market, said McClellan, “and there
is an uptick. But price point is the reality.”
“People are trading homes both up and down so their homes fit their lifestyles,” he
said. “Saratoga is a sweet spot geographically.
But people have to be convinced that
real estate is a good investment.”
Professionals noted that high-priced
homes have not been moving lately. But any
home can sell if priced correctly.
“Whether $150,000 or $1.5 million, a
home will sell if it is priced for what it
offers,” said Tom Federlin of Racing City
Realty.
Federlin specializes in track rentals,
non-track rentals and vacations homes.
Last year he had record numbers of both
home sales and rentals.
Long-term clients whose second homes
he rents come up for sale when the aging
client is no longer able to sustain the
property and asks Federlin to list it. While
seasonal track rentals are his niche, he
also rents to a more mobile demographic
than buyers: Navy personnel, students,
technology contractors and people who
need a place to live while their new homes
are being constructed.
“Some homeowners sell their property
and don’t know what to do next, or if they
even want to buy again,” said Federlin.
“Some have had a bad experience selling
a house, and others don’t know how solid
their jobs will be.”
Federlin is referencing newcomers to
the area technology campuses on shortterm
contracts, who have filled up rental
properties in Malta awaiting a permanent
assignment. He is also concerned about the
“average worker” or “middle class getting
the squeeze.”
“I hear all the time, it is hard for the
average worker to afford a place to buy,”
he said. “There is not enough inventory
for them.”
But there is plenty of rental space. In
fact, Federlin expects a “glut in certain
apartment complexes and price ranges. I believe what happened is that developers
were not selling as many townhouses and
decided to build apartments.”
“Well-paying job opportunities attract
people to the area and as a result, the demographics
here are changing,” said Varley.
“Technology manufacturers, tech support
services and related businesses are bringing
younger people from all over the world.”
“These companies are getting their feet
on the ground, so they offer shorter term
contracts,” said McClellan. “People don’t
know how long they will be here.”
Even if their jobs seem secure, some will
rent a year or two before buying, which increases
the demand for rentals, McClellan
said. “Everything is in place for a strong
real estate market except strong employment
opportunities.”
As in most areas with snowy, extreme
winters, many home owners will wait until
spring to market their homes when properties
look their best.
“Buyer enthusiasm conquers many ills,”
McClellan said.
What’s good for residential real estate is
also good for the commercial market, from
land to leasing, said Varley. An associate
broker on The Scott Varley commercial
team, Joan Purtell, said the Saratoga area
“has always been a strong market because
of its diversity and good planning by the
town fathers.”
“We went through the oil embargo in
1976, the savings and loan debacle in 1988,
another stock market downturn in 1998,
and again in 2005,” said Purtell. “There is
a new cycle about every 10 years.”
Purtell said the current cycle is “about
mid-way through where we might be” and
explained how commercial real estate has
fared since hitting bottom.
“People were downsizing, which meant
renegotiating leases for office space. Next,
warehousing became popular, because retailers had to put their merchandise
somewhere,” she said.
“People who have foreclosed needed to
live somewhere, so the apartment market
gained velocity,” Purtell added. “So warehousing
and residential housing cycled
together and have now stabilized.”
The increase of mixed-use construction
has been “good for the community because
mixed-use creates its own community,”
she said.
Once the upper-floor residential spaces
are filled, the storefronts and office leases
follow, Varley said.
“The highest investment use of these
spaces is whatever will serve the community,
both outwardly to the public and
inwardly to the residents of the mixed-use complex,” said Purtell.
As the population grows, Saratoga will
see many changes that will be “well thought
out” because “the people responsible for
this community have done an outstanding
job and will not allow it to be overbuilt,”
said Purtell.
Consensus is the fourth quarter will end
relatively flat but provide enough momentum
to give 2015 a moderate boost.
McClellan looks forward to a “healthy,
but hesitant” new year for residential and
commercial real estate. Varley is optimistic
about growth at levels that “do not match
but excel the national scene.”
Federlin foresees a steady flow of rental
demand with “new units needed for seniors
and average workers.”