By Paul Post
Area real estate professionals say the fourth quarter heading into 2024 continues to be a strong seller’s market as demand far outpaces inventory for prospective homebuyers.
“It seems that there’s been a decline in homes coming on the market during the past year because many people who are at lower interest rates are holding back, they don’t want to have to buy a house at a higher rate,” said Janet Besheer, of Equitas Realty in Saratoga Springs. “They’re just backing off. So there are fewer sales. We have a lot of disappointed people.”
Pending sales throughout the Capital Region declined 9 percent this summer while closed sales dropped more than 26 percent and total inventory was down 28 percent.
Mortgage rates are currently over 7 percent, more than double the 3 percent level of a few years ago.
“That’s causing a certain portion of the market to step back and say, ‘I’m not going to buy now, we’re going to stay put’,” Besheer said. “Others say, ‘We’ll wait till interest rates come down.’ Well that might be a long wait.”
Meanwhile, prices continue to escalate.
“It’s hard for empty nesters to retire, sell and buy in this market,” said Melissa Cartier, of Saratoga Springs-based Cartier Real Estate Group LLC. “They’re getting a lot for their property, sure, but to purchase at such a higher price point? I don’t know.”
“It’s a really tough time for buyers,” she said. “It’s not fun for them. Lots of people have been looking six months, a year. One buyer I know moved out and rented for a full year before finding a house.”
Some people are so anxious to buy that they’re waiving inspections, which she strongly discourages. “We like to see people be confident in what they’re buying,” Cartier said. “We try to have our buyers be more completive in other areas, like giving the seller more time to move out, not just throwing caution to the wind.”
The situation, at least in part, is a byproduct of the COVID-19 pandemic when large numbers of downstate residents moved north, finding they could work remotely from home in more relaxed, comfortable communities. Homes started getting snapped up as soon as they came on the market, creating stiff buyer competition that caused prices to skyrocket.
“The main people getting hurt were first-time home buyers who couldn’t get a home either because there was so much competition or they just weren’t ready,” said Roohan Realty owner Tom Roohan, of Saratoga Springs. “They just got out of college, just got married, had just entered the workplace and were still getting their savings together and thinking about buying a house with interest rates at 3 percent. Now all of a sudden interest rates are twice that or more and they can’t get as much house as they could have early on. Those are the real victims, I think.”
The good news for sellers is that prices remain high.
“$500,000 is the new 300,000,” Besheer said. “Homes in general are selling at 3.3 percent over list price. That’s huge. The actual median sale price in the Capital Region has climbed to more than $300,000. We’ve always been in the low- to mid-$200,000s. So it’s going up. There’s been a real up-tick in home prices in Saratoga County and Warren County around the lakes.”
“Even in places like Granville and Argyle that used to be a little too far out for buyers, in Washington County, they’ve seen a major up-tick in purchasing,” she said. “Lake Luzerne became a hot spot during the past three years. Houses fly off the page there as well. So the market has moved out.”
Cartier said, “We encourage people to stretch their geographic areas when looking, to not be in the most competitive places, and to be open to doing updating.”
Homes that sell the fastest, for the highest price are those that don’t need any work. But quite often a solid house that needs a little updating can be purchased for much less. “Let’s try to get you in at your price point,” Cartier said. “You can do cosmetics down the road.”
Tim Combs, of HUNT Real Estate in Glens Falls, said, “Everybody is getting more money for their houses. People looking to sell are getting a lot more money if everything is maintained. If you want to get full value for your house, a lot of people are doing little projects before they sell to make them more attractive.”
Other advice?
“Smart buyers can find housing quicker in this market by using tools like getting pre-qualified, which means you’re ready to make a deal,” Combs said. “A lot of buyers go out there and just start looking at houses and they don’t even know how much they can purchase. Once they look at a house and fall in love with it, they have to wait until their financing is approved.”
Most new home construction in the Capital Region is high-end, so buyers shouldn’t expect to see much affordable housing come on the market any time soon.
“I don’t see much changing,” Cartier said. “I think lenders are going to have to offer promotions to help people want to sell and buy. A lot of home owners that bought with 3 percent loans don’t want to sell because they’re afraid to buy at 7 percent. Trustco is now offering a ‘split the difference’ initiative that gives rates in the middle. Lenders are going to have to do things like that because people can’t justify doubling their interest rate unless they really need to buy, really need to move.”
Anyone who can pay cash has a decided advantage.
“If you don’t have cash you must definitely speak to a couple of lenders to find out what you can safely afford. That’s the first thing,” Besheer said. “Next, engage a buyer-agent to be your guide. Have them show you properties you can afford so you become familiar with the inventory. That way, if you have to make a quick decision, you can because you understand what you can get for your money. You can buy a house and be happy without second-guessing yourself for the rest of your life. But you have to be ready to move, you have to be ready to take the plunge.”
“You also have to be prepared to go over the asking price,” she said. “That’s another reason to have a knowledge of the inventory in your area, and have someone who can say to you, ‘I think this is still a good buy even if you go over’.”
Roohan said people might have to adapt to a “new normal” in the marketplace and adjust their expectations accordingly. “Interest rates are higher, but I think we were spoiled for a period there,” he said. “When I first entered the real estate business fixed rate mortgages were 17 percent. I hope we don’t ever see that again, but I think interest rates have sort of stabilized.”
“My crystal ball says, ‘If you’re sitting on the sidelines and want to do something, get off the bench because although you might be unhappy about interest rates, they aren’t bad in an historical context,” he said. “More people are coming to market with their homes. They sat on the sidelines a little bit. They couldn’t make a decision about what to do. Now they’re making those decisions. We’re hoping our listing inventory for prospective purchases keeps growing a little bit.”