The Power is Now

A year like no other in local real-estate – Hudson Valley One

“Now is the winter of our discontent,
Made glorious summer by this son of York;
And all the clouds low’r’d upon our house
In the deep bosom of the ocean buried.”
— Richard III, by William Shakespeare

Prices of single-family residential real estate in Ulster County took a big leap upward in 2020, increasing in value close to 13 percent. But new figures not yet released by the industry show that prices in 2021 blew the proverbial doors off 2020. According to data available from Ulster County’s Multiple Listing Service, the median price of sold single-family homes increased from $290,000 in 2020 to $349,000 in 2021, a jump of 20 percent.

Working with a slightly different data base, the state association of brokers (Nysar) figured the median price in Ulster County at $281,000 in 2020 and $360,000 in the third quarter of 2021. The Ulster County MLS numbers and Nysar’s lead to the same conclusion. Prices have been appreciating each year since 2015, with the lion’s share of the increases coming in 2020 and 2021.

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Ulster County prices have increased in the past five years at a faster pace than they have in all but seven counties for which Nysar has collected data  (Columbia and Greene counties are two of the seven).

In the third quarter of 2021, Ulster County had a four-month supply of housing available for sale. In the third quarter of 2019, just two years earlier, the supply of housing for sale was double that, eight months.

The new numbers represent a new high-water mark in the upward march of Ulster County residential real-estate prices in the past four years. In 2017, four years before the year just completed, the median price – half the houses sold for a lower price and half were higher priced – was $212,000, according to the Ulster MLS.

The change in market value of an asset class that many tens of thousands of residents own has been enormous. Prices at the top and bottom of the price range illustrate the extent of the transformation of the marketplace.
Of the 1720 Ulster County single-family homes sold in 2017, some 235 sold for under $100,000. When 1882 homes were sold four years later, in 2021, only 25 sold for under $100,000.

In 2017, 17 million-dollar homes were sold. By 2021, there were 83, of which 16 were sold for two million dollars or more — in today’s marketplace, the two-million-dollar house has become the million-dollar house of yesteryear.

One house in every ten sold for $750,000 or more in 2021. The localities of the top-end homes, which are tabulated by zip code, show the usual pattern. Woodstock has more than any other town. New Paltz and Marbletown come next.  The Kingston 12401 zip, which extends to sections of several other towns, has quite a few. But a large number of the $750,000-plus homes are scattered all over the county; practically every zip code seems to have at least one.   

You might not know it from the state of New York State’s housing market that 2021 was a boom year for owners of residential housing throughout the United States. According to the Federal Reserve Bank of St, Louis, which keeps track of national median sales prices by quarter, the median price in the second quarter of 2020 – the quarter after we had just been introduced to Covid-19 – was $302,600. By the third quarter of the next year, 2021, the median price was $404,700. That’s an astonishing gain in five quarters (the St. Louis data includes only the counties which measure the data, which excludes many rural counties with low price increases).

The Federal Reserve Bank of New York publishes monthly home-price data for every county in the United States that keeps records. Though not as accurate as Ulster County’s own Multiple Listing Service, it provides a reasonable overview of price changes, especially in urban areas. We applied the New York fed data for November 2021 to activity in 2021 for all the counties in the New York-New Jersey metropolitan area. This is what we found: New York City may be recovering from the mass exodus it experienced after the first Covid-19 wave, but when it comes to housing prices the recovery is starting very slowly despite very low interest rates. On a year-to-year basis, home prices for the third quarter of 2021 increased in the single digits in Gotham as a whole, though of course some neighborhoods saw more price appreciation than others did.

The suburban New York counties closest to the city – Long Island and Westchester – did a little better. The exurban counties of the mid-Hudson region on average did a lot better. The counties with the highest price appreciation in November in the expanded metro region included Orange with 20.0 percent, Dutchess with 19.8 percent, Greene with 18.6 percent growth in prices, and Ulster with 17.6 percent. Rockland (16.8 percent), Putnam (13.9 percent), Columbia (13.1 percent), and Suffolk (11.9 percent) followed.

The nation’s high growth rate in property values in 2021 was mostly due to the explosion of prices in southern and western states. What seems to Ulster homeowners as unprecedented growth in this asset class is commonplace in other parts of the nation, especially the West Coast, the Mountain States, and Florida. 

In some parts of California, astronomical prices, uncomfortably crowded housing, and punishingly long commutes have become the dominant pattern. The Golden State is no longer the promised paradise it seemed for generations to be. Out-migration now exceeds in-migration. California is becoming relatively more affordable as people move to more affordable competing cities.

According to UCLA researcher  Jerry Nickelsburg,  the housing premium increased when San Francisco was an epicenter of innovation and wealth generation. As Seattle and Austin began to catch up, San Francisco’s housing premium decreased. As living costs rise in those hot areas for real estate, Nickelsburg speculates, some well-paying jobs may return to California and real-estate prices will then increase faster again.

Why is Ulster County so near the high end of housing appreciation in the greater New York metro area? It’s probably due to a combination of the pandemic and the expansion of distance work. Many of the jobs leaving New York City have so far been going to the inner suburban ring of New York counties, to Fairfield County in Connecticut, and to northern New Jersey. Job growth outside this inner circle of counties has been disproportionately in warehousing, fulfillment centers and leisure activities. 

How that pattern evolves will be largely dependent on the ingenuity of the entrepreneurs in the different counties of the Hudson Valley and the localities within them.  Eighty years ago, noted economist Joseph Schumpeter posited that entrepreneurship consisted not just of invention but of changes in new products, new methods of production and new forms of organization. His thinking is particularly appropriate in turbulent times such as the present.

The opportunities are there. The real-estate boom is but a harbinger of what could be a sunny future beyond this winter of discontent. It’s a signal that a significant portion of the new hybrid world values our real estate. But what does that mean for our future? We now live in world of greater competition in more dimensions than ever before. Will the Hudson Valley have the imagination and the resources to find its path to realizing its socioeconomic, environmental, cultural and most of all human potential?

‘Tis a story never too often told.

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