Monday, July 20, 2020 / by Vanessa Saunders
Photo credit: Mohammed bin Rashid Space Center
By Vanessa Saunders, MBA, MIMC , Broker Owner, Global Property Systems Real Estate.
Why are there so few houses to buy in the Hudson Valley real estate market?
If you've searched for a house to buy in the Hudson Valley real estate market, you may as well be shopping for houses on Mars. In October last year, the nation had a 3.9-month supply of existing homes for resale. That means, at the pace of sales then, it would have taken 3.9 months to sell all the homes on the market. A supply under six months puts home buyers at a disadvantage.
“Overall buyer demand will remain very robust, particularly at the entry-level, in 2020,” Realtor.com senior economist George Ratiu wrote in a forecast. He was putting it mildly.
Who is responsible for the shortage of homes for sale and why? Here are six very good suspects.
Baby Boomers aren't moving out.
There just aren't many good reasons for boomers to sell. Coupled with the negative effect of economic uncertainty, boomers are hanging on to their current homes, instead of moving and making room for younger generations to move to either their first home or their next one. The average stay for home owners used to be six to seven years before moving on. Last year, that average went up to ten years.
Landlords aren't selling.
After the foreclosure crisis, millions of single family homes were bought by investors and converted to rentals. Those investors are getting a steady income and don't have a reason to sell. Even when they do sell, buyers are competing not only with others looking for a home, but investors looking for another income property.
Home owners love their low interest rates.
Over the last four years, interest rates have dropped steadily, and buyers want to savor the low rates they scored and not give them up.
Builders aren't building starter homes.
Last year, about 585,000 newly constructed homes were sold, according to the Census Bureau. Fifty-six percent of those homes cost $300,000 or more. Not a price most first time buyers can afford to pay.
Local regulations add expenses to new homes.
Environmental protection, infrastructure fees and rules that specify minimum lot sizes — add tens of thousands of dollars to the cost of every home.
Local zoning and land-use regulations limit the number of houses that can be built in a neighborhood, or set a minimum square footage for houses and lot sizes. Such regulations limit the supply of homes and make them more expensive. This is great for neighbors who want property values to go up, but bad news for buyers looking for an affordable home.
What's a buyer to do?
As Yogi Berra famously said, "It ain't over 'til it's over." The housing market will eventually settle down. What a buyer can do now is to be realistic about how long it will take to find a home to buy. They can also start saving money for a down payment (if they haven't already), and work on building their credit score, to get as good a deal as possible on a mortgage.
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Interested in buying or selling a home the Mid-Hudson valley? Get a head start and search all seven Mid-Hudson Valley counties (Rockland, Dutchess, Orange, Putnam, Sullivan, Ulster and Westchester) for homes on the market by using our free search site at www.gpshousehunt.com.