the status of the Capital Region real estate market
ALBANIA — Inflation and rising interest rates continue to be a burden on the local real estate market, where inventory remains low amid high home prices.
It’s bad news for those looking for new homes in early 2023, said Laura Burns, CEO of the Grand Capital Association of Realtors (GCAR). “My advice is to wait until spring and see what happens with the market then,” she said.
The average 30-year fixed mortgage rate in New York is currently 6.5 percent, according to Bankrate. With mortgage rates more than double what they were last year, it’s no wonder potential buyers are putting home purchases on hold and delaying the need to apply for home loans. In Saratoga County, the total number of mortgages collected by the clerk’s office fell from 11,735 in 2021 to 8,595 in 2022.
And in Albany County, closed sales in November fell 32.2 percent, a downward trend measured by GCAR that is expected to continue into the new year as buyer demand is lowest during December and January.
What’s going on with the local real estate market?
High list prices continue to worry aspiring homeowners, with the November median sales price for Capital Region homes reaching $279,000, a 7.3 percent increase from last year, according to GCAR. And while average home sales are expected to fall slightly as sellers stall over the holiday season, the Federal Reserve has signaled it will continue to raise interest rates, which will further raise home loan rates and decrease buyer demand.
The biggest obstacle to housing affordability, Burns said, is inventory levels that have fallen sharply over the past several months. In November, the supply of inventory fell to two months, meaning if no listings were added in that period, there would be nothing left on the market in the region’s 10 counties.
She attributes the issue largely to a lack of new construction, adding that there wasn’t enough housing built last year and that what did come on the market often came with a hefty price tag. The median price for new residential homes in the region currently is about $490,000, she said.
The Capital Region Builders and Remodelers Association (CRBRA) said fewer new homes were built over the past two years as builders were saddled with historically high material and production costs and instead focused on delivering homes. for people already under contract. Due to inflationary pressures, CRBRA expects low inventory to continue through 2023 until market conditions improve — but that doesn’t mean it’s not a good time to buy, at least according to the builders association.
“Currently, material prices are relatively stable, which makes this a great time for buyers to buy a new home before the market heats up again and prices start to rise due to inevitable supply and demand pressures. demand,” said a CRBRA spokesperson.
In her State of the State address on Jan. 10, Gov. Kathy Hochul identified housing as a key platform, with the goal of creating up to 1 million new housing units in the state over the next decade. Changing zoning rules, creating new tax incentives, emphasizing transit-oriented development and environmental review for low-unit construction are among the methods the governor and other experts have cited to encourage the growth of new homes, he reported on see Times Union.
Buyer demand is down, but varies by region
Most buyers aren’t migrating to the area from elsewhere, but locals looking to move within the Capital Region, Burns said. Current market pressures, however, “are blocking people who want to get out of their starter homes and into their next, higher-end home,” she explained.
Home values, inventory levels and buyer demand vary by ZIP code, and readers can further identify median home prices using the Times Union’s interactive guide to housing markets in the Capital Region, Catskills and Hudson Valley updated regularly the last in November.
Some areas of the Capital Region have attracted more homebuyers than others, with the city of Schenectady seeing a 22 percent increase in new listings with a median sale price of $216,000 and a 9 percent increase in closed sales , according to GCAR. Meanwhile, in Albany, listings are down 34 percent.
Troy has also suffered a slowing market, with listings down 46 percent and the median sales price rising from $195,000 to $210,000 due to low inventory. Saratoga Springs, meanwhile, remains the most expensive in the Capital Region metropolitan area, with a median home sale price of nearly half a million.
Even in Saratoga County, the fastest-growing county in the Capital Region, buyer demand is down. In 2022, the Saratoga County Clerk’s Office recorded 6,745 deeds involving the transfer tax, which is charged to complete the sale of a property from one owner to another. In 2021, the number, which also includes vacant land, commercial properties and foreclosures, was 7,476.
But like all other markets described by the moving pendulum metaphor, local real estate trends are expected to change in the coming months. Burns pointed to the growth of the region’s technology and nanoscience sector as one of the potential drivers capable of attracting a new population of professionals to the area looking to buy homes.