CAPITAL REGION — Demand remains strong and supply remains limited in the Capital Region housing market, and prices are rising as a result.
Local Realtors closed sales on 18% more houses in the first two months of 2021 than in the same two months of 2020, despite January and February traditionally being among the slowest sales months. And the median sale price for those houses was 14% higher year over year.
March statistics aren’t finalized, but indications are that the trend continued from the previous two months, the regional trade association for Realtors said Friday.
Meanwhile, builders of new homes also face a confluence of factors: People want things built, but the supplies to do the building are much more expensive and take longer to arrive than a year ago, driving up prices and dragging out timelines.
“In March there were 30,000 showings,” said Laura Burns, CEO of the Greater Capital Association of Realtors, which has a membership of 4,100 real estate professionals and operates the Global MLS. The multiple listing service is the channel for many but not all housing sales in and near the Capital Region, including 13,606 closed sales in 2020.
February 2020 was the last month of normalcy before the pandemic reached New York, and before much of the business world was put in hibernation. The next few months of year-to-year comparisons therefore will be meaningless, but Burns recalls clearly the late-spring sales surge in 2020 after the state economy reopened.
“The minute everybody realized this was going to be a long haul our market started jumping,” she said. “People in the city, no matter what city, wanted to get out. People were comparing it to the 9/11 exodus, but this is more permanent.”
Downstate people moving north had some things in common, she said: They wanted more space around their houses and more space inside than they’d had in the city. An often-heard query was whether the basement was suitable for a children’s playroom or a home gym.
The challenge facing Realtors now is that there’s only two months’ worth of inventory on the Capital Region market.
“A healthy market is about six or seven months of inventory,” Burns said. “We’ve just been going lower and lower the past few years.”
It’s a situation seen in many other areas. A colleague in Oregon told Burns his market was down to one month of inventory.
“This is the time [of year] when people start listing, though,” she added.
The city of Schenectady actively works to promote homeownership, and has some factors in its favor as spring blooms in 2021. Chief among them is affordability — median sale price in 2020 was $150,000. That’s up from a 2017 median sale price of $101,000, but it is still the lowest among any Capital Region town, city or county that GCAR tracks.
Schenectady also has the highest combined tax rate in the region, which on its face is daunting to a homebuyer, but communities with lower tax rates have higher assessments, so the resulting tax bills aren’t as far apart as might be expected.
More important perhaps, Schenectady is a city, and some homebuyers want nothing to do with cities after a year of the pandemic.
Mayor Gary McCarthy said he’s seen that, but such hesitancy isn’t the key factor with Schenectady housing sales in the time of COVID.
“There’s a general caution that people have,” he said, but “our impact was more the closing of Proctors, bars and restaurants reduced hours, Rivers Casino.”
In other words, the things that bring people to the city were diminished or missing in 2020.
Nonetheless, houses are selling in Schenectady — 461 of them last year, by GCAR’s count.
“We’re seeing a high level of interest in purchasing here and we’re also seeing prices move above what the assessed value is,” McCarthy said.
For those interested in becoming Schenectady homeowners, the city has an in-house specialist working to help: Maurice Brown, coordinator of Home Ownership Made Easy in Schenectady.
HOMES is a clearinghouse of buyer education, grants for qualified buyers, city-owned properties, rehab loans, and referrals to Realtors and lenders. It maintains a network of dozens of public-sector, private-sector and nonprofit partners to provide this assistance.
The Capital Region Builders and Remodelers Association has 260 member businesses in seven counties.
CEO Kristen Egelston said they’re mostly swamped with work and scrambling for supplies.
“The demand is higher than it’s been in years,” she said. “Remodelers, many of them, are booked through the end of this year.”
On its face, a homebuilding/home improvement spree might seem an odd thing to grow from one of the worst crises the nation has seen in living memory, but it’s a logical outcome. So many people spent so much more time at home that the shortcomings of their living quarters became glaringly apparent.
With money saved from not commuting or not vacationing, they want to improve those quarters.
“ ‘Home’ has become more important than ever,” Egelston said.
It’s a great business environment and also a challenging one for a builder or remodeler. Factory delivery time on some windows has jumped from 12 to 28 weeks, Egelston said. Availability of appliances is erratic. Raw material prices are through the roof. Federal Reserve data show plywood, lumber and structural components are 50% to 100% more expensive in March 2021 than in April 2020.
All of this boosts the client’s costs and wait time.
But Egelston predicted more housing starts this year than last.
“Despite those increases, people want their new homes,” she said.
Barry Potoker, executive director of the Saratoga Builders Association, said the perennially strong Saratoga County market remains strong in 2021. But he stopped short of predicting an increase in construction.
“New construction is flying high,” he said. “The problem is there has been a significant increase in materials [costs], especially lumber. There’s been a lead-time issue. There’s been a labor issue. And there’s also been a lag because of the pandemic, with getting permits.”
There are plans in the works. Lots of them.
The National Association of Homebuilders reports a 66% increase in building permits in the Albany-Schenectay-Troy Metropolitan Statistical Area in January 2021 vs. January 2020.
“I believe that,” Potoker said. “If you look at Saratoga it’s probably about the same. I don’t know that for a fact, but it’s probably significant.”
The question is whether builders can follow through, pour all the foundations and frame out all those houses that have received permits.
The Saratoga Builders Association remains optimistic, both on construction and on COVID restrictions. It has scheduled its annual Showcase of Homes for September, and is planning to stage it in-person rather than remotely, as it did in 2020.
It already has commitments for 13 properties, just shy of its goal of 15 or 16.
Technically, 2020 was the silver anniversary, the 25th year of the showcase. But the televised event was a bit flat compared with an in-person tour.
“So we’re counting this as our 25th anniversary,” Potoker said.