Today I’m joined by a really special guest—Peter Hunt, the CEO of Hunt Real Estate. Together, we’ll discuss the dynamics of the Central New York real estate market.
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There’s been a big fall-off with respect to the number of closings and transactions in Central New York. It’s really a tale of two cities (or price points): under $250,000, between $250,000 and $300,000, and over $400,000.
Under $100,000, Peter Hunt of Hunt Real Estate has noticed a huge drop-off mainly because there aren’t enough sellers. Under $250,000, it’s still the same. So what can be done about that?
According to Peter, the bottom line is that because there aren’t enough sellers in the market, there is an overabundance of buyers. The solution is to bring more supply to the market.
This is the perfect time for sellers, particularly those looking to trade out their home for another home. There’s probably never been a better time to maximize their equity because of the relationship between buyer demand and seller supply. As supply gets lower, demand gets higher, and prices go up. We’ve seen it all across Upstate New York, and it’s certainly true for Central New York, as well.
As a matter of fact, on average, we’ve seen the prices of homes under $250,000 go up anywhere from 4% to 5%. If you’re thinking of selling your house right now, there are more buyers in the market than we’ve had in a long time, and the rate of appreciation at the lower end is going to be greater than the appreciation at the higher end of the market.
When there is a two-year supply of homes like we have in our market, you’ve got to be aggressive on all fronts.
In this market, if you sell lower and buy higher, you’ll be making money on that transaction because it’s appreciating faster and for more money on the lower end of the market, and it’s appreciating slower and for less money the higher you go in the market. In other words, the rate of return for buyers goes up as you buy a higher-priced home because of price compression on the high end and price expansion on the lower end.
Just as the number of transactions below the $250,000 price point has decreased due to the lack of sellers, the number of transactions above the $400,000 price point has dropped due to a lack of buyers.
We have over a two-year supply of homes between $400,000 and $1 million. As a seller in this price range, what can be done?
Peter says the obvious and unfortunate solution is that you may have to compromise on the price. When there are too few buyers in the market, the first seller who brings down their price will be the first one to set a new bar in that marketplace. The good news, however, is that all across the country, prices on the higher end are down—30% in Southern California and more than 25% in Manhattan. We’re currently in a situation where we’re not as bad off as the rest of the country for the high end of the market. This can be an opportunity for those who act now: Set a new bar and be willing to negotiate.
I always tell clients looking to attract more buyers that they can either increase the condition of their home or decrease the price. However, we’re not in an either/or market: You need to do both to sell well in the high end. When there is a two-year supply of homes like we have in our market, you’ve got to be aggressive on all fronts.
A lot of times, high-end homeowners are less likely to want to improve the home because, in many cases, this is their caste. Even still, it’s our job as professionals to go through that house with a fine-tooth comb and give homeowners every bit of meaningful advice that brings a real return on investment—carpet, paint, kitchen, bathrooms, landscaping, and so on. Improving and upgrading these areas doesn’t cost a lot of money in proportion to the value of the home, but they do bring a return to those who upgrade with the market in mind and actually make the house more sellable. Today’s buyers are a lot fussier, and they know what they want and what they’re willing to pay for.
Finally, in our market, it’s important to work with a team that has an intimate understanding of all the competition in the market—that knows the condition of every other house in the neighborhood—so that you can be sure your home is the very best in that price range. If your listing is best-in-class, the other consumers will know it, and so will other brokers.
If you or someone you know is looking to buy or sell a home in the Central New York area, or if you have any questions for me, please feel free to reach out to us. We’d love to hear from you.
