Many are moving here
PANDEMIC PROPERTY RUSH, Part 1: Demand for homes is massive, supply slim
The coronavirus pandemic has been a boon for the Adirondack housing market, at least for those looking to sell.
And homes are selling fast. Local real estate agents say that despite the pandemic and millions of people still unemployed, the number of buyers looking for a home in the Adirondacks is outpacing the available supply of houses — particularly in the Tri-Lakes region.
As the number of properties left on the market dwindles to historic lows, sale prices are rising. That’s good for sellers, but leaves lower-income buyers who can’t bid competitively priced out of “moving up.”
“We’re seeing a lot of activity,” said Nicholas Politi, co-owner of Lake Placid-based real estate agency Merrill L. Thomas. “It’s just about every type. Vacant land, residential, condos, waterfront. There’s commercial properties selling as well, but not as frequently.”
Densely populated metropolitan areas, such as New York City, saw some of the worst outbreaks of COVID-19 — in March, New York City became the epicenter of the pandemic in the U.S. Though the city is now in Phase 4 reopening, as of August, less than 10% of the city’s office workers had returned to work in-person, and about 25% of major employers say they plan to bring back their employees by December, the New York Times reported Tuesday.
Michael Coughlin, association executive for the Clinton County Board of Realtors and Northern Adirondack Board of Realtors, said with remote work becoming more common, people in metropolises are eyeing homes in the Adirondacks now that they can live in the beautiful area and not have it hurt their salary.
It’s not just the Adirondacks that city-dwellers are flocking to. It’s rural areas all around the state — whether in the Catskills or in Ogdensburg.
“The people buying are not just wealthy vacation people who are barging in,” said Colleen Holmes, owner of Engel & Volkers Lake Placid Real Estate. “We have young kids getting married, who are excited to close on a house. We have local people who are renovating houses with their own hands and selling them again. We have people moving here full-time. I’m seeing a much more positive picture than what is usually portrayed.”
Fall and rise
The uptick in business comes after months of uncertainty.
In the first few weeks after the first case of COVID-19 was confirmed in the U.S., stocks tumbled. In March, as fear grew that the coronavirus was spreading, the stock market plummeted — and as the market became more volatile, some homebuyers found they were no longer approved for a loan because lenders began tightening underwriting standards, according to a monthly report from NABOR.
Then, at the direction of the state, real estate agencies halted in-person operations for more than a month in mid-March and early April. The order slowed business and frustrated real estate agents.
“Realtors are antsy people,” said NABOR Board of Directors President Jodi Gunther, of Saranac Lake.
The number of closed sales across Clinton, Essex, Franklin, Hamilton and Warren counties declined by 4.8% in March — or four fewer sales than in March 2019, according to data from the Adirondack Champlain Valley Regional Multiple Listing Service.
The number of properties for sale in the Adirondacks also declined as more sellers held off on listing their homes. This year, the number of homes on the market has declined to a level not seen since 2007.
The number of homes for sale in the five-county region declined to 842 in March, down by 16.1% compared to the same time last year, when 1,003 homes were on the market.
In April, despite real estate agents getting the go-ahead to restart operations and show properties again — albeit only virtually or with a limited number of people in the home — the number of new listings cratered. There were just 78 new listings in the five-county region in April — a 63.6% decline compared to April 2019. The number of homes for sale declined by 21.3% this April, compared to April 2019.
As more people were laid off and furloughed in April, and as self-isolation recommendations continued with no end in sight, properties began to linger on the market longer, and there were far fewer pending and closed sales, according to the ACVRML data.
The North Country region was cleared for Phase 1 reopening in May. That’s when the Adirondack real estate market began to rebound.
When the state began its reopening, the gates in the North Country opened fast.
“This was like the Kentucky Derby,” Gunther said. “And it hasn’t stopped yet.”
Supply and demand
The small inventory level in the Adirondacks isn’t unique to this area.
Inventory is low nationally — and had been for over a year before the virus, according to Coughlin. He attributed the lack of inventory to the 2008 recession. At that time, buying a home was very difficult, so Coughlin said people turned to remodeling the homes they already owned instead, putting their money into improving and expanding their houses.
Now, 12 years later, he said many are still happy with their houses and are not planning on moving or selling.
“The people who are in the lower end of the price range can’t move up to the middle end, even though they have the cash to do it, because houses are not available, because the people who had those houses basically updated their houses and stayed,” Coughlin said.
Gunther said she believes the low inventory is in part because of the state of rentals in the area. Rentals are limited, and expensive.
When it costs around the same to rent as to pay a mortgage and own a property, she said, more people are seeking the security of home-ownership.
Properties listed at prices across the spectrum — whether a modest $200,000 family home or a multi-million dollar Adirondack camp — are getting multiple offers, said Holmes.
“That’s become very commonplace,” she said. “There could be 10 buyers in a certain price point.”
Some properties that real estate agents would normally have difficulty selling are now being sold quickly, with multiple buyers interested.
“I don’t recall, in my 35-plus years of doing this, ever having so many multiple offers on property as we have now,” said Jim LaValley, owner of LaValley Real Estate in Tupper Lake. “We are seeing several properties that are getting multiple offers and offers coming in above the list price, some pretty substantially above the list price.”
The discrepancy between supply and demand has already begun to drive up housing prices.
The average sale price for a home in Clinton, Essex, Franklin, Hamilton and Warren counties was $212,056 in March, according to NABOR.
As of July, that average sale price had already risen to $293,824 — its highest number in years.
But that doesn’t mean that buyers are bidding on everything.
“I think consumers are smart on all price points. They have access to a lot of market information,” Holmes said. “If a property’s price is perceived to be too high, it won’t sell.”
Buyer be aware
Coughlin said the current market is “scary” for buyers.
“It’s not a good place to be, really,” Coughlin said. “We were there once before, and we really got burned bad.”
He said the competitive market makes it harder for low- and mid-income buyers to move out of rentals or upgrade the size of their homes.
Also, the process has become slower, with the virus hindering the speed attorneys, inspectors and banks can work at.
“There’s a lot of frustration on the side of buyers,” Gunther said.
So how do real estate agents help replenish the supply of homes on the market?
“You would solve Realtors’ frustrations if you could answer that,” Gunther said with a laugh.
Coughlin said home building is very slow now.
“No one is building anything other than custom homes, which are out of everyone’s price range pretty much,” he said.
Coughlin said if there was money available for builders to borrow, to invest in building on properties, “they could sell it before it was built.”
“We certainly have the land,” he added.
However, he said the market is not incentivizing building at this time.
Right now, Realtors are seeking sellers aggressively, using social media as well as print, word of mouth and within the industry.
They want sellers, who are apprehensive to put their home on the market due to the pandemic, to know that despite the uncertain times, buyer demand is high.
The real estate market changes gradually, and Realtors anticipate the low inventory will last a while longer before it is replenished.
“It’s probably three to five years before we see some movement,” Coughlin said.
Look for a continuation of the Pandemic Property Rush series Monday.