Buyers, sellers pull back as borrowing costs rise
Interest rates on mortgages fell below 3 percent during the first year of the pandemic shutdown, helping to fuel a frenzy that accelerated home sales in Beacon and Philipstown and drove rising prices even higher.
Now, with the rate on a 30-year fixed mortgage exceeding 7 percent, the highest level in 23 years, home sales are slowing and prices cooling as potential buyers recoil at taking on higher monthly payments, according to local real-estate agents.
The most recent quarterly report from the Hudson Gateway Association of Realtors, covering April to June, concluded that “affordability challenges” were limiting the market in Putnam County, where sales fell 17.4 percent from the same period in 2022.
Those challenges, according to the report, included “elevated sales prices and higher borrowing costs,” and the decision by “would-be sellers with low-rate mortgages” to stay on the sidelines “in hopes market conditions will improve.”
About 35 percent fewer single-family homes sold in Beacon and Philipstown during the 12-month period that ended Aug. 31 than the year before, according to data compiled by the OneKey Multiple Listing Service. The number of new listings and median sales prices have also dropped and homes in Beacon are staying on the market an average of 14 days longer, according to OneKey.
Nevertheless, the lack of homes for sale still leads to bidding wars and offers higher than listed prices, according to local agents.
Inventory is at a record low nationally, and continues to be at a record low in Philipstown, said Bill Hussung, owner of Robert A. McCaffrey Realty in Cold Spring. “We are absolutely seeing an impact from rising interest rates,” he said.
In Putnam County, 612 single-family homes have sold through September, significantly below the 826 during the first nine months of 2022 and the 1,025 during 2021, according to the Hudson Gateway Association of Realtors.
Like buyers, sellers face the same dearth of available properties and the same decision about taking on mortgages at a higher rate, said Hussung. “They start to see what’s out there and realize that it’s not what they thought,” he said. “So, they’re just going to hold on to their house a little longer.”
The forces are the same in Dutchess County, where sales from April to June fell 15 percent compared to the same period in 2022. With buyers and sellers staying put, the median price for a home sold in Beacon, although still at $507,000 for the year ending Aug. 31, had dropped slightly from a year earlier.
A home on Phillips Street in Beacon that was listed for $604,900 in May sold for $506,000 in September, and a condo at 249 Main St. that sold for $580,000 in September had been priced at $679,950.
The opposite is happening for other properties in Dutchess, where homes for sale decreased by 23.8 percent in the second quarter of this year compared to April through June in 2022, according to HGAR.
Buyers, particularly ones wielding cash, are pouncing when high-quality properties become available, said Charlotte Guernsey, team leader for the Gate House Team at Compass in Beacon. A house on Deer Lick Lane in Beacon that the owners listed for $649,000 in August sold for $715,000 on Oct. 2.
“The prices are still staying high because when a good house does come on the market, they’re fighting over it,” she said.
