Happy New Year!

What a funky 2022. I hope this finds all healthy and having enjoyed the holidays. The seat belt is tightly fastened for 2023. Challenging days are expected ahead.

Not all, but a definite percentage of the press have taken great liberties during this time with it seems more focus on "terrify not clarify" with shocking "crash" headlines to gain clicks that often do not align with actual content or reality. The latest article from Forbes discussed further down appears no exception as it takes a swipe at the luxury sector in Long Island.

Each year during Covid brought different circumstances along with altered buyer and seller expectations. The 2020 buyer was driven by fear. On any given day, realtors could be found in a state of "Wild West" migrating waters from shutdown to and through Tsunami. Sellers struggled between the lure of landslide returns and the reality that a sale meant they would then become a buyer in markets nationwide realizing inventory evaporation. Pure mayhem.

The 2021 buyer had more time to contemplate their full time or part time relocation. Many of the buyers in 2021 realized they could work just as, if not more, productively remote. They came to the Hudson Valley embracing a thoughtful lifestyle change. Pure frenzy hit in 2021 with record setting flights over asking and historic lows in inventory. Another year of mayhem.

Then 2022 came steam rolling in on the same tracks as 2021. More locals were found in the market with the frenzy continuing as interest rates hovered in the 3% range. Then the interest rates started to take rise. There were gasp warnings in May and June, 2022, discussed in December edition of The Brick "Rubble and Ruins for 2023?" available here.

As interest rates rose, certain 2022 buyers shifted mindset to 2008 crash with expectation of "crazy deals" (didn't happen) while many sellers tried to cling to the 2021 frenzy flights over ask, which lessened in each passing month as interest rates spiked. All the while, Realtors pointed to bubbles in social media in attempt to make sense of it all. The surreal rollercoaster of 2022 has been named (by me) as "The Year of Fuel." Fuel for transition.

Here we go...

Year End

In the October edition of The Brick "What's Really Going On?," adjustments were anticipated initially in pockets nationwide. That is happening outside of our area. For now, the Hudson Valley is still holding in tight inventory with price stabilization introduced to the market. There still are multiple offers on certain properties if priced well and effectively marketed, but nowhere near the flights of Covid frenzy.

Those who price with appreciation in Spring Market will likely find price reductions prior to accepted offer. It is imperative to keep a firm pulse on the market with increased price reductions and expirations anticipated in the days ahead due to overpricing. This is definitively not a market to "test the waters." This is a "get on and off the shelf" market.

Other areas in the country have been advancing in inventory increase/price decrease. Properties that realized extreme flights over asking are vulnerable to more noticeable adjustment in the days ahead. The Hudson Valley market should see an adjustment, but . to date we are still in a sellers market with limited price points showing signs of a move toward a neutral market (six to seven month cycle from listed to sold.)

Dutchess County closed the year up 24.1% in inventory versus 2021. While a step in the right direction, that is comparing to a year marked by historic inventory lows. The County is still hovering severely below 2019 inventory levels, considered the last "normal trending" year. Inventory is expected to continue to increase in 2023. The median sale price is up December YTD 5.4% in Dutchess, which aligns with normal trending percentage increases in the three years prior to Covid with YTD December 2019 closing out at nearly the exact same as YTD December 2022 with a 5.3% increase in 2019.

The "big jump" years were 2020 and 2021. December YTD 2020 closed out with a median sale price increase of 13.3% in single family detached per Mid-Hudson multiple listing service. 2021 closed out for the same period with a whopping 16.2% increase in median sale price. This equates to a median sale price of $300,000 December YTD 2019 in Dutchess County versus $416,500 December YTD 2022. 38.8% increase in median sale price over three years is substantial. While sellers enjoyed the returns, realistically the market had no historical pattern to suggest the market could sustain the trajectory experienced since May, 2020.

The Hudson Valley market is teetering. If interest rates go up when the feds meet in February, that will most likely mean less buyers in the market. If interest rates go down or offer some semblance of stability at a reasonable level, the buyer pool awaiting on the sidelines could return into the market. If the plan is to wait for Spring Market to list your property, you may want to consider the December, 2022 Special Edition of The Brick: "Spring or Winter Market - Which is the Better Bet?"

The cash market has backed away in recent months for the most part. It has been known for months that Wall Street bonuses are not expected to deliver as usual while many portfolios take hits. The cash that is in the market is tending to want leverage over mortgaged buyers with better price and/or terms.

Valid analysis of current luxury market conditions?

Let's Unpack It...

Erroneous and misleading headlines from the press that lack relevant content annoy on any subject matter. The latest is a Forbes article that cited sales down in the luxury sector in Long Island by over 65% YOY in three months ending November 30, 2022.

The article then noted a slew of reasons for this hit in luxury (none of which associated with decreased inventory, but rather all around financial), which reinforced confusion between sales and price. On Instagram, a Long Island/Queens realtor posted "Prices down 65% in luxury in Long Island!" Even a realtor got sucked into not catching this in the article and then proceeded to further disseminate misinformation.

Price isn't noted anywhere in the article as being down. In fact, at the very end of the article, it is noted that luxury prices are actually up in all metros nationwide with the exception of San Jose which is down a minuscule .3%. There is no context provided for people to connect sales and inventory. If inventory is down, then logically sales would be down, too. Ironically, the article also notes San Jose luxury sales down 58.7% yet further in the article, San Jose is noted as having the biggest decline in supply (down 32.2%) AND biggest decline in new listings (down 39.2%) nationwide. If there is less to sell, then sales would be down. Not only is this connection not made to the reader in any regard, financial reasons are rather provided for the sales decrease.

During the height of Covid - December, 2021 YTD closed Single Family Detached sales were down 40% in Dutchess County. Available listings were down 54.7%. During the height of Covid frenzy, sales were down. Was this an indicator of a market shifting out of frenzy? Absolutely not. I'm not saying we aren't an adjusting market, because we are. I'm sharing this as one of a gazillion examples of how certain members of the press are confusing issues, at best, and creating an environment of fear. With this all in mind, here's the article if interested in"terrify, not clarify" unfolding before your eyes.

If you have any questions on the market, please feel free to reach out. If I don't have the answer, I will get it for you. This is not a slight to all members of the press. There are journalists that reach out to me regularly for interview in order to disseminate accurate information on the market and market conditions. At the same time, there is a sector of the press that is all about the headline, misinforming and clicks.

What's Really Going on in the Luxury Market

In 2019, there were 11 luxury sales $1,000,000+ in Dutchess County, per Mid-Hudson multiple listing service. In 2020, that number jumped to 124. In 2021, the county saw a high of 133. December, 2022 YTD saw a decrease to 120 closed sales above $1,000,000 in Dutchess County, but still substantially above 11 in 2019.

There are currently 74 active listings above $1,000,000 on the market as of January 4, 2023. With this many active in January and saturation already showing in certain municipalities in the high end, Spring Market is on definite watch in luxury. Historically, luxury is the first market sector to feel an adjustment. Increased supply could start that wheel in motion if demand does not offset.

The top sale in Mid-Hudson MLS history closed in September, 2022 for $18,500,000. Interested in the top sales in Dutchess County each year in 2019, 2020, 2021 and 2022? Click on pics below.

167 River Road, Rhinebeck

Closed 1/8/19

$3,550,000

124 Martins Lane, Rhinebeck

Closed 4/29/20

$16,500,000

485 Shunpike, Millbrook

Closed 3/24/21

$7,000,000

124 Eden Knoll, Rhinebeck

Closed 9/1/22

$18,500,000

TOP TEN

Sales in Dutchess, Ulster and Columbia counties over the past five years:

Columbia County Dutchess County Ulster County

There will be a call for more experts and less realtors with a "weeding out" in the days ahead. This is my full time profession. I appreciate the trust in referrals and will take very good care of those sent my way.

Should you have questions on the market or desire to engage in the services of a solid real estate partner, reach out.

Best,

Sandi