Marc Palladino is the principal of MAP Realty LLC in the New York area. In the following article Marc Palladino discusses the twists and turns that are in store for New York's upstate market.
This year saw growing mortgage rates and high house prices impede the New York real estate market's recovery from the coronavirus pandemic. And it appears that home values will continue to drop in the region throughout 2023.
Closed sales by 12.6% in September of this year, and pending sales declined by 12.2% in the same month. Statewide, the median house price crept up by 2.4% to $379,000. However, Marc Palladino of New York says that it appears that inflation and the economy's overall weakness will see values drop again as time ticks into the new year.
As the house prices rose toward the end of 2022, buyers were deterred from purchasing homes, forcing sellers to sit on the sidelines and decline their expected sale figures.
Of course, Marc Palladino of New York reports that such sky-high mortgage rates affect the entire country's housing market too. Goldman Sachs has warned sellers that the market's downturn will continue into 2023 as buyers struggle with interest and associated costs.
Mortgage Rates Are Far from Record Highs
Some mortgages in 1981 had an interest rate over a mind-boggling 18%. However, Marc Palladino of New York says that October 2022 did see mortgage rates hit over 7% (7.08%) for the first time since 2002, which is double the rate that buyers across the country used to assess their home-buying affordability.
The mortgage rate spike is mostly due to the Federal Reserve raising the lending rates in its attempt to cool inflation. The Fed's hikes drive up the ten-year treasury note rate, impacting mortgage costs.
According to Marc Palladino of New York, it's unlikely that mortgage rates will start falling in the next year. Forecasts suggest it will be at least the middle or the end of 2024 before rates begin dropping.
Similarly, the rent prices have boomed recently, which is suspected to continue into 2023.
2023 Will See Home Values Drop, But Not Like 2008
Luckily for sellers in upstate New York, home prices aren't expected to drop sharply in 2023. Instead, the current housing supply level suggests next year's decline will likely be modest, with prices leveling off at some point in the coming 12 months.
Marc Palladino of New York says that home values have fallen since April 2022, representing an 8.6% decrease compared to the same time in 2021. While the reduction isn't as dramatic as some economists thought it would be, the decline will continue to be "significant."
An Upstate Per-City Outlook
Some parts of upstate New York will fare better in the coming year than others, according to the per-city analysis of the real estate markets in the following areas:
" Albany
October 2022 saw Albany's real estate market grow hot, but statewide predictions for 2023 see it cool off.
Speculators will likely be put off investments in the area due to the low-price appreciation trend. Although, some experts say the city could see an increase in residential construction, diminishing the competition and, thus, the prices explains Marc Palladino of New York.
Moody's report states home prices will fall by 6.96% in 2023.
" Rochester
The demand for purchasing Rochester-based homes is growing, but the low supply is boosting prices and contributing to the market's deterioration.
However, Marc Palladino of New York reports that Fannie Mae predicts that the second quarter of 2023 will see year-over-year home inflation fall to 4.4%, dropping to 2.9% by the fourth quarter.
" Binghamton
The median home price in Binghamton is roughly $96,200, a far cry from the national average of at least $204,000, making it one of the more affordable upstate New York areas.
Marc Palladino, the principal of MAP Realty in New York, says that the mortgage payment to income rate is 5%, meaning those in the region have more money to inject back into the economy.
However, due to the very low construction rate, it's a less-than-inspiring place to invest. Over the last 12 months, there have been just 16 new housing permits, with none planned for 2023.
