Interest rates, lack of supply continue to plague housing industry

Low inventory was the biggest issue plaguing home sales in the area and the state this past year, says Mohawk Valley Association of Realtors Executive Officer Ann Rushlo. Year to date through October, closed home sales in New York state are down 22 percent, pending sales are off almost 13 percent, and new listings are down 16.5 percent, according to New York State Association of Realtors (NYSAR) data. The inventory of homes for sale in the state was down more than 21 percent at the end of October, compared to a year ago.

One thing that’s happening is current homeowners who locked in at lower interest rates were less likely to list their home for sale, Rushlo notes.

That’s a change from the immediate post-pandemic years when interest rates were at all-time lows. Those low rates allowed people to move out and up from their “starter home” a little faster and purchase higher-value homes. Bidding wars also accompanied many sales.

In Oneida County, the Mohawk Valley’s biggest county, realtors closed on the sale of 149 homes, down more than 24 percent from 197 homes a year prior, per NYSAR data. New listings rose over 7 percent to 178 in October from 166 a year earlier. Homes for sale increased more than 9 percent to 396 in this year’s 10th month from 362 in October 2022. 

While sales cooled in 2023, they are not slow, Rushlo contends, and home sale prices have moderated. The median sales price in Oneida County was $187,000 this October, down 1.6 percent from $190,000 a year before, the NYSAR data shows.

“People are being really smart [about overbidding],” Rushlo says, although the occasional house still sells for over asking price.

Overall, the year was as close to a “normal” — as in pre-pandemic — year as the area has seen in while, she says. “I would say for many it was a good year.”

Heading into 2024, the National Association of Realtors is forecasting lower interest rates, so that could shake things up a bit.

A drop in rates could benefit the home building and remodeling market as well, but other issues remain, says Linda Aloisio, president of the Home Builders and Remodelers Association of the Mohawk Valley (HBRAMV).

“We have a dwindling workforce, which is a huge problem,” she says. “We have to find a million more people to go into the trades in the next four years” to replace those who are retiring.

That’s why it’s important that groups like HBRAMV participate in workforce development by visiting area schools to promote careers in the trades, she says.

On top of the worker shortage, material supply chains have still not returned to pre-pandemic efficiency. Electric transformers, in particular, are in short supply.

Another thing in short supply in the Mohawk Valley is affordable housing, Aloiso adds. While there are some pockets of housing development, many are still out of reach of many in an area where the median household income is around $62,000, she says. “It’s heartbreaking because we see that American dream of homeownership slipping away.”

Remodeling, which hit a high in 2020 while everyone was locked down at home, looks to be on the upswing again, Aloisio says. Higher interest rates are likely at play there as people look to make improvements to their existing homes rather than purchase a new one.

“By all the economic indicators we’ve seen, 2024 is going to be similar to 2020,” Aloisio says.