ITHACA, N.Y.—If there’s one thing to be said about the Ithaca-area housing market in the past year, it’s this: it’s a great time to be selling a house.
A glance at the bigger picture suggests that the market was resilient even with the impacts of COVID. According to an analysis provided by the Ithaca Board or Realtors, the median sales price in the Greater Ithaca area—that is, Ithaca, Tompkins County, and adjacent communities in neighboring counties—jumped about 12 percent, from $205,000 in 2019 to $230,000 in 2020. The number of pending home sales and closed (completed sales agreement) home sales were comparable to 2019, with 1,097 closings vs. 1,139 the prior year (the 2020 number is higher than 2019 when pending sales are included, 1,218 in 2020 vs. 1,150 in 2019). The sale price at closing is a very healthy 97 percent of the initial asking price.
The stranger part in the local home sales picture comes when looking at inventory. The number of homes available for sale at a given time is down over 40%, even though the number of sales is fairly constant. In other words, the pickings were slimmer and buyers decided they weren’t going to be as picky when finding a new house to call a home. Quite frankly, once the pandemic hit, the local inventory plunged when in-person real estate showings were prohibited for two months during the spring and the sales process was greatly hampered. But even as the sales process resumed some semblance of normal, the amount of inventory available never quite recovered. Normally there’s about a 3.5 month supply of homes for the pace of sales, but now it’s less than two months’ worth.
“Inventory is a consistent problem in this area, and limited inventory keeps prices up. A good time to sell might just sound like a sales pitch, but right now truly is a good time to sell,” says Tam-Marion Warren, Regional Vice President for Warren Real Estate. Warren Real Estate is one of the larger players in the local home sales market, with eight offices scattered across the Twin Tiers.
“The reality of the market is that homes are selling quicker. We’re seeing a lot of activity across all price ranges, that’s something we haven’t seen in a long time. Sometimes higher-end doesn’t sell as much in some years, but we’re seeing good demand in all price ranges. The average price in Tompkins is $291,000, so anything below $300,000 is going to fly off the shelf. Even the 400s and 500s are strong,” said Warren.
I expect that there was a good portion of people who didn’t have to make a move who probably held back a year. There’s also a good amount of buyers that did the same thing, like retirees downsizing, because they had flexibility,” said Kyle Steele. Steele is an Associate Broker and Assistant Manager for Howard Hanna Real Estate, and a past president of the Ithaca Board of Realtors. “I had a couple listings going on the market back in March as the pandemic hit, and the sellers pulled and said they were going to come back next year. I think there’s a good cross-section that held back on selling last year, and that could have contributed to the lack of inventory.”
One thing that is clear is that there are pandemic impacts, both on where buyers are coming from, what they’re willing to pay, and in what they want from their potential new digs. Warren noted a steady stream of buyers from major cities looking to relocate out of pandemic concerns, or simply because the opportunity arose to work remotely long-term and they wanted to take advantage by relocating to more bucolic and spacious settings.
“We talk to the agents frequently, and there are quite a few out-of-town buyers coming into our market. I have been feeling that the high-end market is moving. Six million-dollar or more homes sold in 2020. We had seven homes in three years prior sell for that much. A few of the 2020 sales were definitely out of town buyers,” said Warren. She noted the highest price paid for a single-family home locally in 2020 was a lakefront property on Taughannock Boulevard that went for over $2.3 million.
“I have had agents with buyers saying they aren’t looking for open floor plans, people want their private spaces for kids and Zoom meetings. People are also looking for more space in homes, they’re at home more,” Warren added.
“The usability of the space that they have is big,” said Steele. “A lot of people were saying, ‘my house is too small’. So the home office, the extra bedroom, the finished basement, the finished garage, there’s been a lot of work in home renovations with that, and the market is seeking that, especially in the $250,000-$400,000 price range. Having that home office and extra flex space is huge. The good news of a vaccine is on the horizon, but people want to have that extra space just in case.”
Steele also raised another major factor in the work-from-home professions – Internet connection speed. “I had a lot of folks who said they needed a high speed, 200 megabytes/second for Zoom calls and meetings, but that’s a major limiting factor in the more rural parts of our area. Satellite does 20-25 megabytes/second at best. I’m interested to see how Elon Musk’s StarLink will work, as Tompkins County is a test zone. It may bridge the connection speed gap.”
It’s worth noting that the low-inventory phenomenon is not unique to the Ithaca-Tompkins region. Low housing inventories have been a concern across the country, as the pandemic has driven people to settle down and put down roots in a place that offers space and offers the financial reassurance that home ownership brings with it – apartments are places to live, but homes double as investments. Warren noted that buyer interest is strong at all of her firm’s offices, which includes Elmira, Corning, and Waverly over the state line. “This is across the whole market. In Tompkins, there’s a lot of conversation about affordability, while Binghamton and Elmira are seeing the first good appreciation in their markets in a long time,” said Warren.
Even the new home market, traditionally a more volatile section of local real estate because of the greater uncertainties with building a house instead of just buying one, is enjoying strong buyer interest. New Earth Living’s Sue Cosentini, the builder-developer of the Amabel Pocket Neighborhood in the town of Ithaca, has been quite happy with the interest buyers have shown in her 30-lot housing development.
So the buyer’s market is, in a sense, supercharged. You have the normal churn of people relocating for work or retirement, as well as a flow of pandemic-affected buyers flowing into the local market. That’s great if you’re a seller. It’s not so great if you’re a home buyer trying to stay local, facing limited inventory and upward pressure on house prices.
“An important takeaway from this report is that sellers should be encouraged but buyers should not be discouraged,” said Warren. “There are always houses to buy and it’s a good time to sell. But you should go in prepared. I think it’s really important to have a good realtor and be informed on the market. The market is changing and is different for every neighborhood and price range. Being informed and well-represented positions you for success. You can find homes, they won’t be their perfect home, but the market is strong and we are lucky to live in a strong local economy with appreciating real estate. So maybe you might not find your perfect house, but if you stick with it and have a good agent. People need to be prepared to compete with multiple offers. I don’t think people are going to be unable to find homes, it just might to take a couple houses.”
“It’s challenging, there’s no doubt about it,” added Steele. “One of the things that we do as RE professionals is providing the emotional counsel for that market they’re getting into. Buyers should look really strongly at what they actually want and why they want that. Like, if they want to live in a Fall Creek, one of the hottest market where we see multiple offer situations left and right, sometimes 10-15 offers, I would question, ‘do you really need to live downtown, or would you consider a less walkable property with other features you want 10-15 minutes outside of Ithaca, where the market’s more stable?’”
As for the multi-family and smaller rental property (1-4 unit) side of the housing market, Warren noted that has also held up quite well over the past year. “My personal experience is that the local investors have not pulled back. They’re doing due diligence but the confidence is still there in the market. The Cornell market is showing strength, and the Ithaca College market I think is going to be fine too. Retail and office space seems down, but multifamily is still very strong. The 1-4 unit properties, especially those with income apartments attached to owner-occupied units, those remain a strong market.” Steele agreed, saying there was “prudent confidence” from smaller investors in the rental market, and that the market metrics were in good shape.
So what does 2021 hold? The question was posed to both Warren and Steele to get their take on what a pandemic-recovery market may look like in the Finger Lakes and Southern Tier.
First, Warren’s thoughts. “I think it’s going to be a steady, strong year. If people are thinking about selling they shouldn’t wait. The year has started a touch slow but January is not a good indicator. February-March is when the spring market starts. We have a lot of listings coming on but it probably won’t be enough for demand and there’s not much inventory. I think the market will be strong across all price ranges with consistent demand. Lakefront and second home markets will be really strong with people not traveling, larger homes will be strong as well. It’ll be interesting to see the recreational properties, the farmettes and wineries, if they will get stronger demand as lifestyle properties. People may want a little more land. Price appreciation will be strong across the market, including outlying areas.”
Steele’s take was similar, if perhaps a little bolder and more enthusiastic. “I expect it to be extremely competitive. From the person who’s most flippant to the most concerned about what’s going on (with the pandemic), you need a place to call home. It will be a competitive year, with prices going up and multiple offers in many areas. With historically low interest rates for mortgages and banks willing to lend, I think it will be a strong year, a great year to lock in low rates as a buyer and good year to sell. I expect it to be a bit of a barn-burner.”