ITHACA, N.Y.—2021 was a hard year to be a home buyer in Tompkins County. Building on the trend of the past several years, home prices soared in and around Ithaca last year.
According to numbers provided in the annual report by the Tompkins County Department of Assessment, the median property sale at the time of closing skyrocketed from $258,500 to $295,000 in 2021, an increase of 14.1 percent, and a much faster rise than recently-elevated inflation indices. The median sales price in 2019 was $235,000, and in 2011 it was $180,000—in other words, a 24 percent gain in two years, and a 64 percent rise in median price over the past decade.
Meanwhile, the average property sales price zoomed up 15.8 percent from 2020 to 2021, from $284,590 to $329,468. However, average sales price tends to be a less accurate indicator, as the value is skewed by high-end lakefront lodges and mansions. From 1990 to 2020, there were 28 home sales at or over $1 million in Tompkins County, but there have been 10 in just the past two years. The vast majority of property sales in Tompkins County are small residential properties (single-family and two-family homes), followed by land sales.
However, in a reversal from last year, the total number of sales in Tompkins County rose in 2021, from 856 in 2020 to 959 last year. While a jump, it’s fairly consistent with the pre-pandemic number of 949 in 2019, and Tompkins County has typically been in the 850-950 range for annual sales over the past decade. 2020 is thought to have been on the lower side as a result of the mandatory pause in real estate activity during the first way of COVID-19 in the spring of that year.
As with previous years, if you’re planning to sell in the short term it’s a financial boon. If you’re a buyer or still planning on living in the same house for a while, it’s financial pain. Incomes weren’t keeping up with rising real estate costs before COVID-19, and in the past couple of years the rise in prices has accelerated.
Even for those who do sell, buying elsewhere is more often just “treading water” financially. The national trend is very similar to Ithaca’s. In many metropolitan areas, home values have boomed over the past couple of years, leading to widespread affordability issues across the country. People have taken notice—49% of Americans surveyed in a Pew Research Center poll last month identified a lack of affordable housing in their local community as a major problem, up from 39% in 2018. That’s greater than the percentage who said drug addiction (35%), jobs (31%) or crime (22%) were major problems in the communities they call home.
“We could significantly increase the number of sales and probably reduce the price if we put as much effort into building houses as we have for building apartments,’ said Jay Franklin, Director of Assessment for Tompkins County.
“There is still a place for apartments…(W)e have focused so much on apartments that we forget that there are other populations having just as hard of a time,” Franklin said. “And when rent is so much more expensive than buying a house, the more that a person is forced to rent, the less they can save for a house.”
The problem is, there is no easy overnight solution. On the national level, the issue is largely driven by demographic issues and a lack of new supply on the market. After the housing collapse in the late 2000s Great Recession, the United States built housing at a very low per-capita level, with 50% fewer new homes built from 2009-2018 than from 1999-2008. In the meanwhile, Millennials, now demographically the largest generation, are entering their 30s and early 40s – prime homebuying age as they begin to make more money professionally, marry and start families. It’s Economics 101: increasing demand + years-long lack of supply = a perfect storm for rising housing costs. More recent supply chain, inflation and COVID-driven issues exacerbate the already-existing problem.
On the local level, construction costs are high because of Tompkins County’s smaller size and relative isolation, zoning is outdated in many communities, it’s hard to assemble the land needed for larger for-sale home developments, and condominiums are legally and financially difficult to do in New York State. Being a remote work destination during the pandemic and the conversion of previously owner-occupied or long-term rental homes into short-term rentals (Airbnbs) has only worsened the affordability situation.
In relation to Franklin’s comment, apartments are able to move forward where for-sale housing hasn’t because the price per square foot is often lower due to shared materials and labor costs spread out among units. It’s also easier to keep an apartment rented, than to find someone with the pockets deep-pocketed enough for a down payment on a house, so apartments are a safer investment and are therefore easier to obtain financing to build.
One of the major drawbacks in this recent spike of home values is that even if an owner has no intent to sell, a fair assessment means that if its neighbors on surrounding blocks are selling at elevated prices, the assessment will usually go up similarly, though it can vary for individual property conditions as noted by Department of Assessment staff. Some places may go up more, others less based on factors unique to the property, and if an owner disagrees they can contest the assessment.
To handle this process, the Department will send out mailings of assessments in batches. Once received, property owners will have three weeks to decide whether or not to informally review the stated property tax assessment value, and the request can be done via paper or online here. For those who wish to take it the next step, formal reviews and grievance filings can be filed from May 1st to May 24th.
“We are going with a version of Disclosure Notices this year. This shows your estimated taxes last year (estimated because of the STAR exemption mainly) and what your taxes would have been last year if your new assessment was in place and everyone else’s new assessment was in place holding the tax levies constant. The reduces the tax rate and shows the true effect of the new assessment on your taxes,” says Franklin.
For 2022, property assessments were updated for the City of Ithaca, the towns of Caroline, Danby, Dryden, Enfield, Groton (excluding the village of Groton), Ithaca (excluding the village of Cayuga Heights), Lansing, Newfield and Ulysses. On the commercial side, apartment buildings, parking lots, hotels, stand-alone restaurants and retail establishments were also reviewed countywide.