In hot Hudson Valley housing market, millennials losing out
Financial challenges put their generation at a disadvantage
The process of buying a home is daunting enough when you are doing it for the first time, awkwardly navigating mortgage qualifications and showings while working to secure a down payment and the costs associated with closing. But for millennials especially, who are both the largest generation and the largest percentage of first-time homebuyers right now, the path to homeownership can feel maddeningly out of reach, particularly in the Hudson Valley.
Nationally and locally, the pandemic has only made an already-competitive housing market worse. Historically low mortgage rates dropped even lower after the arrival of coronavirus, and with remote work
from-home options becoming more common, homes in the Hudson Valley are more attractive than ever for New York City buyers. Last year, Hudson and Kingston emerged as the metro locations experiencing the biggest influx of relocations in the country.
According to the New York State Association of Realtors’ May 2021 report, New York state’s average home sales prices have increased from $384,259 to $481,456 since May of 2020, a 25.3 percent jump due in part to a housing shortage that began before the pandemic.
Hudson Valley millennials are not just struggling through a hot seller’s market, though. The generation entering this inventory-pinched housing landscape is encountering financial challenges of historic proportions.
The investigative Bloomberg feature “Millennials Are Running Out of Time to Build Wealth,” which draws upon data from the Federal Reserve and economists, points out that national homeownership rates for millennials are lower than their predecessors were at the same point in their lives. Despite having a market stronghold, the 25to 40-year-old millennial cohort — those born between 1981 and 1996 — are 7 percent less likely to own a home than Generation X, who in 2021 are between 41 and 56 years old. Arguably most jarring, it also found that “in almost every way measurable, millennials in the U.S. at 40 are doing worse financially than the generations that came before them.”
Common wisdom for all generations holds that building home equity is the key to building wealth, but the national median first-time buyer age keeps increasing, going from 29 in 1981 to 31 in 2013, and 33 today, according to the National Association of Realtors. Hypercompetitive bidding wars only add additional delays to millennials’ path to homeownership.
After navigating not one but two housing crises in the past 12 years, millennials are in an especially burdensome economic position — the severity and reverberation of which may not be fully realized for another two decades.
“Millennial homeownership has been a topic of discussion for many years at our agency,” says Sandra Altomare, the Director of Homeownership at RUPCO, an Ulster County community organization that aims to make affordable housing accessible and homeownership attainable for first-time, low- to median-income homebuyers. “How to reach and market to the younger buyer and how to gain a better understanding of their unique hurdles,” she said, is something her team routinely considers.
Its “First Time Homebuyer” program provides counseling for mortgage readiness and grants for eligible homebuyers when available to help support transactions. But Altomare says that the housing market directly impacts their success. The average age of first-time homebuyers that have purchased through RUPCO’S program over the past year is 38, five years older than the national average.
“Competition is tough as buyers from urban centers are flooding the market,” Altomare acknowledges, adding that “cash buyers put local homebuyers in Ulster County, especially lowincome buyers, at a great disadvantage.” Kingston saw the second highest increase in sales nationally, The Washington Post reported, using data from Zillow.
“Oh boy, it’s tough out there right now,” agrees Laurel Sweeney, an associate real estate broker with Berkshire Hathaway Homeservices Nutshell Realty, who typically represents sellers in Ulster County and works with buyers in the mid-hudson Valley and Catskills. “Inventory is at historical lows — something I have not seen in 20 years.”
She says that millennials are the largest group in her buyer pool. “I call them all my ‘kids’ and love educating them and
helping them through the maze of buying.”
Given the low inventory and downstate cash offers, Sweeney said, “I definitely see frustrated [millennial] buyers — losing out on multiple offers, [and having a] very short window of time to actually look at the home.” These days, she often gets only 15 minutes for client showings.
Her advice in this highly competitive local market “is to be patient but diligent. If something checks eight out of 10 of your boxes, go see the house immediately and be prepared to make an aggressive offer.” Barring that, she recommended putting the home search on pause. “Taking the time to save additional cash and be able to be more aggressive with offers may be a good solution for some,” she said.
RUPCO also encourages clients to continue pursuing homeownership if that’s their goal regardless of market, but Altomare underscores that, for those in challenging living conditions or in the midst of job relocation, waiting may not be a viable option. She suggests buyers manage their expectations “regarding style, condition, type, and location of the home” if they’re facing those kinds of housing transitions.
In May of 2020, owning a home in Kingston was within reach for a millennial couple like the Careys. Zac works in manufacturing at a local design and fabrication business, and Elizabeth was a direct-support professional working with adults with intellectual disabilities for $13 per hour.
Fast forward a year, she’s now a certified peer recovery advocate. The Hudson Valley Catskill Region’s Multiple Listing Service (MLS) database shows that the average sale price for a home in Kingston was $207,718 from January 1 through May 31, 2020. It’s now $292,773 — an increase of 41 percent — and out
of reach for the parameters of their roughly $200,000 budget.
For the aspiring homeowners, waiting for the Kingston market to die down felt unrealistic. “Kingston isn’t going to be Kingston anymore,’’ said Elizabeth, who is 32. “The music and the murals and the little shops aren’t going to be there if the people who’ve created it can’t afford to live here anymore.”
Elizabeth has lived in the mid-hudson Valley for 12 years, the last four of which she resided in a three-bedroom Rosendale apartment with her husband, brother-in-law, and their pets. When her landlord raised their rent for the second time during the pandemic, the couple decided it was time to move on and start looking for a house.
“I don’t know the number anymore,” said Elizabeth of the amount of times she and Zac, 33, put in offers over asking price for homes in the $175,000 to $200,000 range but were nowhere near being competitive. “It must have been eight or nine offers, and each was turned down. If you want to use seller’s credits, don’t even bother because there’s too many competitive offers around here,” she warned.
With a loan officer in the family helping guide her, Carey started navigating the mortgage process almost nine months ago, but there were additional hiccups along the way aside from being outbid by downstate cash buyers.
The financial load and limitations that come with student loan debt also proved challenging. According to the 2021 National Association of Realtors Buyers and Sellers Generational Trends Report, the debt-toincome ratio was one of the biggest reasons that millennial buyers were denied loans, and student loans made up the biggest source of millennials’ debt.
“Three to four years we’ve been saving, and we had enough to put a decent down payment on a house. But because [Zac] had student loans, for us to get a good enough rate, we’d have to pay those off completely because he’s not in school anymore,” she explained, adding that they didn’t initially realize how much his debt would hamper the mortgage application process. Paying off his $10,000 loan burden meant sacrificing their down payment.
Besides being the most educated and in-debt generation to date, studies also show that millennials are more likely to live at home, delay marriage and childbearing, and receive later-in-life family inheritances — if they’re available to them at all. Millennials are also the most racially and ethnically diverse, and therefore potentially subject to lender and wage discrimination, which further complicates the generation’s general fondness for living in high-cost cities.
As more millennial people of color enter the marketplace during their peak buying years, vying for a seat at the homebuyer table, significant historical wealth disparities put them at yet another disadvantage: a lack of generational wealth.
The national median home price for millennials today is $328,000, which is $112,000 higher than the median home price paid by baby boomers in 1989 when adjusting for inflation, according to Bloomberg’s report on millennial homebuying. Wages, however, have risen only 20 percent.
If they had goals to further their education or climb the corporate ladder, millennials in their 20s during 2008’s Great Recession undoubtedly felt ripple effects from the financial crisis. Whether it was through witnessing or experiencing mass layoffs — and subsequent mentorship and advancement setbacks that followed — millennials have met unique economic challenges in the early stages of their careers where professional development is critical.
After multiple disappointments and exhausting their options house hunting in Kingston and Kerhonkson — “They’re calling it Kerhampton, apparently, because everyone from the Hamptons is coming up and buying [another] home!” — the Careys gave up trying to buy a mid-hudson house and shifted their
search higher north, to the Capital Region.
“Take the offer,” Carey tells Hudson Valley home sellers who need the money in the aftermath of the pandemic — but also be aware of the local impact. “Sell it to the idiot in the city and let Kingston eat itself because there are no jobs to support the rents that they’re trying to charge people. Yeah, go for it, make that money and get the heck out of here!”
She and Zac certainly are.
In Albany and Troy, though still within the relocation crosshairs of New York City, the Careys had better luck; they found that they were able to take more time at house showings and weren’t outbid with a flurry of downstate cash offers.
After receiving an accepted offer at an asking price of $175,000 on a home in downtown Albany’s Ten Broeck Triangle neighborhood, they closed in late June. Zac will keep his current job, commuting on a hybrid-remote basis, and Liz found a new position that centers her in Albany and Troy.
Coming in at the eleventh hour to help subsidize their down payment was Carey’s father, who recently sold her childhood home in Washington, D.C., at a tremendous profit. Had it not been for his help and generational wealth, she acknowledges, they would have had to back-burner their house purchase at least another year.
“Anyone with more resources from any source is going to have more success in the home buying process than those that don’t,” Altomare said .