To rent or to buy? New Paltz research team studies Hudson Valley housing market data
SUNY New Paltz student Lana Doronkina ’25 (Finance) collaborated with Assistant Professor James Forest on a recent study focused on New York State’s housing market, which was funded through New Paltz’s Summer Undergraduate Research Experience (SURE).
Their report, “Rational Expectations in Housing Markets: The Case of Survey Forecasts,” analyzes the efficacy of the Rational Expectations Hypothesis (REH), a method of surveying commonly utilized by economists, financial analysts and policymakers, with an eye on how the REH’s credibility was affected by the 2007-08 “Great Recession” and the housing crisis that followed across the United States.
“When the collapse happened, a lot of people bought into the words of trusted professionals, and they were not forming their expectations based on rational things,” said Doronkina.
Forecasts like the REH are often formed through anchoring bias, or a reliance on past information to predict future outcomes. These tools can be useful, but that reliance on past performance can be limiting.
Doronkina and Forest advise that homebuyers should also pay close attention to “potential psychological biases that could greatly distort reality.”
“Consumers need to do their own research,” said Doronkina. “Take any reports on the housing market with a grain of salt.”
A closer look at the local housing crisis, and what homebuyers can do
The phenomenon of bias in reporting bears relevance to residents right here in the Hudson Valley, who understand the tumult of the late-aughts housing market and, later, the COVID-19 pandemic’s shock to both housing supply and demand in our region.
“The Hudson Valley experienced a surge in demand as urban residents sought more space, driving significant price increases that have persisted,” said Forest. “Though demand has cooled slightly, prices remain high due to limited inventory and high construction costs, and affordability in the region remains a concern due to inventory shortages and competition from wealthier buyers.”
Shifting population trends have been one major factor swinging the housing market in upstate New York. On the one hand, many longtime residents have left in recent decades, unable to keep up with rising costs of living; on the other hand, wealthier individuals from nearby metropolitan areas are increasingly drawn to the area seeking a second home or just a quieter, more natural cadence.
These trends were captured in two recent reports published by Pattern for Progress, a regional nonprofit led by New Paltz alumnus Adam Bosch ’05 (Journalism):
- “The Great People Shortage,” issued in 2023, found that the Hudson Valley “has lost a net of more than 130,000 people to migration since 1996.
- In 2024, Pattern for Progress followed with “Money Migration,” which documented a net gain of 60,000 New York City residents to the region during the COVID-19 pandemic.
It all adds up to create a housing market where existing homes have inflated prices, while the resources and skilled labor needed to build more affordable housing is not readily available.
“What we have in the region right now is a greater quantity of people in the middle class who traditionally would have graduated into home ownership, who cannot,” said Bosch. “We haven’t really built the housing that we need for people of low and moderate income who provide important goods and services to us.”
So what can prospective buyers do to keep up? Doronkina and Forest’s research affirms that the first step is to stay informed: Use the market forecasts that are available, but don’t rely on any single model to paint a full, objective picture.
“We have to extrapolate our expectations, both on empirical data from the overall economy and what we’re anecdotally observing here in the Hudson Valley,” said Forest.
Study exemplifies School of Business’ scholarship on real-world issues
Doronkina and Forest’s collaboration is a strong example of the variety of research from New Paltz’s School of Business that connects to people’s lived experiences. Faculty have published research, often with the help of bright student scholars, that showcase the impacts of real-world business issues, from consumer habits to the value of family businesses.
Undergraduate research is supported through New Paltz’s Research, Scholarship & Creative Activities office, which has nurtured faculty-mentored student projects that not only influence their respective fields, but benefit the broader community.
The funding for these projects can lead student-faculty teams to industry conferences, and Doronkina and Forest have presented their study thus far at conferences hosted by the Eastern Economic Association and Academy of Economics and Finance. At the latter conference, their study earned an award at the Undergraduate Research competition.
In April, the team will share their work with SUNY peers at the annual SUNY Undergraduate Resarch Conference in Binghamton.
“The value of research at SUNY New Paltz is the impact of it,” said Doronkina. “You can spend hours extrapolating data, and when you have a conclusion, it has the potential to help people.”
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