Until recently, the Westchester real estate market has been very resistant to the housing recession that has been headline news in many parts of the country. Don’t get me wrong, there were signs that the market was far softer. But average and median sales prices had held up and even increased since 2005 when the housing recession began.
Reasons for the resilience are many – but I will mention the most obvious one. There is this old saying: Real estate is location, location, LOCATION. Okay – I know its a cliche – but in this case it happens to be true. The primary reason Lower Westchester has remained on solid footing is its location. From most points, mid-town Manhattan is a 40 minute commute or less. The train ride is convenient and comfortable. That is a HUGE perk and people are willing to trade real money up-front in exchange for more family time, less wear and tear on their cars and gasoline. Ask anyone who has experienced the grinding commutes north and west of lower Westchester and they will tell you more than you ever wanted to know about how a long commute saps your strength, your wallet and family time. Although some of the stats ahead are not looking too pretty, this fact should be uppermost in everyone’s mind for when the market recovers – which it will.
Bear with me…I know that blogs should be fun…but I’m trying to illustrate a point and I couldn’t find an easier way. I pulled a great deal of data from the MLS from 2005-2008 in order to illustrate what happened as the housing recession started and what is happening now. I got the idea of presenting the data in this way from Teresa Boardman – although I do this in a slightly different way. I chose to use sales price and sales volume to indicate past trends. The sales volume is an indication of the overall enthusiasm for the market – while the sales price is an indicator of the relative strength of the market. Since there are normal seasonal fluxes in the market I had Excel draw trendlines to show the general movement in the market minus the lumps and bumps.
This is a monthly compilation of closed sales, calculated every month from Jan of 2005 (when the boom was in full swing) to the end of 2008. As you can see, there is a steady decline in the number of closed sales per month from the height of the market to today. In some areas, sales volume is down over 50% from the peak. Although there are peaks and valleys – these reflect seasonal trends. You can plainly spot that each peak is lower than the last and the same holds true for the valleys.
This shows a general erosion of enthusiasm for home buyers and sellers alike. White Plains had rather low inventories during most of this period which created fewer options for buyers.
If enthusiasm drops – so should prices – right? Well no, that’s not what happened. Here is where I show you the general pricing trends from 2005-2007. Prices either stayed static or moved up slowly. Depending on the location, some saw fairly hefty increases in home values between 2005-2007. Why? The answer is complex. It was starting to become more of a buyers market during this period. Certainly the frenzied buying was a thing of the past. Throughout this period, depending on the location, I was telling sellers to be reasonable because they no longer held all the cards – and I was telling buyers the same thing. This was what I call the tug-of-war period. Neither buyer nor seller prevailed. Homes that weren’t in cream puff condition either didn’t sell, or sold low while homes that were upgraded with stainless steel and granite were snapped up like hot cakes.
The bottom line here is that the market had weakened, but when most of your sales are top-of-the-line homes you are going to get for top-of-the-line prices. Thus the increase in home prices overall.
You are now asking…”But why didn’t you include 2008 in that chart?” Patience! All is about to be revealed!
Here comes the price decrease. The combination of the sub-prime mess and tighter lending standards along with the Wall Street meltdown has taken its toll on the Westchester market. The prices are finally settling down. In the last six months of the year, the overall market tumbled 16 % when adjusted for seasonal fluctuations in pricing. Much of the change occurred immediately after the market crash on Wall Street.
Caveats: This data includes a broad area of Westchester County. Real esate is hyper local here and the difference of a few blocks can be very important. The most desirable areas have had price drops, but nothing on this scale. Look for the more local reports that I will be generating over the next few weeks for more local insight. I also kept this market to single family homes, condos and cooperatives – as other types of real estate such as multifamily homes are a market unto themselves.
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