Just the other day I posted a link to an infographic on my Facebook page. Although this is national data and I generally shy away from anything other than local data, it did reflect our local market conditions very well
What we have here is a classic mismatch between what is for sale and what buyers want and can afford. The inventory is skewed to the high-end, while most of the home buyers are entry level to midrange buyers. The national numbers showed that 75% of all metro areas had a shortage of entry level housing for sale while 92% of all metro areas had a shortage of trade-up homes.
These numbers strongly reflect the current Westchester market. For years since the recession ended, the higher end market has been on a tear. It had left the entry-level and trade-up markets in the dust. The result had been what I referred to as a very “granular” housing recovery where there were a few big winners and many left wondering if their homes would ever start appreciating again.
The first, and most positive explanation is that the entry-level and trade-up markets are staging a comeback and the higher end homes are taking a badly needed breather. Such a thing is a normal and healthy market signal, that the higher end of the market had gotten out of sync with the rest of the market and everything is adjusting.
But there are also indications that the difficultly lies at a more fundamental level. Builders simply don’t want to build entry-level or trade-up homes and and are almost exclusively focussed on the luxury market. More specifically, the focus is on the luxury rental market.
There is a strong element of truth to both of these explanations. The difficulty is that the latter is far more entrenched and is unlikely to self-correct. Why would a builder want to build an entry level home when the real money is at the high end? As long as a market exists at the high end, there is no incentive for them to cater to anything else.
For entry-level and trade-up home buyers, it means you will face a great deal of competition when purchasing a home. Where careful negotiation ruled a year ago. Today, its highest and best. But since no one is building mid-range homes, this “mismatch” isn’t going anywhere anytime soon.
That means dealing with the market as it sits because the conditions that created the problem are going to remain for the foreseeable future. The good news, of course, is that once you have purchased your home, an appreciating market is a healthy thing.
For home sellers in this price range its all good! If you put your home on the market, it well sell for a good price.
Once again, like last year, I don’t see any levers that are going to make buying a home in Westchester more affordable. I wish this were not the case, but I can still help my clients work well with the market they have been given. That’s the best any of us can do for our home buyers.
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