Sellers who are downsizing from a home in Westchester are bumping up against an unexpected problem. A new wave of gentrification geared to the top 1% is making it difficult for merely affluent residents to downsize.
This is one time that I have to admit I was late to the party. I only started blogging about this issue about a year ago. I really should have seen the writing on the wall earlier.
In the early years following the housing crisis, the bulk of Westchester languished in kind of a housing funk. A few pockets went through a very deep correction with many foreclosures. On the flip side, there were some small slivers of real estate that were raking in all the gains. For the most part, prices were depressed inventories were high and buyers scarce.
When the turn-around came, it was driven by the relentless increase in the cost of living in NYC. Until around 2016, most New Yorkers had to be dragged kicking and screaming out of the city. But the relentless increase in housing costs finally took its toll and many city dwellers were pushed into lower Westchester.
This is something I hear every single day. Boomers feel stuck in their big homes. They don’t want to rent a 750 sf box for $3k a month because they know that’s money out the window. They want to BUY something. But precious little inventory in the form of condos is being built. The few condo projects are all at the upper end purchases, mostly starting at over $1 million for a 2 BR+ unit. That’s no solution for someone selling a $750k house.
Although rising prices is great news for home sellers, this migration has made Westchester less and less affordable for those already living there. You know it’s time to scale back… Sure, you can sell your house for more, but where do you go? The price per square foot for a higher-end condo can be almost double that of many single family homes. For those looking to downsize, the promise of scaling back on square footage while banking some serious cash has become pretty much a fantasy.
Many of my families who are thinking of downsizing from a home look around and feel there is nothing for them to downsize to. They keep asking me when developers will stop building over-priced rentals and start building what they need. It is baffling to them that with a the screaming need for more moderately price condos, that none are being built – at least not in lower Westchester. After all, 2BR condos ranging from $500k -$800k would sell like hotcakes.
However, as those of lesser means have discovered down through the years, need doesn’t motivate developers. It’s all about the money. If they can make twice as much by catering to someone wealthier, that’s what they are going to do. City and town officials speak to protecting the interests of the middle class, but they aren’t doing it. Municipalities need more revenue and would prefer that higher end residents that will fill their coffers. If that means displacing those in the 80th percentile in favor of the top 1%, so be it. The bottom line is this: if you feel as if you are being pushed out of Westchester, you are probably right.
This turn of events comes as a shock to many current residents first-time buyers. After all, the vast majority of Westchester residents rightly consider themselves to be very well heeled. The thought of gentrification pushing any of them out of their home towns seems absurd. But gentrification has always pushed those of lesser means out of the way to make room for the even more wealthy. The 80th-99th percentile just didn’t notice it before because until the crash of 2008 they were part of the gentry class.
The crash of 2008 changed everything. Up to that time, developers were happily building condos and homes for mid-range price points. But, in the last 10 years, the gap between the 80th percentile and the 99th has become a yawning gulf. It no longer makes financial sense for developers to build for the 80th-95th percentiles. Catering to the 1% is just so much more profitable then working within the budgets of even the 90th percentile.
Since a location like Westchester has a very convenient commute and ranks high on the “Best Places to Live” lists, it will attract an almost endless supply of the 1% for developers to cater to. As long as that continues, new inventory for everyone else is going to be sharply curtailed. The result is a massive inventory squeeze for everyone else.
Most residents can still successfully downsize in their own county. But for most, it will involve tradeoffs and compromise. I can’t change the market for you. Real estate agents and brokers have no such market power. Apart from mentioning the issues to my elected officials every time I see yet another luxury rental being proposed, there is little I can do about the underlying problem. But I can help you deal with the market that you are presented with.
There are several directions that you can realistically take and perhaps the most important lesson here is to prioritize what is most important to you.
With all the building that is currently ongoing, if moderately priced inventories of brand new condos haven’t already arrived in your town, then it’s really not in the cards for the foreseeable future. By that I mean at least the next 5-10 years. Can any of us wait 5-10 years to downsize from your home for something that might or might not happen? For now, we have to accept that the landscape has changed and work with what we have and not rail against what it should be.
If staying in lower Westchester and being near New York City is most important to you, then there are probably going to be some major compromises that you will need to make.
Exchanging less space for luxury and location. If you want an amazing location in the heart of a downtown, or perhaps right on the river, you may be able to afford a 1BR luxury condo. That’s generally a very big downsizing step for those used to a good-sized house, but you have to look at what you really need.
If you don’t mind customizing a space, there are plenty of condos and townhouses that were built in the 80s that offer great space. They are often less walkable and their interiors tend feel a bit tired and dated. One thing to remember is this: you can’t change the size or location of condo/townhouse, but you can change the interior.
There is also the cooperative market. Many of the pre-war charmers are cooperatives and many were built near town centers. Because they are older buildings, they tend to have hard wood floors and high ceilings. The layouts are often excellent, though the bathrooms tend to be on the small side. They do come with their own set of drawbacks. The biggest sticking points I’ve found are dealing with a common laundry, a wait list for parking in the complex, no central air (window or wall units) and pet restrictions. If you have a dog, there are dog-friendly cooperatives, but they are harder to find. They are a good alternative for those who want space and a convenient location because they can save you $200,000+ over the cost of a condo with similar square footage.
Westchester is one of the most expensive areas of the country to live. It has the highest property taxes in the nation. The good news is that once you get out of the Westchester (and NY Tristate) bubble, your money will buy a great deal more. If having a modern move-in ready home with all the amenities and space that you ideally want is more important than the immediate location, then moving away from Westchester is your best solution.
In the end, there are quite a few options for Westchester residents looking to downsize in place. But the bottom line is that staying put will require prioritizing must-haves and compromising on the rest.
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