Westchester County’s housing market closed out the fourth quarter of 2018 with a decrease in overall sales from the same period last year, wrapping up a year in which total housing deals fell for the first time in seven years.
The county’s residential brokers are pinning the slow year on a mix of factors. The reasons include buyer concerns with rising interest rates, a lack of inventory and sellers not pricing for the market.
There were 1,358 sales of single-family homes in Westchester between October and December, down about 6 percent from the same period in 2017, according to data from the Hudson Gateway Association of Realtors. That closes out a year in which the county’s 5,876 total sales of single-family homes represented a 5 percent decrease from a year earlier. The total number of residential sales in 2018 — counting single-family homes, condominiums, cooperatives and two- to four-family buildings — dropped about 4 percent from 2017 numbers.
The fourth quarter marked the sixth straight for Westchester in which total single-family home sales declined, according to the Elliman Report, compiled by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.
Joseph Rand, managing partner for Better Homes and Gardens Rand Realty, described a “lack of fuel for the fire” in Westchester’s market.
“Prices are going up,” he said, “which is an indication that demand is still strong, but then sales are going down.”
The median price for single-family homes was measured by HGAR at $650,000 for 2018. That is up about 1.2 percent from a year earlier and up 3.5 percent from 2015. Homes stayed on the market in Westchester for an average of 79 days in 2017 and an average of 74 days in 2018, according to Berkshire Hathaway HomeServices.
Entry-level price points are in demand, Rand said, something that’s not unusual for the market. There are typically always more buyers looking to spend $400,000 than $800,000 on a home. But right now, the demand at the entry level is especially intense, as he described it. That demand, he said, should eventually “bubble up” to the higher markets, as sellers of $150,000 condos become buyers of $300,000 homes.
Demand in the low- and mid-priced market has “elevated prices for those homes,” causing buyers to take a pause, according to the fourth quarter report from Westchester Real Estate Inc., an association of independent real estate companies based in Eastchester. But the association said the market saw more of an “adjustment” than a slowdown for 2018.
“Sellers who were and are realistic with their asking prices were rewarded with strong offers and quick sales, even into the typically quieter holiday season,” Westchester Real Estate said in its report.
Last year was also the first full year for the market under the new federal tax code, which capped local and state deductions at $10,000. With Westchester County’s taxes placing it among the highest taxed areas in the country, the law was expected to hit the county particularly hard. There is evidence that may have been true for the luxury market. The county had 318 total sales of homes priced at $2 million or higher in 2018, down 11 percent from the prior year, according to the Houlihan Lawrence Luxury Market report.
However, Westchester saw five separate sales of more than $10 million in the 12-month period, surpassing a previous high set in 2005.
Houlihan Lawrence, in its report, raised alarms about pending luxury sale numbers it said were down across the board, which could hurt first-quarter numbers. The brokerage also said the county’s luxury market could be hurt by rising interest rates, a cooling New York City housing market and financial markets entering negative territory for the first time in a decade.
“Sellers may have to accept their home could achieve a selling price far less than they imagine, and their motivation to sell and price competitively will drive the market in 2019,” wrote Anthony Cutugno, executive vice president and director of Houlihan Lawrence Private Brokerage.
One beneficiary of the change in the tax laws could be sellers of lower-taxed condominiums and cooperatives. Condo sales in Westchester last quarter were up 8 percent from a year prior, while co-op sales were up 18 percent, according to the Elliman Report.
“We have seen a big uptick in interest for condos and co-ops in Westchester,” said Scott Elwell, senior executive regional manager at Douglas Elliman Real Estate in Westchester and Connecticut. “I do believe the taxes are part of that. I also believe the movement toward an easier lifestyle.”
Elwell said his office is tracking whether potential Westchester buyers are expanding their buying area to find places with lower taxes, including Connecticut. The strongest demand in Westchester of late, Elwell said, are for condos that are well-priced and houses in good condition close to transportation centers.
“Sellers that have a good understanding with their agents of their homes and price it correctly, across the board, sell very quickly,” Elwell said. “The buyers are savvy and have worked with their accountants and understand exactly what they can afford.”