Real estate rebound gains traction
The housing slump showed serious signs both of abating and of staying abated in the second quarter.
After depressed values, overstocked inventories and foreclosure sales for four years ”“ a full year longer than housing bear markets of the past ”“ the regional buyer”™s market is bumping into its pricing antagonist, the seller”™s market.
Inventories are down. Prices are up. Perhaps best of all, as Douglas Elliman”™s Amy Kane sees the data, “We”™re seeing heavy contract momentum carrying into the third quarter. This does not appear to be a blip.”
Kane serves as Douglas Elliman”™s vice president of business development and as executive vice president and director of sales of its TriBeCa office in Manhattan. She addressed the raft of favorable statistics released recently by her Manhattan-based company, which operates six offices in Westchester.
“The reports match the consumer behavior we”™re seeing,” she said. “I see a very healthy market. I understand there is a scarcity of inventory and that credit is still tight, but it”™s looking healthy across all regions. There were pockets of good news in 2011. Now we”™re seeing huge gains. Now, northern Westchester is looking stronger to go along with the southern part of the county, which had been stronger.”
Rye Brook-based Houlihan Lawrence”™s managing principal Chris Meyers agreed. “We see the recovery that began in the fourth quarter of 2011 in the markets in southern Westchester and at the low end of the sales spectrum ”“ under $500,000 ”“ slowly building momentum in the six quarters since then,” he said. “Now it”™s safe to say that recovery has spread to all parts of the county and to all price levels.”
Inventory in the recent second quarter was 13.3 percent or 6,128 units below the same quarter in 2012.
“In 2010, we were seeing the exact opposite, with inventory staying on the market. That”™s no longer the case and that”™s really big news,” said Meyers.
Kane cited the White Plains market as strong and noted the high-end market ”“ single-family homes costing above $1.625 million ”“ witnessed a 24.3 percent spike in sales. She cited recession-fueled price cuts spurring some of the activity by affordability.
“There was a median sale price decrease of 8.5 percent, but that”™s healthy,” she said.
The multimillion-dollar homes”™ recovery has come with a notable line of demarcation, according to Meyers.
Meyers called the market for homes valued between $2 million and $2.5 million “red hot,” with pending sales quarter-over-quarter up 84 percent. After that, the market between $2.5 million and $3 million has seen only a 9 percent increase, a figure Meyers termed “a decent percentage.”
Meyers, too, is seeing the scarcity of inventory Kane sees. He said ideally there should be five or six homes in active inventory for every home under contract to sell. “Now, we have two listings for every home in contract,” he said. The healthier five or six to one ratio ”“ “a balanced market” ”“ re-emerges for homes priced above $2.5 million.
For properties in Westchester, median sales price for the combined condo, co-op, single-family, multi-family and luxury home market rose 4.4 percent to $479,000. The much-watched single-family home price ticked up 4.8 percent to a median value of $650,000. A total of 2,251 single-family homes sold in the second quarter, a 24 percent increase from a year ago.
“It all points to healthy consumer confidence,” Kane said. “When there is more confidence in the economy, there is more confidence in buying a home.”
The two- to four-family unit market had been among the strongest in the recession and it remained solid, posting a median sales price of $350,000, up 8.8 percent quarter over quarter.
The number of multifamily unit sales rose 36.9 percent to 115.
The rosier second quarter coincides with escalating interest rates.
A 30-year fixed mortgage had held steady “at or below 3.5 percent for most of ”™13,” Meyers said. In the last two months, however, that number has ratcheted up to between 4.5 percent and 4.7 percent.
“That equates to a $425 bump in monthly mortgage payments on a $500,000 home,” he said. “My thought is that rates coming up will not cut down on the number of sales, but it puts a headwind on prices. This is not necessarily a bad thing considering inventories are the lowest since 2004.
“It will cut into affordability, but affordability had been at historic highs,” he said.
In booming White Plains, sales are up 41 percent year over year and a more sizzling 67 percent in 2Q 2013 over 2Q 2012.
“Inventory constraints have motivated buyers to broaden their search and a few areas have outperformed the market as a result,” according to the Houlihan Lawrence quarterly report. “The Rivertowns, recently coined as ”˜hipsturbia”™ by The New York Times, posted a 28 percent increase in sales, and 8 percent gain in median sale price. The easy commute along the Hudson River, riverfront community parks and quaint downtown areas have resonated with New York City and Brooklyn buyers, who strive for relevant alternatives to city life.”
Kane, who sells from lower Manhattan, is seeing the same thing. “Manhattan and Brooklyn are looking here,” she said.
While the listing discount in Putnam County fell 0.9 percent (from 12.1 percent to 11.2 percent) and the inventory fell 2.8 percent to 962 units, the median single-family sale price of $288,500 was still down 1.5 percent compared with 2Q 2012.
The number of Putnam sales, however, was up 18.2 percent to 208 units for the quarter.