The local residential real estate market has seen such a boom that its strength was deemed unsupportable in the latest 2021 Q3 report from the Hudson Gateway Association of Realtors.
“With the exception of the second quarter of 2020, the real estate market has been an anomaly outperforming the economy,” HGAR said. “Sales and prices have enjoyed a trajectory, which is likely unsustainable going forward.”
According to HGAR, sales in Westchester, Putnam, Rockland, Orange and Bronx counties were all up from this time last year, with Sullivan County being the region’s only exception.
The Douglas Elliman report for new signed contracts in September showed a decline from the last quarter in new listings and new signed contracts for both single-family homes and condos in Westchester.
However, Rich Ferrari, president and CEO of brokerage for New York and the Northeast Region at Elliman, maintains that even the industry”™s experts can”™t be sure of how long these trends may continue.
And he doesn”™t think that demand is slowing down for the region at all.
“We know we’re not seeing (a slowdown of demand) in the immediate future,” Ferrari said. “Eventually every market goes back to a normal market, but that will only happen when inventory rises and demand slows down.
“Right now, demand still remains high and inventory is low, so we will be able to use the barometer basically on inventory,” he continued. “Then we’ll know we’re going back into a normal market, but we don’t see it in the near future. It will happen ”” whether it’s six months or five years from now, we don’t know, but it will happen.”
For now, the only thing hindering the signed contract boom that began last summer in Westchester is the decline in new inventory to replace all that had been bought in the past year. As a result, total sales have decreased over the past three months.
“In Westchester and most of the suburbs, whether it’s been the Manhattan suburbs or Boston suburbs, we’re seeing signed contracts were down, but that’s only a result of low inventory,” Ferrari said. “New listings were down over 50%, which naturally will bring signed contracts down.”
Demand is still strong, which continues to yield record prices. The median sale price for a single-family home in Westchester is now $855,000, having risen 5.6% from the 2020 Q3 median price of $810,000.
“The demand remains very strong,” Ferrari said. “The lower (number of) signed contracts has nothing to do with the demand. It’s reflected in the price. Prices are continuing to go up, which eventually will slow down the demand when an apartment becomes out of price for a potential buyer.
“But we’re not there yet,” he declared. “It’s a very healthy, strong market.”
Even with an increase in prices, the market is still proving a desirable one for many buyers with mortgage rates remaining low, at least for now. Ferrari, however, does not predict that those prices will drop anytime soon.
“We expect prices to be stable to upward,” Ferrari said. “With interest rates remaining low, for someone who chooses to finance, even with a high price, it tends to be affordable. Their monthly outlay remains the same as if the prices were a little lower because interest rates are so low.
“Again,” he continued, “like transaction volume, prices will level off. They will reach a point where the consumer will begin to think that they are overpriced. We’re not there right now. For some of our suburban and second-home markets we were in, probably for five to eight years, prices had not gone up. So it’s a little bit of catch-up right now also.”
Ferrari noted that many home sales in the region are second-home buyers ”” likely who also own residences in New York City.
“In New York City right now, the vacancy rate for a rental across the board is about 2.5%, whereas a year ago it would have been about 30%,” he said. “So for everyone that left, someone else came into the city, you know, but what’s really happening is so many more New Yorkers have second homes. And a lot of those second homes are suburban homes, they’re not country homes, and that’s the big plus to Westchester.”
Ferrari added that the properties selling fastest right now are those that are move-in ready. Buyers are discouraged lately from renovation projects due to lingering supply chain delays for many home and construction materials.
“Whether it’s a mid-century modern, a new modern construction, or whether it’s a traditional 1920s colonial or Tudor, what is in more demand right now is anything that is in mint condition, either new construction or completely renovated,” he affirmed. “Anything where a buyer does not have to do a considerable amount of work tends to get the most interest.
“They don’t want to wait a year to renovate,” Ferrari said. “They want to move in now.”
