Realtors in Westchester last week said the continued downturn in housing sales and median prices in the county during the second quarter was expected and a needed correction to an overpriced market.
When it will end is anyone”™s guess.
The Westchester-Putnam Multiple Listing Service last week reported 1,770 second-quarter closings in the county, a 24 percent drop from the second quarter of 2007. That was an improvement over the residential sales market”™s first-quarter performance, which was down 31 percent from the same period last year.
In a typical year of seasonal sales patterns, the second-quarter sales pace would amount to an annual total of about 6,970 sales, the lowest level since the 1994-96 period, according to the report.
Compared with the second quarter of 2007, sales of single-family houses in Westchester were down nearly 27 percent from April through June; cooperatives, down 23 percent, and two- to four-family houses, down 31.5 percent. Condominium sales were down about 15 percent, an improvement over the first quarter, when condo sales were down 35 percent from the same period last year.
Only the condo market saw a second-quarter increase in median sale price compared with last year. The middle price for condominiums in the county was $400,000, up 4.6 percent. The median sale price for a single-family house was $674,900, down 3.6 percent from the same period last year. The mid-range price for a two- to four-family house was $472,500, a drop of nearly 14 percent from last year. The median sale price for cooperatives was $188,500, down about 2 percent.
The average second-quarter sale price for a single-family house in Westchester was $894,467, down 7 percent from the same period last year. The report said that drop, compared with the lesser decrease in median price, suggests that price adjustments by sellers were more frequent or deeper, or both more frequent and deeper, at the higher end of the market. Million-dollar house sales accounted for 24 percent of total second-quarter residential sales, compared with 31 percent in the first quarter.
Westchester”™s end-of-quarter housing sale inventory was 7,925 units, up 11 percent from 2007. That high level was last seen in 1996-97, just before the boom market drew inventory down to record lows, according to the report.
“This is the domino effect,” said Adam Kessner, president of Paddington Realty L.L.C., a real estate company he started last year in White Plains. With high market prices, potential buyers who cannot afford a new home until they sell their old one can”™t find buyers for their homes. “This is the spiraling that”™s affecting the entire market,” he said.
When he opened his Westchester company in April 2007, “I knew this was coming,” said Kessner, who also owns a real estate brokerage in Manhattan. “It had to come. It”™s like a bubble in the stock market. The increase in prices over the last seven years has been insane. It can”™t sustain itself.”
“I still think the prices are just too high,” Kessner said. “I think it”™s just the beginning. I think prices are going to drop a lot more.”
“This has been a correction,” said Gregory S. Rand, managing partner at Prudential Rand Realty in White Plains, who had predicted a 5 percent second-quarter drop in median sale price for a single-family house in advance of the Multiple Listings Service report. “What we”™re seeing is that the correction is moving along a course you”™d expect.”
Rand said he is looking for a 10 percent to 12 percent correction in prices for the market downturn to reverse. “I”™m anxiously awaiting it,” he said.
“We will definitely have a record low in sales this year. But if we have a total drop of 10 percent in median sale prices, then it could mean the worst of this is behind us.” Â Â
“This began last year when buyers said, ”˜Enough, enough,”™” Rand said. Sellers, however, at the time did not budge from their elevated asking prices.
 “There was a standoff. It was a question of who was going to blink first ”“ and the sellers are blinking.”
In his commentary for the quarterly residential sales report, P. Gilbert Mercurio, Westchester County Board of Realtors CEO, said the local market was overdue for a correction after a nearly 10-year run-up in sales volumes and prices that peaked in 2005 and 2006. “Even without the subprime loan debacle or the current near-recessionary environment, Westchester-Putnam real estate prices, and sales volumes too, would have had to pause eventually to allow the region”™s household incomes and purchasing power to catch up.”
With second-quarter sales volume up 7 percent from the first quarter when compared with last year”™s quarterly pace, “I don”™t know if we”™re slowly digging our way out or this is a statistical freak and it could get even worse in the third quarter,” Mercurio said last week. “I have never before seen it so dependent on outside forces ”“ things you can”™t do anything about except to just endure them. I just don”™t know what the future holds.”
Kessner, who has turned his company”™s focus to the thriving Westchester rental market in the current housing climate, thinks the future holds worse sales reports. “I think we”™re looking at probably two more years of it getting worse before you see progress in the market. I think the sales market is going to decrease further as the economy worsens and interest rates rise.” Â
