The Westchester real estate market continues to see activity, though at a slower pace than 2010. In looking at year-to-date 2011 sales, it is especially important to remember that at this point in 2010, the federal tax credit was providing a huge stimulus to the market. That is not the case this year, which is one reason why the number of sales is down so much from last year (-14.7%).
The only price points that did not show a decline in the number of sales was $1 million - $1.5 million and $2.5 million to $3 million. In the $500,000 - $1 million range, which had the highest number of sales, volume declined by 21.5%. In fact, the Board of Realtors just reported that 24% of single family sales were at prices above $1 million, which is a high number historically (20% in 2010 and 17% in 2009).
Here is some good news for June 2011: Westchester County, Harrison, Rye, Scarsdale, White Plains (10605,10606) average and median selling prices were higher than last year!
I continue to speak with buyers who are reluctant to purchase – there seems to be a belief that prices will continue to fall, and steeply. Here are two points to consider:
1) On October 1, 2011, loan limits will be dropping from $729,750 to $625,500. If a buyer needs to borrow more than that, they must take out a jumbo loan, which carry higher interest rates and often more strict lending criteria.
2) At some point, interest rates will go up. From 2006-2010, 30-fixed interest rates averaged 5.7%; that is nearly 1% higher than the current interest rate.
While these are valid reasons to worry, you have to separate the purchase price from the cost of ownership. Yes, prices could go down a little bit more…. But the major cost of owning a home, your mortgage, could soon be a lot more expensive. And qualifying for a mortgage could become more difficult. Further, if today’s buyer plans to own the house for several years, it is quite possible that prices will have increased over the length of ownership.