The Real Estate Market Is Back!
A client said to me last week that it feel like the early ‘00s. When we visited a property they liked in White Plains, there were three other prospective buyers who walked through while we were there + there were a lot of business cards from agents who had shown the property previously. Although we ended up losing the bidding war, the lucky seller had 9 bids to choose from. Similarly, a property in New Rochelle just had more than 25 bids on it! What is going on???
A general lack of well-priced properties has caused tremendous interest around good homes. In the first case mentioned above, the multi family home has a net yield of around 8% (at the asking price), a good location and plenty of parking. There is a lot of capital seeking return and while being a landlord is not always easy, there are opportunities for the aggressive investor. In the second case, the asking price was about 50% below the 2007 selling price. It will be very interesting to see where each property settles.
The Westchester real estate market tends to lag the rest of the United States, i.e., we were among the last markets to experience price declines and we have been slow in seeing appreciation….. But it is starting to happen. In fact, the year-over-year number will probably show a 3% increase in median selling prices. Not a lot but it’s something!
The number of sales tends to increase before prices rise and we have seen many more homes selling this year than in the past few years (the number of sales is up about 20% for 2013). I am optimistic about pricing for the next few years (I have been a housing bull since 2011, actually). For sellers, this does not mean that you can expect to sell for more than your property is worth. Translation: asking prices have to be very reasonable in order to attract buyers. I believe that a slightly below-market asking price is ideal because buyers are very savvy today - it is VERY easy to overprice your property “to leave room for negotiation” or because your neighbor’s house sold for $XXX,XXX. Sellers: resist the temptation. There are qualified buyers just waiting for a well priced house and they will pounce when yours hits the market. In fact, it will likely attract several interested buyers and you will end up a very happy seller.
Remember that interest rates, while historically low, are up about 100 basis points from all-time lows. As I mentioned in a previous blog post, “if you financed 80% on the average priced home, the 1% increase in interest rates would mean an extra $405/month. That’s a 13% higher payment!”