A personal note first, followed by market commentary.

What bothers me the most as a real estate professional? Two things:

1) When I see buyers or sellers choosing to associate themselves with a real estate agent who has little or no experience and/or who fails to adequately represent their client…. and then the buyer/seller continues to work with that agent. I hear stories about this all the time and they usually have a bad ending. Buyers and sellers should thoroughly interview the agents they are considering – this person will represent you in what could be the largest business transaction of your life. Do you really just want to pick that person from their picture on the internet??? Or simply trust a referral from a friend??? Make sure that you “click” with your chosen representative.

2) When a buyer or seller decides to work with a specific company. The real estate business is about the agent that you work with and not the company they work for. Yes, the company provides some basic support services, but the knowledge, experience, negotiating skills, etc. that buyers and sellers depend on are all provided by the agent – the company has nothing to do with that.

One of my goals is to provide the very best customer service. I want (and get!) repeat business from my clients and I want (and get!) their referrals. I see it as my duty to represent clients and help them negotiate the best price and terms that the market will bear.

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My accomplishments in 2011:
- For the second year in a row, I was named a Five Star Real Estate Professional by Westchester Magazine; fewer than 4% of real estate agents were chosen.
- My office was #6 for listings taken and properties sold in the Empire Access Multiple Listing Service – that’s the top 1%!

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2011 was a mixed year for the Westchester real estate market. There were pockets of strength, notably Larchmont, Rye and Scarsdale. Of the areas I cover, Edgemont was the weakest (number of sales down 26%, average selling price down 27%). What is not reflected in the numbers is the amount of activity; I was in more than a dozen bidding wars in 2011, especially early in the year. Even though the actual number of sales was down in most areas, the best homes attracted more than their share of interest, which partly explains why average and median selling prices were up.

As compared to 2007 (the peak of the market) and three stock market benchmarks, you can clearly see (BELOW) that prices are down quite a bit. Only Larchmont/Mamaroneck and Rye City have higher median selling prices. If you had bought the QQQ at the beginning of 2007 and sold at the end of 2011, you would be up almost 33% but we all know that that came with a tremendous amount of volatility.

While qualifying for a mortgage (or a refinance) can be challenging, interest rates are so low that upper tier buyers are buying. In fact, the $2.5 million - $3.5 million market segment had 18.6% more sales 2011 vs. 2010 (51 vs. 43)!

In 2011, almost 21.5% of sales were for properties over $1 million; a historical look at the number of single family sales greater than $1 million:
- 2011: 21.50%
- 2010: 21.08%
- 2009: 17.06%
- 2008: 22.80%
- 2007: 25.30%

The Westchester County real estate market is alive and doing well! The accompanying charts and graphs show that things are quite active. For example:

Total Single Family Sales

September 2011 – 358 closings
September 2010 – 323 closings
September 2009 - 329 closings

Single Family Sales Less Than $1 Million

September 2011 – 236 closings
September 2010 – 186 closings
September 2009 – 230 closings

Single Family Sales Greater Than $1 million

September 2011 – 43 closings
September 2010 – 33 closings
September 2009 – 44 closings

Inventory continues to be low; at the end of September, there were about 4,800 single family homes for sale. That compares favorably to 5,200+ for sale in September 2010 and just over 5,000 in September 2009. Pricing generally continues to be weak; for 3Q2011, median and mean single family sale prices were down 6.3% and 4.4%, respectively.



Serious buyers continue to shop for homes; I have been involved in several multiple bid situations over the past few months. The buyers that I have encountered are motivated by several factors, including low interest rates and favorable pricing. The main reason I hear, though, is that people are just tired of waiting; they want to move on with their lives and buy the house they’ve always wanted.

For those of you who are happy in your current living situation, I hope you’ve looked into refinancing. Interest rates are very low and you might be able to save a lot of money by lowering your monthly payment.

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.

How Much Lower Can Interest Rates Go?

2010 was an exciting year for Westchester real estate! Below is a summary of the past 4 years’ average and median price performance by school district or ZIP code. Why 4 years? Because that is how long it’s been since the peak of the market (4Q2007)! The magnitude of losses from 2007-2010 might surprise you, especially as compared with the equity markets (whose returns are also tallied below).


I find it particularly interesting to see where people are buying – check out the chart below, which has single family home sales broken out by price range.

At the end of 2009, I wrote: “I continue to believe that residential property prices are in the process of stabilizing and that the bottom is already behind us.” Despite interest rates off their lows and continuing economic uncertainty, I still believe that the bottom is behind us. In fact, a recently published market update from the Westchester-Putnam Association of Realtors said that “the median sale price of a Westchester single family house in the fourth quarter of 2010 stood about 3% above the 2009 level. Probably all of that 3% increase constituted true price appreciation.” Q4 condo and coop prices were also higher, by 3% and 2%, respectively, from 4Q2009.

My goal for 2011 is to help as many buyers and sellers as I can. In these challenging times, it is especially important to be represented by a team of professionals who work strongly on their clients’ behalf. My team of attorneys, inspectors, financial professionals and other vendors will continue to provide you and your referrals with outstanding service.

The number of single family sales in Westchester County during October 2010 was down 17% compared to 2009. As I’ve discussed before, the federal tax credit incentivized buyers to close by September 30, so this was not a huge surprise.

Notice that the number of expired listings (homes that failed to sell during the time they were listed for sale) jumped almost 30% county-wide; Edgemont, Harrison, Larchmont/Mamaroneck and White Plains all experienced more than a 30% increase in the number of expired listings. Some of those sellers will not come back on the market, though many will.

Though this could hold down future price appreciation, the longer-term view is that this is a great time to buy real estate (as detailed in last month’s blog post). Even famed hedge fund manager John Paulson recently said:

“If you don’t own a home, buy one. If you own one home, buy another one. And if you own two homes, buy a third and lend your relatives the money to buy one.”

This is the same guy that made billions shorting subprime mortgages - he now sees a buying opportunity in real estate.

It is very interesting to see at which prices those purchases took place.

Notice that homes priced $1 - $1.5 million, $2 - $2.5 million and $3+ million experienced jumps in activity. The rich are buying, setting themselves up for long term gains and locking in low mortgage rates.

A few weeks ago, all I kept hearing was how the number of sales dropped 30% from June to July.... Here's the background, and a prediction of what's to come:

The second round of the federal housing tax credit required a signed contract by April 30, 2010. The closing had to occur by June 30, 2010. Since people rushed to close in order to qualify, there were many more sales in June than July. Put simply: demand shifted to earlier in the year as people shopped early in order to qualify for the tax credit.

Banks and title companies were unable to keep up with the spike in transactions (they were also swamped with refinance applications), so the government extended the closing date until September 30, 2010. What I expect will happen is that there will be more closings than usual in September, followed by a drop in October closings.

To keep this in perspective, note that through the end of August 2010, the total number of sales in Westchester County had actually increased over 2009. Why would people want to buy now? The Wall Street Journal recently came out with "10 Reasons To Buy A Home."

http://online.wsj.com/article/SB10001424052748703376504575492023471133674.html?KEYWORDS=brett+arends

To summarize:
1. You can get a good deal
2. Mortgages are cheap
3. You'll save on taxes
4. It'll be yours
5. You'll get a better home (than if you rented)
6. It offers some inflation protection
7. It's risk capital
8. It's forced savings
9. There is a lot to choose from
10. Sooner or later, the market will clear

That all works well if you are a buyer.... But what if you are a seller?

1. If you sell, where will you move to? This is a great time to be a "move-up" buyer, i.e., to purchase a more expensive property.
2. Mortgage rates are near all time lows; since most buyers need financing, this is a great time to sell because a lower interest rate means that more buyers can afford to purchase your home. Once rates start to rise - AND THEY WILL! - that might not necessarily be a good thing for prices and it will decrease buyers' purchasing power.

At the end of July, there was about eleven months’ supply of inventory (single family homes) in Westchester. We are still firmly in a buyer’s market. There are still pockets of activity and yes, even some properties that are attracting multiple bids. Most homes, though, are just sitting on the market. There are still too many sellers who are overpriced and not willing to negotiate.

The most common thing I hear from buyers is: “Why aren’t there any good houses for sale?!?” I am currently working with several qualified, serious, ready-to-transact buyers who are looking in White Plains, Mamaroneck and Scarsdale. If you own a property in these areas and are thinking about selling, call me first…. I would love to make a match!

When I tell people that I am a full time real estate agent, I am met with sympathy. People want to know how bad the market is, why nothing is selling, etc. Here is the truth: throughout Westchester County and through the end of July 2010, there were:
- Over 2,400 single family sales
- 580 condo sales
- Over 850 coop sales
- 211 multi-family sales

As you can see from the graph below, Westchester real estate has been a decent investment compared to the S&P 500. The current median selling price is at 2004 levels, though interest rates are obviously much lower. Also, price volatility is much lower with real estate than in the equity markets.

The picture is a little different when you look at it from the peak:

Despite negative news reports, the real estate market continues to serve buyers and sellers. Business is happening and banks are lending…. And if you have not refinanced your mortgage – do it now while interest rates are very close to all time lows!

There is about 14 months’ supply of inventory for Westchester – we remain firmly in a buyers’ market (anything more than 6 months is considered a buyers’ market). While there are still plenty of properties changing hands, only homes offering the most value, i.e., the best price for the given amenities, are attracting buyers. Sellers must still be flexible on price if they do not want to sit on the market.

In looking at Westchester County as a whole, the supply of single family homes has been creeping up for the past five months. In fact, inventory is at the fourth highest level in two years. Additionally, the number of expired properties is at the second highest level in two years. Many expired properties eventually find their way back to market and could further bloat inventory levels. Generally speaking, as the supply of homes increases, prices usually decrease.

There has been a HUGE increase in the number of homes sold. In June 2010, there were more than 630 single family sales – a 100% jump from June 2009. Nearly 22% of those sales were for $1+ million properties. In fact, June saw 14 property sales of $3 million or more (versus 4 in June 2009). Showings have definitely been slowing, though, since the expiration of the federal tax credit on April 30, 2010.