Realtors Predict a ‘Normal’ Spring Home Sales Market
John Jordan | April 2015
WHITE PLAINS—For the second year in a row, a harsh winter that featured significant snow, extreme cold and on many days biting winds kept many prospective homebuyers bundled up next to the fireplace and away from Realtor Open Houses.
Despite the long winter of 2014-2015, homes sales in the four-county region of the Hudson Gateway Association of Realtors (Westchester, Putnam, Rockland and Orange counties) were up more than 12% collectively in the first quarter, according to the “2015 First Quarter Residential Real Estate Sales Report—Westchester, Putnam, Rockland And Orange Counties, New York” released earlier this month by the Hudson Gateway Multiple Listing Service, Inc.
The HGMLS report stated that there were 2,861 closed residential transactions in the first quarter of 2015, an increase of 309 sales or 12.1% over 2014’s first quarter postings. A majority of the closed transactions reflected listing and showing activity that took place during the late winter months of 2014 and January 2015.
Westchester County had 1,620 first quarter sales, an increase of 6.2% over 2014. Most of that increase occurred in the condominium sector; sales of single-family houses and cooperatives were flat as compared to last year.
Putnam County saw a 29.8% increase overall in sales. Orange County sported a hefty 23.8% increase and Rockland posted a 13.6% rise in home sales, according to the report. Realtors continue to be concerned about for-sale inventory, which at the end of the first quarter was down 6.4% from levels posted during the same period of 2014. The steepest decrease took place in Westchester County, where inventory fell 10.4% to 4,706 units.
For comprehensive analysis and statistics on the HGAR residential sales market turn to page 27 beginning with the 2015 First Quarter Residential Real Estate Sales Report for Westchester, Putnam, Rockland and Orange Counties released by the Hudson Gateway Multiple Listing Service, Inc. earlier this month.
Some of the common themes culled from interviews with Realtors who do business in Westchester, Rockland, Putnam and Orange counties, include the fact that the housing recovery continues to be a mostly south to north phenomenon with the localities to the south enjoying brisk sales and higher prices, while to the north, particularly Orange County, sales have risen, but home values continue to fall, although some stabilization of prices there is beginning to emerge.
2015 HGAR President Drew Kessler, a Realtor doing business in Rockland County and a mortgage company executive in the region, said, “It’s great to see that unit sales are certainly up throughout the four counties as compared to the first quarter of last year. So just to see more activity and more volume is definitely a positive.”
“I think we are going to have a late spring market this year because of the weather. It set us back in time but there are a lot of people who are waiting for conditions to be better to get out and get (home) shopping once again.”
—Christopher Meyers, Managing Principal, Houlihan Lawrence
Kessler noted that the harsh winter likely not only kept homebuyers on the sidelines, but also prompted many property owners to wait until the spring to list their homes for sale.
He said that the dwindling for-sale inventory has and continues to be a concern for the residential real estate market in the Hudson Valley. Kessler said that quality product is selling quickly, however, prospective homebuyers are turning their collective heads to properties that require significant investment and repairs.
“The consumer is looking for a complete product,” he said. “The concept of the ‘fixer-upper’ is not as acceptable as in previous generations or even 10 or 20 years ago.”
Due to low interest rates and even more attractive financing for first-time homebuyers, Kessler said that having “skin in the game” should not be a problem for most prospective buyers. The possible impediment could be the quality buying options available in today’s market, he noted.
Kessler said that demand for luxury housing in the region is increasing and he has seen bidding wars on some properties. He is concerned about the middle-level property or the “move-up” home for former first-time buyers where he said the market is “underserved” in terms of quality product.
Dottie Herman, president and CEO of Douglas Elliman Real Estate, was pleased with the increase in sales, but related that the region suffered another harsh winter like last year, which cut into buyer activity. She agreed with Kessler that the luxury market in Westchester was strong in the first quarter, which mirrored activity in many markets across the country.
Herman is bullish that sales will increase in Westchester now that the warmer weather has arrived. She said that while Westchester County was off to a slow start in terms of sales in the first quarter, she expects steady and sustainable growth in the months ahead both in terms of sales volume and pricing.
“I think you are really going to see an increase in the overall market as we go forward for two reasons: one, I think the prices in New York City have gone so crazy you are going to see some people with kids in school who are going to look to move to Westchester where they are going to be able to get a bigger house and where schools are good. I also think you are going to see an increase (in sales) with the lower-priced homes.”
She also expects increased activity from Millennials, who entered the workforce during the recession and either moved in with parents or opted for rental properties, are now at the age where they are having children and should be entering the housing market.
Herman said another potential boost for the market is what appears to be an impending increase in rates by the Federal Reserve Bank, perhaps as early as June. She expects mortgage rates to eventually increase to about 5%.
“If anyone is on the fence, they should buy because they (interest rates) are only going to go up,” Herman said.
Christopher Meyers, managing principal, Houlihan Lawrence, said that the weekend of April 10 was the strongest weekend for home sales activity in Westchester and Putnam counties thus far in 2015. He noted that not coincidentally the weekend featured the best weather of the year as well.
“I think we are going to have a late spring market this year because of the weather,” Meyers said. “It set us back in time but there are a lot of people who are waiting for conditions to be better to get out and get (home) shopping once again.”
Meyers said that of late the stronger market is homes priced under $2 million and that pending sales in the luxury market have not been as strong. Meyers noted that homes priced under $2 million are seeing double-digit percentage increases in pending sales. However, he said that there has been added inventory in the luxury market, which will afford prospective buyers more options.
In the company’s first quarter housing report, it predicted, “Far from the bubble environment of previous up trends, this rising market is one that is grounded and sustainable.”
In a telephone interview with Real Estate In-Depth, Meyers continued on that theme by saying, “I still think we are probably somewhere in the fourth or fifth inning of the bull market. We are kind of right in the middle of it. And again it is going to be a much milder bull market than the last cycle just because the economic conditions are not in place for us to see the same kind of exuberance we saw 10 years ago.”
Chris Scibelli, Broker-Owner of Keller Williams Realty of Highland Mills, said the Orange County market continues to improve, but is lagging behind the other counties to the south and east.
He said that buyer interest and buying activity has increased with the onset of the better weather. Scibelli said that some areas are seeing stabilizing prices, while others are still suffering from some falling prices. Downward pressure continues to come from distressed properties. He estimated that as many as one of every six properties on the market is either a short sale, deed-in-lieu of foreclosure or subject to a foreclosure in Orange County. Scibelli estimated that the county’s three cities (Middletown, Port Jervis and Newburgh) have 25% of the distressed property stock on the market for sale.
“I think part of the frustration with that (distressed properties) is it has been difficult to work through the short sale business because there are so many rules and regulations and the banks seem to follow their own (rules) and you have a selling mentality that is not so forthcoming,” he said. The veteran Realtor added that banks up until now have held off putting distressed properties on the market, however, he expects more foreclosures and short sales will be put on the market for sale now that the warmer weather has arrived.
While he believes sales volume will increase as the year progresses, Scibelli expects it will take three to five years for Orange County to dispose of a majority of its distressed housing stock.