Third Quarter 2013 Westchester Market Watch

Page 1

WESTCHESTER MARKET WATCH third quarter

2013

juliabfee.com


INTRODUCTION Sales flourished during the third quarter of 2013, with both dollar and unit volume increasing by double digits in the majority of our markets and price categories. This is the fourth quarter of consistent sales growth, and all metrics support a housing market that is in full recovery mode: • Market activity is at a five-year high • Prices are stable and median selling prices are improving • Inventory levels continue to decline In tandem with the continued strengthening of the real estate market comes the need for an educated perspective on the housing metrics. More than ever buyers and sellers alike need to have a realistic understanding of what is happening, why it’s happening and what to expect going forward in order to capitalize on current market conditions. The strong sales pipeline that was established during the first quarter of 2013 has steadily increased through the year and resulted in year-over-year sales gains as well as price stability. In the third quarter of 2013, Westchester County closed dollar volume was 37% higher than the third quarter of 2012, while unit sales were 26% higher. The gateway communities of Southern Westchester County continue to enjoy the highest upward sales trajectory both in terms of units sold as well as median selling prices. Single family home sales in Northern Westchester County are also exceptionally strong with dollar volume 25% higher and unit sales 19% higher than the third quarter of 2013. Reflecting the improving health of our real estate market, sales are strengthening for properties at all price points. Notably in the third quarter, entry level home sales, which have been leading this recovery, are experiencing slower sales gains than the broader market. This is attributed primarily to depleted inventory levels. It is the luxury market that is starting to turn the corner, tracking at higher levels than the overall market this quarter, with sales gains of more than 50% versus last year. The return of the luxury buyer is a strong indicator of housing confidence. The market is being supported by a broad group of buyers motivated by pent-up demand and excellent market conditions, including low prices and favorable interest rates. Sellers are comfortable with selling in this market and realistic in their valuations. Median selling prices continue to improve, reflecting level prices and heightened sales activity in the upper price ranges. Buyers do remain price-sensitive and highly discriminating in their choice of home. The condominium and co-operative markets are also contributing to the gains made in the overall housing market. In fact, in communities like Bronxville where there is minimal inventory in the entry level market, condominiums and co-operatives are experiencing above market sales gains. I hope you find our Third Quarter 2013 Westchester Market Watch helpful as you evaluate your own personal real estate holdings and plans for this coming year. At Julia B. Fee Sotheby’s International Realty, we are committed to excellence in everything that we do, and we dedicate ourselves to providing the highest level of service and expertise to buyers and sellers alike in all price categories. If we can be of service, please don’t hesitate to call. With best regards,

Paul E. Breunich President and Chief Executive Officer Julia B. Fee • William Pitt Sotheby’s International Realty +1 203.644.1470 | pbreunich@juliabfee.com WESTCHESTER MARKET WATCH

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SINGLE FAMILY HOME SALES CONTINUE UPWARD TRAJECTORY Third quarter 2013 transaction volume continued to improve as a broad swath of buyers actively engaged in the market. Continuing a trend that began in the third quarter of 2012, the vast majority of our communities experienced both monthly and quarterly sales gains, often at double-digit levels. Buyers are returning to the housing market in increasing numbers as confidence in both real estate and the general economy improves and job growth in the New York City metro area continues. The increase in mortgage interest rates during the third quarter provided a psychological stimulus to buyer activity, serving as a reminder that the historically low borrowing costs we have been experiencing for several years will not last forever. As has been true for some time, Southern Westchester County is leading the way with third quarter dollar volume up by 30% versus the same time a year ago and unit closed sales up 21%. Sales activity in Northern Westchester County is also exceptionally vibrant with third quarter dollar volume 30% higher than a year ago and unit sales 40% higher.

6167+ 64+ 63+ 77+ +96 3134+ 27+ 31+ 30+ +45 SINGLE-FAMILY HOME UNDER CONTRACT SALES 2008 - 2013 (In Units) 966

3q13

775

618

3q08

672

3q09

3q12

642

3q10

636

3q11

453

315

3q08

SOUTHERN WESTCHESTER

340

3q09

3q13

273

3q10

316

3q11

304

3q12

NORTHERN WESTCHESTER

Consumer confidence continues to hover at its highest levels in five years. During the third quarter of 2013 we saw the Consumer Confidence Index range between 81.8 and its current 79.7 (1985=100). In tandem the Present Situation Index, which reflects how people feel about their employment and income prospects, increased further to 73.0. Improving consumer confidence is a significant factor in bringing buyers back into the housing market and particularly local buyers, who are generally discretionary buyers. Neil Dutta, head of U.S. Economics at Renaissance Macro Research LL in New York, says, “If you ask someone how things are right now, they’re all saying it’s better to an extent they haven’t seen in quite some time. The labor situation is improving and consumers have more intentions to buy major things like homes.” Southern Westchester County is currently experiencing exceptional volume growth compared to its post-2009 lows, driven by its proximity to New York City, top-rated schools and charming communities as well as the flourishing Manhattan real estate market, where rising prices and depleted supply are motivating younger families to move to the suburbs. The housing market has been very strong this entire year compared to markets in recent memory, as reflected in year-to-date statistics that show that dollar volume CONSUMER CONFIDENCE INDEX 85 75 65 55 Jul 2012

Aug

Sep

WESTCHESTER MARKET WATCH

Oct

Nov

Dec

Jan 2013

Feb

Mar

Apr

May

Jun

Jul

Aug

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Sep

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has increased by 24% versus 2012 and unit volume is 21% higher. Under contract sales, which represent the forecasted sales pipeline, remain very strong as well, standing at 25% higher than the third quarter of 2012. With the eight-to-twelve-week lag from pending to closing, under contract sales are expected to translate to double digit fourth quarter sales increases versus the same period a year ago. While all price points have performed relatively well in the third quarter of 2013, it is the luxury segment, defined as homes valued at $3,000,000 and higher, that has dramatically outperformed the remainder of the market. Coming off minimal activity levels during the first half of 2013, pending sales increased by 47% during the third quarter and closed sales surged by 200% to the highest level in five years. Both Southern and Northern Westchester County experienced meaningful sales activity. Year-to-date seventyfive homes valued at $3,000,000 and higher have sold. Even more impressive are the sixteen homes that closed during the third

SINGLE FAMILY HOME UNDER CONTRACT AND CLOSED SALES under contract sales

so. westchester

SOUTHERN WESTCHESTER closed sales

3q13

3q12

3q13 vs 3q12

3q13

3q12

3q13 vs 3q12

ytd

2013

ytd

2012

ytd

2013 vs ytd 2012

closed dollar volume

dom*

3q13 vs 3q12

3q13

966

775

25%

1394

1110

26%

2,932

2,421

21%

26%

124

Ardsley

22

16

38%

46

30

53%

82

64

28%

75%

126

Blind Brook

25

10

150%

39

21

86%

79

49

61%

80%

126

Briarcliff Manor

19

19

0%

35

25

40%

68

43

58%

34%

119

Bronxville

14

10

40%

28

31

-10%

71

71

0%

5%

122

Dobbs Ferry

11

11

0%

23

20

15%

50

49

2%

14%

146

Eastchester

45

23

96%

50

28

79%

88

63

40%

31%

116

Edgemont

16

20

-20%

35

34

3%

95

97

-2%

18%

140

Elmsford

11

16

-31%

16

12

33%

36

23

57%

30%

136

Greenburgh

41

30

37%

61

26

135%

105

73

44%

135%

129

Hartsdale (P.O.)

25

18

39%

43

23

87%

76

56

36%

90%

127

Harrison

51

30

70%

48

40

20%

114

98

16%

53%

145

Hastings

13

18

-28%

34

17

100%

73

41

78%

143%

112

Irvington

23

23

0%

29

38

-24%

63

65

-3%

-10%

116

Mamaroneck**

48

44

9%

112

91

23%

215

178

21%

28%

106

Mount Pleasant

21

24

-13%

31

28

11%

63

66

-5%

19%

112

Mount Vernon

25

22

14%

27

25

8%

72

75

-4%

35%

138

New Rochelle

85

73

16%

119

92

29%

261

196

33%

26%

134

Ossining

43

41

5%

54

43

26%

116

97

20%

3%

109

Pelham

32

17

88%

43

50

-13%

109

102

7%

-12%

145

Pleasantville

24

20

20%

32

26

23%

58

54

7%

27%

166

Pocantico Hills

2

1

100%

6

4

50%

7

6

17%

27%

204

Port Chester

37

17

118%

39

27

44%

78

60

30%

47%

121

Purchase (P.O.)

18

10

80%

19

5

280%

33

18

83%

306%

141

Rye City

38

26

46%

80

54

48%

152

119

28%

137%

119

Rye Neck

20

10

100%

23

15

53%

46

36

28%

109%

111

Scarsdale

47

53

-11%

105

90

17%

205

178

15%

18%

125

Tarrytown

14

16

-13%

24

22

9%

48

42

14%

2%

130

Tuckahoe

12

5

140%

10

11

-9%

33

27

22%

11%

115

Valhalla

22

10

120%

26

13

100%

67

30

123%

108%

112

White Plains

58

54

7%

80

72

11%

173

134

29%

5%

110

Yonkers

147

116

27%

139

126

10%

329

301

9%

19%

125

*DOM: Median Days on Market **Mamaroneck School District includes Larchmont P.O.

WESTCHESTER MARKET WATCH

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quarter at $5,000,000+ versus one in the third quarter of 2012. Year-to-date, twenty-six homes have sold in this trophy home range versus nine in the same period of 2012, and the pipeline is strong with another eight homes under contract. Twenty-one of the twenty six homes were in Southern Westchester County, and were primarily waterfront or new construction properties located in prime areas of the county. SINGLE FAMILY HOME UNDER CONTRACT AND CLOSED SALES under contract sales

NORTHERN WESTCHESTER closed sales

3q12

3q13 vs 3q12

3q13

3q12

3q13 vs 3q12

3q13 vs 3q12

3q13

453

304

49%

607

433

40%

1,291

1,030

25%

30%

137

Bedford

56

35

60%

77

64

20%

164

160

3%

46%

122

Byram Hills

42

32

31%

72

41

76%

126

92

35%

79%

144

Chappaqua

42

25

68%

82

52

58%

183

109

66%

43%

123

Croton-Harmon

17

14

21%

30

13

131%

63

40

58%

97%

105

Hendrick Hudson

29

18

61%

29

30

-3%

62

67

-7%

12%

113

Katonah-Lewisboro

45

41

10%

68

70

-3%

150

147

2%

8%

135

Lakeland

63

45

40%

62

53

17%

151

144

5%

13%

157

North Salem

19

11

73%

24

17

41%

55

53

4%

31%

143

Peekskill

22

20

10%

18

15

20%

54

39

38%

16%

144

Somers

48

25

92%

52

29

76%

110

87

26%

117%

123

Yorktown

69

38

82%

92

49

88%

168

97

73%

86%

124

ytd

ytd

2012

ytd

2013 vs ytd 2012

dom*

3q13 no. westchester

2013

closed dollar volume

*DOM: Median Days on Market

EXTRAORDINARY WATERFRONT RESIDENCE

WESTCHESTER MARKET WATCH

MAMARONECK, NY - MLS: 3329992

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MEDIAN SELLING PRICES GENTLY RISE The median selling price for a single family home in Westchester County rose by 4% during the third quarter of 2013 compared to the third quarter of 2012, which was the result of a combination of leveling prices and more high-end properties being sold. Prices are subject to upward pressure in markets such as Bronxville, where depleted inventory has created conditions in which demand has outpaced supply for several consecutive quarters. Multiple bids are reported with increasing frequency in the most in-demand price segments. Typically these are properties offered at a compelling price where buyers sense exceptional value. Buyers today are knowledgeable, follow inventory in their chosen market very closely and are more cost conscious. According to Jason Wilson, Manager of our Scarsdale brokerage, “We have a smarter, more qualified consumer than we did during the 2004-2006 bubble, which is impacting valuations and expectations.� It should also be noted that bank appraisals continue to be ultra-conservative, which will influence price appreciation. SINGLE FAMILY HOME MEDIAN SALES PRICE CHANGE

SOUTHERN WESTCHESTER twelve-month median sales price

quarterly median sales price

3q13

3q12

3q13 vs 3q12

3q11

3q10

3q09

3q13

3q12

3q13 vs 3q12

Ardsley

$630,000

$647,000

-3%

$521,000

$615,000

$603,000

$594,000

$518,000

15%

Blind Brook

770,000

773,000

0%

805,000

925,000

733,000

749,000

753,000

-1%

Briarcliff Manor

875,000

890,000

-2%

745,000

965,000

830,000

814,000

750,000

9%

Bronxville

1,825,000

1,350,000

35%

1,754,000

1,825,000

2,150,000

1,670,000

1,451,000

15%

Dobbs Ferry

730,000

633,000

15%

703,000

629,000

660,000

666,000

688,000

-3%

Eastchester

610,000

565,000

8%

609,000

665,000

519,000

322,000

372,000

-13%

Edgemont

1,035,000

860,000

20%

965,000

1,195,000

695,000

832,000

830,000

0%

Elmsford

416,000

365,000

14%

428,000

425,000

414,000

381,000

403,000

-5%

Greenburgh

450,000

449,000

0%

464,000

395,000

490,000

425,000

438,000

-3%

Hartsdale (P.O.)

545,000

560,000

-3%

485,000

580,000

580,000

513,000

535,000

-4%

Harrison

1,138,000

900,000

26%

1,400,000

1,433,000

1,200,000

1,125,000

940,000

20%

Hastings

713,000

625,000

14%

640,000

611,000

620,000

649,000

635,000

2%

Irvington

800,000

793,000

1%

875,000

810,000

788,000

888,000

730,000

22%

Mamaroneck*

1,052,000

1,018,000

3%

1,100,000

1,000,000

820,000

993,000

999,000

-1%

Mount Pleasant

515,000

465,000

11%

525,000

505,000

565,000

515,000

494,000

4%

Mount Vernon

370,000

325,000

14%

350,000

350,000

385,000

335,000

325,000

3%

New Rochelle

599,000

619,000

-3%

625,000

635,000

618,000

564,000

575,000

-2%

Ossining

362,000

395,000

-9%

398,000

343,000

409,000

365,000

370,000

-1%

Pelham

740,000

667,000

11%

949,000

790,000

860,000

763,000

684,000

12%

Pleasantville

599,000

553,000

8%

645,000

682,000

599,000

580,000

520,000

12%

Pocantico Hills

636,000

913,000

-30%

675,000

890,000

703,000

695,000

675,000

3%

Port Chester

408,000

400,000

2%

446,000

443,000

450,000

408,000

400,000

2%

Purchase (P.O.)

1,100,000

965,000

14%

1,180,000

2,547,000

1,189,000

1,185,000

1,483,000

-20%

Rye City

1,678,000

1,090,000

54%

1,190,000

1,205,000

1,080,000

1,558,000

1,600,000

-3%

Rye Neck

833,000

640,000

30%

850,000

1,226,000

1,782,000

810,000

708,000

14%

Scarsdale

1,310,000

1,330,000

-2%

1,204,000

1,235,000

999,000

1,300,000

1,263,000

3%

Tarrytown

503,000

552,000

-9%

600,000

604,000

658,000

562,000

558,000

1%

Tuckahoe

743,000

650,000

14%

638,000

673,000

605,000

705,000

629,000

12%

Valhalla

500,000

440,000

14%

438,000

453,000

552,000

520,000

413,000

26%

White Plains

603,000

637,000

-5%

585,000

610,000

600,000

564,000

575,000

-2%

Yonkers

420,000

407,000

3%

412,000

456,000

441,000

410,000

407,000

1%

*Mamaroneck School District includes Larchmont P.O.

WESTCHESTER MARKET WATCH

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The pricing of a home will always be an art rather than a science. A property’s market value is a reflection of a number of tangible and intangible factors. The hard factors of a home include location, size, age and amenities. The soft factors include land topography, curb appeal, degree of updating, décor and the current competitive environment, among others. Turnkey properties, which include nicely decorated homes with up-to-date systems and structures, are the most highly desirable properties and command the highest prices in their range. Homes that are not in as pristine condition can languish on the market since the majority of buyers are seeking instant gratification when they make a purchase and don’t have the time for or the interest in major home improvement projects. Buyers remain exceptionally discriminating, and this is a trend that we expect will continue. In Westchester County overall, the median selling price for a single family home for the third quarter of 2013 was $652,000, a 4% increase versus the third quarter of 2012. In Southern Westchester County the median selling price was $685,000, with the sales price improvement closely mirroring the overall Westchester County performance. In Northern Westchester County, which experienced a more severe downturn than Southern Westchester County, we are currently experiencing above-market improvement in the median selling price. In the third quarter of 2013 the Northern Westchester County median selling price rose by 8% to $569,000. SINGLE FAMILY HOME MEDIAN SALES PRICE CHANGE

NORTHERN WESTCHESTER twelve-month median sales price

quarterly median sales price

3q13

3q12

3q13 vs 3q12

3q11

3q10

3q09

3q13

3q12

3q13 vs 3q12

Bedford

$710,000

$623,000

14%

$773,000

$816,000

$843,000

$780,000

$683,000

14%

Byram Hills

1,040,000

865,000

20%

1,143,000

902,000

1,141,000

930,000

858,000

8%

Chappaqua

900,000

946,000

-5%

861,000

975,000

855,000

875,000

879,000

-2%

Croton-Harmon

478,000

620,000

-23%

493,000

425,000

486,000

462,000

473,000

-2%

Hendrick Hudson

427,000

393,000

9%

360,000

493,000

400,000

398,000

350,000

14%

Katonah-Lewisboro

620,000

620,000

0%

600,000

790,000

616,000

624,000

624,000

0%

Lakeland

312,000

339,000

-8%

329,000

368,000

389,000

323,000

318,000

2%

North Salem

478,000

525,000

-9%

402,000

660,000

568,000

467,000

425,000

10%

Peekskill

253,000

294,000

-14%

237,000

188,000

327,000

240,000

229,000

5%

Somers

628,000

460,000

37%

607,000

588,000

620,000

475,000

503,000

-6%

Yorktown

415,000

400,000

4%

427,000

445,000

460,000

410,000

388,000

6%

DISTINCTIVE HEATHCOTE RESIDENCE

WESTCHESTER MARKET WATCH

SCARSDALE, NY - MLS: 3318401

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CONDOMINIUMS AND CO-OPS SHARE IN MARKET GAINS The condominium and co-operative market continues to stage a comeback with its sixth straight quarter of meaningful pending and closed sales gains. Multiple factors are influencing the growth in this market. First, confidence in the single family home market has spilled over to condominiums and co-operatives. Second, the financing is easier to acquire than it was during the housing crisis now that inventory levels are down and the ratio of units on the market to total units in the complex is back in line with bank requirements. Third, the depleted inventory of entry level homes is forcing some families to transition to the large condominiums and co-ops. And finally, the unlocking of the single family home market is allowing down-sizers to make a move to a simpler lifestyle. Overall in Westchester County closed sales for the third quarter were 35% higher than the same period a year ago, while under contract sales improved by 32%. Year to date, there are 22% more closed unit sales than the same period last year, while dollar volume is running 31% higher. The acceleration in dollar volume sales figures is indicative of more expensive properties being sold during the period. Inventory levels continue to drift downward as demand increases and new construction remains minimal. A shortage in the supply of quality condominiums and co-operatives is projected in the next few years as buyers eat up the available stock and market conditions improve. Prices remain steady for both condominiums and co-operatives, giving buyers further confidence that we are at the bottom of this market cycle. The median selling price for a condominium in Westchester County is $355,000, which represents a negligible 1% increase versus a year ago, while the median selling price for a co-operative is $154,000. As our single family home market continues to improve, we fully expect the condominium and co-operative markets to share in the gains. CONDOMINIUM AND CO-OPERATIVE CLOSED SALES AND MEDIAN SALES PRICE CHANGE closed sales

3q13

3q12

3q11

median sales price

3q10

3q13 vs 3q12

3q13

3q12

3q11

inventory level

days on market

3q13 vs 3q12

3q12 vs 3q11

3q13

Southern: Condo

241

164

144

150

47%

$400,000

$390,000

$360,000

3%

-13%

126

Southern: Co-op

447

330

290

249

36%

$160,000

$157,000

$170,000

2%

-5%

164

Northern: Condo

130

113

89

83

15%

$310,000

$300,000

$305,000

3%

-30%

114

Northern: Co-op

22

13

13

10

69%

$81,000

$98,000

$87,000

-17%

10%

195

BURST OF NEW LISTINGS ENTER THE MARKET The continuing reduction in inventory is a key component to our housing markets’ return to health. Despite the influx of new listings, strong demand has continued to reduce the number of units available for sale. In Southern Westchester County inventory levels are down by 5% this quarter versus the third quarter of 2012 and 11% in comparison to the second quarter of this year. New listings in the third quarter were 14% higher than the same period a year ago, a reflection of improving seller confidence in market conditions. In Northern Westchester County, there has been a surge in new listings on the market during the past two quarters in response to improving market conditions. During the second and third quarters of 2013, new listing activity was 25% higher than the same period last year. However, the heightened sales activity has absorbed a significant portion of these homes, leaving inventory levels stable versus the third quarter of 2012. The “sweet spot” in the market continues to be the entry to mid-level markets, where demand for quality inventory is outpacing supply. The operative words here are “quality inventory.” Buyers are willing to wait for good homes that are priced right, and will not settle for less in this environment. The return of the luxury buyer to many of our towns has provided added confidence in the overall market and represents a reflection of the exceptional opportunities that exist today. The pick-up in demand coupled with the lower supply is resulting in the Month’s Supply of Inventory (MSI) falling considerably. In Southern Westchester County the average MSI, which was 7.4 months in the third quarter of 2012, has fallen further and landed at 4.8 months in the third quarter of 2013. In Northern Westchester County the average MSI fell from 12 months in the third quarter of 2012 to 7.5 months in the third quarter of 2013. As reference, the MSI was as high as 20 months when our markets were struggling in recent years.

WESTCHESTER MARKET WATCH

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A WORK OF ART

ARMONK, NY - MLS: 3305123

WHERE WE ARE HEADED We fully expect the housing momentum to continue through the fall of 2013 as the macro factors of an improving economic and employment outlook intersect with the micro factors of reasonable home selling prices and historically low interest rates. The year-to-date double-digit sales improvement and robust pipeline of under contract units have put us on track for the best year in residential housing we have seen in the past five years. We feel confident that many towns in 2013 will record more single family home sales than they did in 2008, 2009, 2010, 2011 and 2012. The summer spike in mortgage interest rates added a measure of unexpected forward motion to the market. It provided the psychological prompting that motivated some buyers to be more aggressive in finding a new home in order to lock in rates before they increased further. Although conforming loan interest rates recently reached 4.5% for the first time in a year, after the most recent Federal Reserve meeting they eased back to 4.25%. While this may seem high compared to the 3.5% rate we became used to, mortgage interest rates in the 4% range are exceptionally low by historic averages and should be locked in if possible for the long-term. Loans that offer an option to take advantage of declining interest rates after the lock-in period are in high demand. It cannot be stated strongly enough that buyers today are highly discerning, seeking turnkey properties. We anticipate that sellers will need to carefully prepare their homes for the market for the foreseeable future. Buyers today are buying based on “current condition” versus “potential.” Today’s housing environment offers exceptional opportunities for buyers and sellers alike. Level housing prices, the depleted inventory of fresh housing and a larger buyer pool should provide sellers with the impetus to prepare their houses for sale and feel confident in putting them on the market. On the other side of the equation, this is a buyer-friendly environment where consumers are able to take advantage of the attractive combination of compelling home prices and low interest rates. Information Sources: Case-Schiller reports, Various MLS services, National Association of Realtors, Connecticut Economic Digest, local mortgage brokers, Realty Trac., HGMLS. While information is believed true, no guaranty is made for accuracy. Cover art: *Provence, France, used with permission. WESTCHESTER MARKET WATCH

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