Articles Posted in Real Estate Issues

The shortage of houses on the market has brought about some long expected price increases in most areas of the Mid-Hudson.  In Westchester County, the second quarter of 2017 single family homes had a median sale price of $670,000.  An increase of $20,000 or 3.1% over last year’s level.  According to an article by Hudson Gateway Association of Realtors, the mean sales price of $900,000 was 7% more than last year indicating that the high end sector is reinserting itself into the sale prices.  Westchester condominiums and cooperative saw an increase of 5.3% & 3.9% respectively.  Orange County which has had high sales volumes but flat prices saw a second quarter single family median prices of $235,000, an increase of 5.6% from 2016.  Rockland County’s median price at $441,387, a 2.6% increase and Putnam County median price at $345,000 was a 9.9% increase over last year.  Buyers are operating in a market that has seen tremendous reduction in the supply of housing over the past four years.  At the end of 2014, there were 12,153 listings posted with Hudson Gateway Multiple Listing Service.  By the close of the second quarter of 2017 had plunged by 344 units to 8,713 or 28.3% fewer listings.

The article in The Somers Records on July 27, 2017 by the Hudson Gateway Association of Realtors states Westchester posted 2,642 sales for an increase of 1% over 2016.  Orange County posted an impressive 1098 sales, an increase of 13.8%.  Almost all in the single family housing sector.  Rockland County had a 3.8% increase in single family sales.  Rockland’s condominiums sector had an increase of 33.6% in sales.  Putnam County reported a decrease in single family sales of 5.4%.

In an article in USA Today – The Journal News on August 11, 2017 entitled “number of homes for sale sinks to a 20 year low explains one reason for the shortage of single family homes on the market.  The article by Roger Yu and Paul Davidson states that the baby boomers grow increasingly reluctant to trade up or down from their existing homes.  More than half of its survey respondents or 59% said they do not plan to sell their houses in the next year. This crunch has driven home price index up nationally by 5.6% in May from a year earlier.  The housing shortage forced many first time buyers to consider smaller homes and condos.

It has now become a sellers’ market because demand for single family homes is up and prices have not reached pre-recession levels.  In an article in the Putnam-Northern Westchester Express of the Journal News on May 11, 2017 by Akiko Matsuda, points out that at a recent open house on North Ridge Street, Rye Brook, New York, 26 group of visitors (young families with young children) toured the 1,797 sq. ft. home put on the market for $699,900.  A day later, the listing agent reported that they had received multiple offers.  Bidding wars were already common place for move-in ready homes in river towns and southern Westchester that offer easy commute by Metro North to Grand Central station.  The inventory is not keeping up with the demand.

Joseph Rand of Better Homes & Gardens Rand Realty states “the story of the real estate market is lack of inventory”. The market is hot and buyers’ demands are very strong.  “We need more listings coming on the market”.  The tight inventory has started driving prices up.  The volume of home sales has been rising in both Westchester & Rockland Counties.  The buyers are young couples with families that left New York City looking for more space.  Single family home sales in the first quarter of 2017 was the highest first quarter in a decade according to Jonathan Miller, President of Miller Samuel Real Estate Appraisers and Consultants.  “The single family homes inventory was the lowest first quarter in 13 years”.  The number of single family homes for sale in the first quarter of 2017 was down 17% from 2016 in both Westchester & Rockland Counties.  According to Kenyatta Jones-Arieta of Nyack based R2M Realty “when properties come on the market, especially in our area, if they are priced right they get offers and don’t last.  They go within a first week if not the first few days”.  Rand states the levels of sales activity is back where it was in the pre-recession era.

The median sales prices wildly vary in different communities in the region, but the most desirable prices seem to be between $400,000 and $600,000. A majority of first home buyers that are flocking to the lower Hudson Valley aren’t looking for something fancy.  Dorothy Jensen Realty in White Plains states “a lot of people are just looking for a basic house with three bedrooms and two bathrooms”.  They do not want homes that are basic and dated.  They do want their home to be pretty much move in.  If the buyers are spending $400,000 and it is their first home, they do not have a lot of money saved to do major renovations.

A total of 545 million homes were sold in the US in 2016.  Housing supplies in later December, 2016, fell 10.8%.  Skimpy inventory is expected to act as a headwind in 2017.  After the housing crash, many homeowners owed more on their mortgage than their homes were worth. Owners are waiting to realize bigger equity gains before putting their homes on the market.

According to an article in Putnam-Northern Westchester Express of the Journal News on January 26, 2017 by Akiko Matsuda, the lower Hudson valley housing market was the busiest in 2016 since 2011.  The Hudson Gateway Association of Realtors, Inc. reported 18,145 closing of residential homes in Westchester, Putnam, Rockland and Orange Counties.  This figure is 2019 higher or 12.5% more than in 2015.

The largest percentage gain in volume was in Orange County where sales of single family homes were up 26.7% from 2015.  The number of sales in 2016 in Westchester, Putnam and Rockland Counties showed growth in 2016 up by 8.4% in Westchester, 21.7% in Putnam and 12% in Rockland compared to 2015.  The volume of sales far exceeded the pace of inventory.   Putnam’s replenishment year end inventory in 2016 was down 31.2%; Westchester inventory was down 21.2%, Orange down 20.8% & Rockland 16.1% down compared to inventory in 2015.  Despite the high levels of sales and low inventory, the median price of homes have not risen that much.  In Westchester, single family homes had a median price drop for two years in a row.  In 2014, it was $635,000 in 2015, 628,875 and 624,000 in 2016.  The median sales price of Rockland & Putnam single family homes went up 2.4% and 4.8% respectively.

Since January, 2016, The Journal News has published a number of articles dealing with abandoned properties where the legal owner has left property because the property is underwater meaning, the property is valued below the mortgage that is in effect.  The owner leaves the bank that holds the mortgage, starts foreclosure proceedings and the property lays abandoned falling into disrepair and a magnet for children to play in the property or even squatters move into the property.

In an article on Monday, January 18, 2016 in The Journal News by Nick Muscavage and Jon Campbell entitled “Zombie Homes Hurt Values”, bank foreclosed properties have racked up 178 violations and caused surrounding properties to lose an estimated $9.2 million in values.  The report from the State Senate Independent Democratic Conference and Mayor Richard Thomas of Mount Vernon examined 82 bank owned properties finding 64 properties having at least one violation or complaint filed against them by their municipality.

In an article on Wednesday, January 20, 2016 by Akiko Matsuda in The Journal News “Zombie Homes Send Chills Through Lo Hud Communities”.  The article refers to the above article and State Senator Jeff Klein and Mount Vernon Mayor Rich Thomas stated properties across Westchester assessed a nearly $20 million was lost in neighborhood home values.  “It becomes not only an eyesore in the neighborhood, an abandoned house is a magnet to vandalism”, according to Haverstraw Town Supervisor Howard Phillips.

In an article in Westchester County Business Journal by John Golden states residential brokers closed on more than 15,000 sales in the lower Hudson Valley four county region in 2015. The last time this many sales occurred was pre-recession years of 2006 & 2007.

Unlike the peak years of 2006 & 2007, the step up buying activity in 2015 was not accompanied by soaring home prices in the lower Hudson Valley.  The median sale price of a single family house dropped or held steady in Westchester, Orange and Putnam Counties.  Rockland County’s median price of $415,000 in 2015 was 4% above 2014.

The 15,324 sales for 2015 includes single family homes, condominiums, cooperatives and two –  four family houses in Westchester, Putnam, Rockland & Orange Counties.  This was an increase of 1769 units or 13% higher than 2014.  Westchester lead in sales in 2015 with 9,401 sales, a 9% increase from 2014.  In Orange County there was 3,284 closed deals, a 26% increase from 2014. This was the largest percentage increase in the region.

The last time we looked at the real estate recovery was on July 20, 2015 (see our previous blog – Real Estate Recovery).  On July 27, 2015, in the Westchester County Business Journal, Bill Fallon published an article “survey finds first time home buyers entering market”.  TD Bank with 19 facilities in Westchester County surveyed 1000 people and nearly one in five potential first time home buyers were actively looking to buy and nearly two-thirds would like to have a payment of 20% or more.  The data also revealed 62% of the potential first time home buyers think they will purchase a home within the next two years.  Among millennials surveyed, 67% plan to buy a home within two years.  43% of the people surveyed were looking to purchase their first home in a suburban area.

On October 26, 2015, The Westchester & Fairfield County Business Journals published an article by Colleen Wilson entitled “millennials entering home buyers  market”.  Millennials are those born from 1982 through 2000.  They have become the largest generation in US history at 83.1 million strong.  Westchester real estate markets are hoping to attract these potential buyers as millennials are transitioning from renting to buying.  Philip Farada, a real estate broker who owns Phillip Real Estate in Briarcliff Manor, NY estimated that more than 1/2 of his firm’s buyers are millennials.  Nationally, the millennial age group is estimated to make up a third of the home buying market.  This report considers millennials to be anyone under 34.  Millennials are dealing with expensive priced areas of Westchester in addition to high house prices and student loan debt.  Anne Marie Gianutson, a digital director of Houlihan Lawrence Real Estate with 20 offices in the suburbs, north of New York City, states trends in millennial home buying are counter to those of the previous generation.  “Overall millennials have accumulated less wealth in their lives than previous generations”. She said “we notice people wanting to live beneath their means rather than stretch more than what they can afford”.   Martin Ginsberg, found of Ginsberg Development Companies said millennials might be more likely to remain renters because they saw their parents deal with the housing crisis during the great recession.

In USA Today – The Journal News on December 30, 2015, Paul Davidson published an article entitled “home prices climb back to pre-recession peak”.  The article points out that singe family house prices in 40% of 401 metro areas were at or above pre-recession peak in the third quarter of 2015.  Nationally, home prices are still about 12% below peak up from a nearly 30% deficit in early 2012.  Homeowners are benefiting from steadily rising prices largely because of tight housing supplies.  Another benefit of the milestone is that it can coax more homeowners to put their houses on the market alleviating the supply crunch.

Zombie properties results when residential properties are vacated or abandoned by an owner in default on their mortgages. In an article in the Westchester Business Journal on June 1, 2015 by John Golden, he points out that Gov. Andrew Cuomo recently announced New York State’s agreement with 11 banks, mortgage companies and credit unions that represent 70% of the New York mortgage market. The agreement is to eliminate neighborhood blight of vacant properties where owners face foreclosure. There are about 16,700 zombie properties statewide in 2014. Lenders met to address the zombie property problem. New York State is expected to implement by August, 2015 that lenders agreed to conduct an exterior inspection of the property within 60 days of delinquency to determine vacancy and abandoned properties and every thirty days thereafter.

If the property is found to be vacant and abandoned, the lender will secure each unit by changing the locks, replacing or boarding up windows, posting the property with contact information and eliminate safety hazards. Lenders will also notify New York State’s Department of Financial Services of any new property to be added to the State’s reporting of vacant and abandoned properties. The Financial Services Department will accept complaints from neighbors or local officials about vacant properties.

Under existing law property owners are responsible for the maintenance of their properties. Bank and mortgage companies are not required to maintain vacant and abandoned properties until they receive a judgment in foreclosure. The Abandoned Property Neighborhood Relief Act has been introduced in the New York Legislature. New York Attorney General, Eric T. Schneiderman called the agreement “a welcome step forward to stop the epidemic of vacant zombie homes”.

In an article in The Journal News on Sunday, June 28, 2015, Bill Cary published an article entitled “Real Estate Market Takes Off”. He points out experts are saying that the multiyear real estate slump is finally over. According to Houlihan Lawrence in the Pelham’s “It’s the best market we’ve had since 2007, both in price and velocity of sales”. In Rockland County the number of home sales is up 16% for the Spring, 2015 vs. 2014. In Putnam County, sales shot up 23% compared to last Spring. Westchester County lags behind with an increase of 6% in sales in 2015.

Nationally, sales of existing homes rose 5.1% late 2015. The fastest pace since late 2009. According to the National Association of Realtors, this year is on track to be the best home sales since 2007 when the U.S. entered a recession. Accordingly to Brian Levine, Manager of Houlihan Lawrence in Irvington, “We’re seeing bidding wars and all cash offers”. The endless winters put a big damper on early Spring sales. But for parts of the lower Hudson Valley, the market has come roaring back to life in the last couple of months. Some realtors feel it’s a sellers’ market. At least 30 of 59 houses sold in Pelham had multiple bids.

Buyers demand remains strong locally and a shortage of homes on the market continue to be a problem in Yonkers. Houlihan Lawrence has seen a low inventory shortage. At the beginning 0f 2015, there were only 199 houses on the market in Yonkers. 45% of the sales in Westchester has been in the $700,000 price. In Rockland, 54% of the sales were for $300,000 or less. The people who are selling the smaller homes now have liquidity to step up to their next house. Fluid with cash, they can now buy a $600,000 – $700,000 home. In most years by June, you are at the end of the Spring market but in 2015, sales are still in the thick of it.

Since the recession of 2007 – 2010 the area of the U.S. economy that has suffered the greatest has been the construction industry. When the bottom fell out of the real estate market, construction came to a near standstill. All the larger projects in Westchester County were put on hold. The construction industry is the last industry to make a recovery.

In an article by Ross Pepe, President of both The Construction Industry Council of Westchester and Hudson Valley, Inc. and Building Contractors Association of Westchester and Mid-Hudson Region, Inc. in the Westchester Business Journal, he stated the long suffering recovery for the construction industry is finally taking hold 5 years after the official end of the great recession of 2008 – 2010. Mr. Pepe keeps track of the recovery through total number employed by the unions. For example, The International Union of Operating Engineers, Local 137 hit the highest number of man hours worked in 2007 when it reported total number of hours worked at 1.5 million hours that year. Since then, Local 137 saw the total number of hours worked each year dwindle by a 1/3 down to 978,000 hours, a third reduction. After several years of slow recovery, the numbers are climbing back but still 20% of what its high was in 2007.

The comeback in the construction and building market place is because of the comeback of the overall economy. Mr. Pepe points out state and municipal funds have grown by increased tax revenue from taxes, home sales (mortgage & recording taxes) and a rise in travel and entertainment. Low gas prices are also having a favorable effect on household budgets.

We have been following all the reports since January, 2015 concerning real estate sales of single family homes, condominiums and cooperatives. In an article in The Westchester County Business Journal by John Golden on January 26, 2015, he reports increased demand for co-op apartments which drove an 8% increase in sale in the fourth quarter of 2014. Sales of single family homes in Westchester County dropped 1% from 2013 and the median price rose 4.1% to $635,000. Overall, house sales in Westchester County totaled 8609 unit in 2014, a 0.6% increase from 2013. Condominium sales totaled 100 units for 2014, a 5.2% drop from 2013 and 1709 co-ops sold in Westchester County in 2014, an 11.3% increase from 2013. The fourth quarter medical sale price of co-ops rose from $145,000 in 2013 to $146,000 in 2014. For all of 2014, the median price of co-ops was $147,500, down 1.7% from 2013. Sales of condominiums surged in the fourth quarter of 2014, a 13.7% increase from the fourth quarter of 2013. The median price of a condo rose 2.8% to $335,000.

In an article in The Journal News on Wednesday, January 14, 2015 by Bill Cary entitled “Soaring Condo, Soaring Sales” where he discussed the luxury real estate market in the lower Hudson Valley was back. A 41st floor condo at the Ritz-Carlton in downtown White Plains sold for $10.5 million. This was a 10,700 square foot full floor elevator penthouse. The largest condo ever sold in Westchester County. The last penthouse in Tower I of the Ritz-Carlton was a 5200 square foot condo sold on the 41st floor for $5 million.

The Journal News reported the luxury market in Westchester $2 million and up had a hugh surge at the end of 2014, shooting up 28% and for the entire year of 2014. Luxury markets were up 16%. The median sale price of condos in Westchester County went up 2% from 2014 – $343,000 to $350,000. In Rockland County, the number of condo sales in the fourth quarter was up 6.5% for a median of 200,000 in 2013 to $213,000 in 2014. In Putnam County, 34 condos were sold in the fourth quarter, up from 28% in the last quarter of 2013. The median sale price rose 5.7% from $211,500 to $223,000.