Limited Inventory Fuels a Hot Westchester Real Estate Market

The county's hottest places to live just don’t have enough supply to keep pace with growing demand.


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22 Jack Road; Cortlandt Manor; $799,900

 

We’ve all heard the old adage that real estate is about three things: location, location, location. But in the case of Westchester County home sales over the past few years, the keyword on the lips of real estate agents hasn’t been location — it’s a far less enticing industry term known as inventory. Simply put, the hottest places to live in the county just don’t have enough housing supply to keep pace with growing demand. The result is a cut-throat, competitive market, particularly for first-time purchasers and downsizers. If you’re shopping at a higher price point, however, you needn’t worry: Luxury-level buyers will likely have the very opposite experience.

“Any property under one million dollars is the hottest item in the world,” says Nicholas Wolff of Better Homes and Gardens Rand Realty in White Plains. “Anything you put on the market in that range is usually gone within a week. There’s so many people all over looking to buy, and it creates a bidding war in most cases, if it’s a good house and realistically priced.”


16 Vermont Avenue; White Plains; $999,000


Marc Tessitore, sales associate with Coldwell Banker in Greenwich who is experienced in selling Westchester properties, says the sub-million market is currently “ridiculously fast” in Westchester. “If I put a condo on the market for $350,000, it will move in 10 days,” he notes. “We’re getting into bidding wars in some of the better areas. I just sold a property in Scarsdale, where the average amount of time on the market is about 44 days. I had multiple offers and took a cash offer within 12 days.”

The scorching heat of the cheaper and more popular end of the housing market can be attributed to one factor over the past year: the lack of housing inventory, which drives prices up. “Below a million dollars, we’ve seen historically low inventory over the past three or four quarters,” says Jim Gricar, general sales manager at Houlihan Lawrence, who oversees many of the firm’s Westchester sales. “Prices have remained stable and even risen in this low-
inventory sector. And that’s because buyers have fewer choices, have to bid more aggressively, and that tends to move pricing up.”

And what about that old adage regarding location? Well, it turns out that location is a direct cause for Westchester’s low housing inventory. The most popular areas to buy housing in Westchester happen to be within existing populated areas with little to no land for new construction. As a result, while there are many new multifamily rental apartments being constructed across the county, there are far fewer new single-family homes being constructed than in previous years. “[Developers are] not building many new homes in Westchester at all,” says Wolff. “There’s no land, so there’s nothing being built.”

The inventory problem, however, also has obvious benefits. Since the lower end of the price scale still represents the majority of home sales in the county, the inventory shortage is actually helping to keep the overall Westchester real estate market strong. According to sales data supplied by Chirag Shah of Gateway Realty Corp. and the Hudson Gateway Association of Realtors (HGAR), there were 9,529 overall housing units sold in 2017, up slightly from 9,502 in 2016. The average price of a single-family house jumped from $818,878 in 2016 to $851,973 in 2017, while the median price increased from $623,350 to $642,500.

Under $1 Million

“Any property under one million dollars is the hottest item in the world. Anything you put on the market in that range is usually gone within a week.”

—Nicholas Wolff, Better Homes & Gardens Rand Realty

10 Harmony Drive; Larchmont; $999,000

 

46 Justamere Drive; Ossining; $629,000

 

108 Wood Avenue; Ardsley; $729,000


Single-family home sales in the under-$1 million range dropped to 4,746 in 2017 from 4,849 in 2016 — a relatively modest and stable decrease, given the lack of inventory in the category over the past year. Home sales in the luxury range continued to show modest growth. Houlihan Lawrence reported that sales for Westchester homes priced $2 million or more reached a 10-year high in 2017, increasing 4.7 percent from 2016. Overall, HGAR reports, county home sales in the luxury range between $1 million and $5 million increased to 1,403 in 2017 from 1,352 in 2016, while sales in the “super-luxury” range, over $5 million, held steady, dropping from 19 to 18.

But buyers looking at those top two tiers of the housing market — luxury properties priced between $1 million and $5 million, and the super-luxury homes priced $5 million and above — will likely have the exact opposite experience as their fellow home buyers in the lower price ranges. The reason for the distinction, once again, is inventory.

“The closer you are to the one-million-dollar mark, the less inventory there is, and the closer you are to the five-million-dollar mark, the more inventory there is, so I would say those figures divide the upper and lower ends of the market,” Gricar explains. “The super-luxury market has a pretty sizable amount of inventory, lots of choices for the consumer, and therefore they have more negotiating power.”


17 Orchard Drive; Purchase; $3,300,000


Candace Adams, president and CEO of Berkshire Hathaway HomeServices Westchester Properties, notes that buyers in the higher price categories can afford to be more discerning in seeking out discounts and better deals. “It’s all about price and value in the luxury market,” says Adams. “There are buyers out there, but they’re looking for true discounted prices and great value.”

Shah points to a downward price-correction trend in the luxury and super-luxury categories as further evidence that wealthier buyers are waiting out sellers to get better discounts and deals. A home on Heathcote Road in Scarsdale, for example, was listed in 2014 at the starting price of $13.3 million but was on and off the market before finally selling in December 2017 for $6.9 million. Another home, on Mead Road in Armonk, had a starting price of $17 million five years ago but was also on and off the market — eventually selling last spring for just shy of $9.2 million. “The luxury market in Westchester is still going through its correction, even as the median and average prices of middle-market homes have been moving up in the county,” says Shah.

So, who is fueling the continued intense demand for housing in Westchester? The most prevalent purchasers fall into either of two groups: first-time homebuyers (usually Millennials with young families) and downsizers, who are mostly Gen-Xers and baby boomers looking to simplify their lives and save money after their children grow up and leave the nest.

Many real estate agents report that they continue to see a steady stream of first-time homebuyers from New York City — most notably Manhattan and Brooklyn. “They’re people with kids who are getting to be school-age,” notes Adams. “They realize that now is the right time to move out of the city. And they don’t care about the high taxes in Westchester, as long as they are getting great schools.”

Over $1 Million

“It's all about price and value in the luxury market. There are buyers out there, but they're looking for true discounted prices and great value.”

— Candace Adams, Berkshire Hathaway HomeServices Westchester Properties

39 Bradford Avenue; Rye; $3,695,000

 

210 Wilson Park Drive; Tarrytown; $2,349,995


Photos courtesy of Dan Bucci, Coldwell Banker

 

31 Paddington Road; Scarsdale; $3,350,000


While New York City has become an easier and safer place to live over the last 20 years, the appeal of Westchester — which offers highly coveted schools, green space, and often just a short commute into the city — has not changed at all over the same time period, Gricar notes. “The quality-of-life issues changed a lot in the city, but the charm of Westchester did not diminish,” he explains. “Those fundamentals haven’t changed. They’re just as attractive as they were before.”

As evidence of the county’s continued appeal and the astronomical appreciation of real estate value in certain parts of New York City, Gricar points to the statistics concerning Brooklyn residents who went on to purchase homes and relocate to Westchester. According to Houlihan Lawrence, 64 Brooklyn residents purchased homes in Westchester in 2007. After the economy recovered in 2012, that number jumped to 128 sales to Brooklyn residents. In 2016, a record number of 247 Brooklynites purchased Westchester homes.

“You’ve seen a real increase in the value of Brooklyn real estate, and unfortunately it’s hard to trade up from that,” explains Gricar. “You can’t trade up into Manhattan because the prices are still higher there, so Westchester has captured Brooklynites’ imaginations.”

As for downsizers, most are empty nesters looking to escape the higher taxes and maintenance needs associated with holding on to large properties but still wishing to stay close to the communities they have called home. “I think the Northeast has had its blows the last several years, with empty nesters moving out, but we’re also seeing that boomerang of people coming back because their families are here, and maybe life in Florida, or Phoenix, or Tennessee isn’t what they thought it was,” says Adams. “That is helping to bolster the market.”

Where Are All the Condos?

Rentals eclipse condominiums when it comes to new developments, but existing condos are selling well.

Buyers seeking out more convenience and amenities from their Westchester homes kept the condominium market hot throughout the past year. While overall condo sales dropped from 2016 to 2017, the median and average sales prices for these properties increased, according to data from real estate firm Douglas Elliman. They also report that the average time that Westchester condos spent on the market during the third quarter of last year was 60 days, the shortest timeframe in seven years. The firm reported that this average time on the market increased to 72 days in the fourth quarter of 2017, but condos still spent an average of 10 days less on the market than single-family homes. Realtors point out that the popularity of condos appeal to both first-time home buyers and downsizers, the two groups that are largely fueling the intensely hot and competitive Westchester real estate market.

“We’re seeing cool amenities in condos — anything from rooftop pools to electric charging stations for cars and everything that people want now,” says Owen Berkowitz of Douglas Elliman. “It’s those amenities and the worry-free living that can attract a whole broad array of people.”

“The condo/townhouse product [is what] we're encouraging them to build and we need more of it, to be frank.”

Jim Gricar of Houlihan Lawrence works with his firm’s project marketing division to advise developers what to build and where — and says a big focus is on new condo developments that appeal to downsizers. “We’re encouraging our developers who want to build vertical to definitely include elevator spaces, even for people who may be moving in who are in their 60s or younger,” says Gricar. “It may not be their last purchase, but it is often times intended to be. So that’s the condo/townhouse product that we’re encouraging them to build and we need more of it, to be frank.”

“Young folks who have been working for five years and have been able to save up $30,000 or $40,000 — they’re grabbing up condos very, very quickly,” says Marc Tessitore of Coldwell Banker. “And lenders have programs for first-time homebuyers that allow for low down payments. They have programs for five percent down now.”

Tessitore adds that many young homebuyers are attracted to condos because they can also turn around and rent them. But while a few new condominium complexes opened their doors in 2017 — including new luxury developments in Larchmont and Bronxville — the red-hot rental market in Westchester is largely hurting the construction of new condominiums across the county. Developers are now looking to cash in by constructing multifamily rental apartments instead, keeping condo properties in short supply.

“We have somewhere in the neighborhood of three to four thousand apartment rental units that are being built in White Plains in the next two years,” says Nicholas Wolff of Better Homes and Gardens Rand Realty. “Developers are finding financing available for rentals, but not necessarily for big condo buildings, so that’s why it’s going in that direction.”


Owen Berkowitz of Douglas Elliman Real Estate in Scarsdale believes that empty nesters are still seeking homes in the Sun Belt, but as second homes, not as a permanent relocation. “They have been resizing near the places they’ve lived, where they’ve established friendships and networks and recreation,” he says. “I don’t think empty nesters are leaving Westchester as they once had. I think they’re staying close to home and finding second places for lifestyle.”

When it comes to geography, the hottest places to buy real estate in Westchester are all over the map but share one common trait: They appeal to the wants and needs of both first-time homebuyers and downsizers for walkability and easy access to transportation hubs.

Gricar points to the Rivertowns — specifically Hastings-on-Hudson, Dobbs Ferry, Irvington, and Tarrytown — as naturally appealing to first-time buyers who are moving up from Manhattan and Brooklyn. “The Rivertowns offer a coffee culture, a walking culture, and a small retail culture compared with the big-box retail elsewhere in the county,” says Gricar. “It makes all the sense in the world that Manhattanites and Brooklynites would find those communities appealing.”

Gricar adds that Millennials and empty nesters both want transit-easy properties, so both groups of buyers are looking at the same locations. He predicts that White Plains, New Rochelle, and Yonkers will remain hot areas due to rezoning efforts in those towns that have led to the construction of condo and multifamily rental properties.
 

Westchester towns, cities, and villages situated along one of the three Metro-North train lines continue to be popular real estate draws.


Adams notes that Westchester towns, cities, and villages situated along one of the three Metro-North train lines continue to be popular real estate draws. “The in-town locations are appealing to empty nesters and first-time homebuyers as well as investors,” she says. “Those homes in town that were lower priced a decade ago and would only appeal to first-time buyers, are now appealing to investors and to empty-nesters who are downsizing.”

She predicts that Port Chester will continue to see increased interest from homebuyers throughout 2018, as the town continues to develop a walkable center around the train station with new restaurants and shops. “There’s no doubt that the ‘walkability thing’ you read about is so true,” she notes. “That’s definitely a factor in the last four or five years that has become very prominent as criteria for buyers.”

Berkowitz says that while first-time buyers seem naturally attracted to lower Westchester, with its close proximity to New York City, northern Westchester locations like Ossining, Croton, and Chappaqua, are gaining favor, as well. Buyers are even seeking out the most northern reaches of Westchester, such as Cortlandt Manor, where purchasers get more value for their dollar. “There has definitely been more interest in the further locations as people discover they can handle the commute,” Berkowitz explains. “Their work involves a lot more screen time in this new economy, so they’re working while commuting. They can build that into their days.”

Realtors were uniformly optimistic about the Westchester real estate market for 2018, noting that they couldn’t foresee any developments that would cool the intense heat of the high demand and low-inventory cycle — aside from a complete collapse in the economy. But they also identified a few challenges and opportunities on the housing front, particularly concerning the desire of buyers for new properties requiring minimal maintenance or updating, and new tax provisions.

Walkability has become a prominent criteria for homebuyers over the last few years, making communities like
Chappaqua (left) and Tarrytown (right) particularly attractive. 
Photos by Stefan Radtke.


“One challenge we have right now is the 1920s and 1930s estate properties that need to be renovated and updated,” says Adams. “They’re beautiful and nostalgic, but it does require significant investment to bring [these homes] back. People don’t want to put money into them and some don’t want to deal with it. They’d rather buy new.”

Wolff has also noticed that buyers don’t want houses that need a lot of work, even if they’re priced reasonably as “fixer-upper” bargains. “It’s either because they don’t have the ability or desire to do that type of work, or make that additional investment if they have the money,” he notes. “So handy-man type homes are a good opportunity for anybody that would want to buy them, fix them up, and then keep or re-sell them. More people want something in really good condition, so they can move in and just tweak a little bit, rather than gut a kitchen or re-do bathrooms.”

Realtors also identified the new property tax provisions passed by the Republican-led Congress late in 2017 as a potential challenge, though most believed that any negative effect on the market would be offset by other factors. The provisions eliminated federal
income-tax deductions for local property taxes above $10,000, resulting in greater tax burdens for many Westchester residents.

“I think people are starting to get an understanding of the new tax plan, and it’s not as big of a deal as initially thought,” says Tessitore. “You’re still getting your $10,000 deduction. If you don’t have kids in school, and you’re paying $30,000 to $40,000 a year in property tax, that might be an incentive to move out of the area. But from what I’m hearing, people who have kids in school are willing to suffer the higher tax burden.”

Berkowitz also dismisses the ultimate impact of the tax provisions. “In the short term, I don’t see any detriment,” he says. “And in the long term, the market will remain healthy because of other pressures. Because buyers still need a place to live, and still want their beautiful views and parks and restaurants, and open streets to ride their bikes on. Everything that Westchester is, and allows them to be, will always be coveted.”


Joe Cesarano is a writer, editor, and web producer based in White Plains and Tarrytown. He has experienced the Westchester real estate market for over two decades as a buyer, seller, and renter.