Downsizing Heats Up Housing
Millennials, boomers, and other persistent market forces drive Westchester home sales in 2017.
Villa BXV; Easy Metro-North access attracts buyers to upscale condo projects in walkable communities like Bronxville.
Millennials and boomers will drive Westchester County’s residential real estate market this year, according to Nancy Kennedy, associate broker with Houlihan Lawrence in Croton-on-Hudson. “The Millennials are ready to go into the housing market, and the boomers will be downsizing,” she says. “The forecast is that inventory will remain low, and there will be lots of competition among buyers.”
Photos courtesy of Houlihan Lawrence
Rising interest rates, sky-high New York City rents, and a strengthening national economy all affect our market, as well — in very positive ways. About 9,500 single-family homes, condos, and co-ops changed hands in Westchester in 2016, the fifth consecutive year that saw an increase in the number of unit sales, and a healthy 58 percent increase over sales in 2009, the bottom of the market.
Amy Kane, senior regional VP of William Raveis for Westchester and Fairfield Counties, forecasts a further uptick in unit sales for 2017. “Conditions have been favorable in the stock market,” she says. “There’s confidence coming into the job market, as well. Consumer confidence is also strong.”
“Our transactions have been tracking up for the past few years, and 2016 was no exception,” says Dorothy Botsoe, owner of Dorothy Jensen Realty in White Plains and president of the Hudson Gateway Association of Realtors. “Listing prices are flat, but sales have been up-trending very well. Both sellers and buyers did well last year.”
What hasn’t changed much, Botsoe points out, are prices of single-family homes in the county. Last year, the median price was $624,000, a change of only one percent over 2015 and in line with the $615,000 median since 2010. Keep in mind, however, that this figure is very much a function of the types of homes that come on the market in a given year. Kane notes that “sometimes it’s not the quantity but the quality of the inventory.”
One of the biggest perennial constraints on the market is the number of homes that are put up for sale. “The average buyer used to stay in a home for six years,” says Kennedy. “Now, it’s closer to 10.” Still, she says, there’s very little new construction in Westchester. “The Toll Brothers community in Rye Brook sold at a record pace. Their community in Cortlandt Manor sold well, too. But aside from an occasional one-off, that’s about all you see in new construction. We’re pretty much out of land here.”
How tight is inventory? According to Berkshire Hathaway Home Services Regional VP Brenda Maher, “We have only about eight months of inventory, compared with 18 months in nearby territories.”
That’s where the boomers come into play. As they downsize, many become home sellers, which, in turn, makes them buyers not only for smaller single-family homes but for condos, as well. That’s a trend that will certainly continue, since US Census Bureau estimates show the 65+ age group growing 11 percent from 2010 to 2020, while the under-65 population stays flat.
“We’ve seen an increase in boomers not wanting the responsibility of a home anymore and not wanting to leave Westchester,” Kennedy explains, “so the condo market has been very attractive to them. There is also a huge savings in property tax when you go from a big home to a condo.”
Simplify Your Home Purchase
Tom Ralph, of Thomas J. Ralph Real Estate in New Rochelle, on how to streamline the home-buying process.
Get Pre-Approved. Unless you’re planning to pay cash, visit a couple of lenders to get pre-approved for a mortgage. That will give you an idea of your potential price range.
Narrow Your Search. Before you start looking, at least decide on the location (walkability, shopping, distance to transportation and highways, school district), size (including square footage, number of bedrooms and bathrooms, size of yard, etc), and condition (move-in, in need of updates, fixer-upper, etc).
Use Online Tools. Check out Realtor.com, Zillow, and other sites to get a feel for what’s out there, filtering by your criteria.
Visit Open Houses and Do Drive-bys. If you see something you like, contact the listing agents.
Consider Working With a Buyer’s Agent. The commission will be included in the purchase price of the home, just like the seller’s commission.
Marge Schneider, executive VP of the Cappelli Organization, agrees. “Empty-nesters don’t want to be bothered anymore with a house. They don’t want to have to call the landscaper and arrange for snowplowing. Also, a lot of people in Westchester have second homes in Florida or Arizona, and they want a lock-and-leave situation. When they come back, they want all the services and amenities.”
Photos courtesy of William Raveis
Boomers may be downsizing, but they’re certainly not cheap-sizing. “When they sell their houses, they don’t want to give up any of the luxuries,” Schneider points out. “They want the marble bath. They want stainless-steel appliances, granite countertops, and all the nice finishes.”
In 2016, she reports, the Ritz-Carlton New York, Westchester, in White Plains, sold 22 units for $33 million, leaving only 14 left for sale in the tower, which she expects to easily sell out this year. Trump Tower in White Plains and Trump Plaza in New Rochelle both sold out quickly — and that was before the election.
Boomers are also looking for walkable communities, according to Gateway Development Group President Jim Carnicelli, whose Villa BXV condo development sold 30 of its 53 homes in 2016 without even a model unit. “Bronxville is an elite community with everything right at your doorstep,” he says. “Metro-North is literally steps away from your door. Walk a few more steps, and you’re right in the heart of Bronxville, which has great shops, great restaurants, a movie theater. You don’t need a vehicle in this community.” Carnicelli adds that while homes in the development start at around $1.3 million, “the sweet spot has been around $1.7 million. Our penthouse homes start at $3.5 million.”
But what happens to the grand center-hall Colonial, quaint Tudor, or stately Georgian single-family home in Chappaqua and Scarsdale that the boomers are selling? According to Rob Vannucchi, executive VP of Douglas Elliman, this is where there may be some softness in the market. “At the higher-end price points in the luxury market, it is not as strong as we would like. It’s a case of supply slightly exceeding demand,” he says. “What we’ve seen in Westchester, though, is consistent with the North Shore and the Hamptons on Long Island, South Florida, Beverly Hills, and even in Manhattan to some extent.” The firm’s market report shows luxury homes (the top 10 percent by price) stayed on the market about five days longer in the third quarter of 2016 than the year before, while the average sale price declined year over year, even though there has been a slight uptick in the units sold.
“When you get over $1 million, it’s a very select market,” according to Botsoe. “You don’t get a ton of activity there.”
Millennials aren’t looking for (and probably can’t afford) those seven-figure homes. Another market segment that was once important in the high end has all but disappeared now, too. “The relo market still exists, but it’s not as significant as it has been historically,” Vannucchi says. “The higher cost of living in Westchester compared with other metro markets discourages transfers. Then there is the high cost to the employer of transferring an employee, which makes it more practical only for the higher-level executives.”
“Those homes that are farther out from the immediate center of town is where we see a little softness in pricing,” says Maher. “Everything closer to downtown, even if the house is on a smaller piece of land, is going very, very quickly. The boomers and the Millennials are at opposite ends of the spectrum, but their needs are very similar.”
Westchester has always been a first-home destination for Millennials, and skyrocketing rental rates in New York City contribute to the demand, according to Kane. “As affordability decreases in the city, it continues to drive Millennials into the suburban market,” she says. “We’ve seen increased demand in Westchester for communities with train stations and affordable price points. That’s why the Rivertowns tend to have strong demand. People like the blend of homes, the beauty of the Hudson, the walkability of the towns, the cultural life that is part of them, the ability to walk to the train. Buyers want active communities because quality of life is very important.
Exit: Stage Right
If you want to get the best price for your home, consider hiring a professional home stager. You may love being surrounded by hundreds of photos of your children and grandchildren through the years — but potential buyers want to envision themselves in your home. They can’t do that if it’s all about you.
“These days, you have buyers who want everything done before they move in,” says Marlene Gold, who in the last eight years has staged homes that sold for more than $150 million. “A good professional stager understands who the buyer is and what they should be seeing. If a property has a to-do list, it just keeps lowering the price. Staging is a process of taking things off that to-do list.”
Here are some quick staging tips:
Eliminate coat hooks, since they give the impression the house has no closet or mudroom.
Refresh landscaping with new plantings, to show the home has been kept up-to-date.
Replace old light fixtures, to demonstrate the house has been updated.
Take worn carpeting off staircases. Even if you don’t replace it, the negative will be gone.
Get rid of wallpaper. These days, it’s a turnoff in any room other than a powder room.
Switch out older kitchen appliances for stainless, even if the old ones work.
Many of the same qualities attract Millennials to White Plains, New Rochelle, Harrison, and other places with easy access to the city. “Everything that’s south of [Interstate] 287, because you’re close to the city and transportation, is really good,” Botsoe says.
While Millennials are eager to buy, they’re also particular about what they want in a home. “The trend for Millennials is that their first home purchase comes later in life,” Maher observes. “They want everything 100 percent finished and in move-in condition. They don’t want to do a thing, whether it’s fix one toilet or whatever; they can’t see beyond that.”
photo courtesy of William Ravies
Does that mean there’s no hope for sellers with a less-than-perfect property? “Today, it’s investors who are buying the fixer-uppers, making them picture-perfect, then flipping them pretty quickly,” Maher says. “Investors have the cash and are buying homes without contingencies.”
Entry-level buyers who want to live in Westchester generally have to act fast, according to Barry Kramer, principal broker of Westchester Choice Realty in Scarsdale, which specializes in co-ops and condos. “We’re finding more and more properties going to multiple bids,” he reports. “This is largely a matter of the amount of inventory for sale. Looking, for example, on Garth Road, there are fewer than 15 apartments for sale, whereas in the past, there would typically be 60.”
Millennials, says Maher, often rent in a town to “try it out” before making a final purchase. “They want high-end rentals where they can just move right in. The individual living space may be a little smaller, but they have communal space they really like.” The growing demand for condos and co-ops, as well as rentals, explains why nearly all of the county’s new construction is multifamily. In the second quarter of last year, 27 apartment projects were in various stages of development in Westchester. In recent months, developers have announced new projects in White Plains, Harrison, Mount Vernon, and New Rochelle, among others.
Architect and developer Martin Ginsburg, who has left his multifamily mark on the county with a multitude of highly successful projects, has responded to the trend toward renting rather than buying. “We were primarily focused for the first part of this century on building for-sale condominiums — building 350 units a year in Westchester and surrounding areas,” he says. “But that business went the wrong direction, so we’re now building luxury rental apartments. We were the dominant player in luxury condominiums, and now we’re going to be the dominant player in luxury apartments.” Ginsburg Development Company has more than 500 units under construction in three projects in Yonkers and Peekskill at the moment.
One of the question marks in 2017 is the effect of rising interest rates. “We believe the new administration will spur economic development, which will create inflation, which means higher interest rates,” says David Valcich, a loan officer for Associated Mortgage Brokers in Purchase. “In the short term, I think it will make the market a little softer. In the long term, it’s a good thing for the market.” Mortgage rates increased about a half-point in the month following the 2016 election (from 3.5 percent to 4 percent), and the prospect that the Federal Reserve will push rates higher throughout 2017 remains strong.
Selling Out Smartly
Looking to put your home on the market? Consider these suggestions from local experts.
A “Zestimate” From Zillow Is Not Gospel.
“We recently changed our website to give you three different estimates of what your home is worth. There’s almost always a variation among them,” says Brenda Maher of Berkshire Hathaway. “When an agent meets a potential seller now, the Zestimate is already in their hands. It may say their home is worth $1.5 million when it’s really worth more like $900,000, because the algorithms don’t contemplate that the house is next to the town dump or that there’s another development in the works.”
Research Listing Agents Before Choosing One.
“Consider the depth of knowledge of the Realtor. How long have they been in the business? How well do they know the community? How well does the agent listen to you?” advises Tom Ralph of Thomas J. Ralph Real Estate.
A Picture’s Worth a Thousand Words
— and maybe several thousand dollars. All agents will list your home in the MLS, “but you want to be sure your Realtor is presenting your home in the best light online,” says Barry Kramer of Westchester Choice Realty. “That includes the photography. You want someone who uses a professional photographer or is one themselves.” Of course, he says, be sure your Realtor and his or her contact info is included in your listing. “If they are featured, the calls will go to the agent who knows your property best.”
Don’t Be Tempted to DIY.
“‘For Sale by Owner’ is very difficult in the market today,” says Nancy Kennedy of Houlihan Lawrence. “If you are not listed with a broker who is going to disseminate that information to all the online sites, their own networks, NYTimes.com, and WSJ.com, you won’t get the proper audience.” In addition, she notes, “It’s also one thing to find somebody who says they want to buy your house and another to make sure it goes smoothly all the way to closing.”
“An uptick in mortgage rates doesn’t necessarily have a negative impact on the market,” Kane explains. “What it does is put a little bit more pressure on those who are thinking about buying. It’s generally a positive. In the high-end cash market, buyers are more influenced by what’s going on in the world economy, job certainty, the stock market, and their bonuses.”
Botsoe agrees. “Interest rates are certainly going up, but I don’t think it will impact the market much,” she says. “Most of us remember when rates were at six or seven percent or even higher. It may affect how much home you qualify for, but overall, if you’re going to buy, it’s not going to be a big factor.”
Though economic conditions fluctuate, Westchester’s residential market will remain strong, according to Vannucchi. “We’re very optimistic about this year because we don’t see major changes in the trends that drive the market. People being priced out or spaced out of the city won’t be changing anytime soon.” There’s another constant factor, too, he says. “The quality of life in Westchester — the schools, restaurants, entertainment, even the nightlife — will always be a big draw.”
Sales of Single-Family Homes, Condos, and Co-ops
Median Single-Family Home Price
Source: Hudson Gateway Association of Realtors
Dave Donelson lives and writes in a 300-year-old farmhouse in West Harrison that can never be accurately priced by an algorithm.