The Westchester County Real Estate Market
As we enter into the second quarter of 2021, the Westchester County real estate market is red hot.
According to Rocket Homes (the Rocket Mortgage folks), the median sales price of a home in Westchester County is now $635,000, up 11% since April 2020. Sales of single-family homes, condominiums, and cooperatives in Westchester County were up 41.6%, 30.5%, 30.0%, respectively, year-over-year (2020 vs. 2021), and average days on the market dropped for all home types.
Berkshire Hathaway reports that “The number of luxury home sales priced above $2 million in Westchester County doubled in the first quarter of 2021. On average, these homes sold 38 days sooner than homes sold the previous year… The second quarter will bring record-breaking statistics for luxury home sales in the coming months as long-term rentals signed in the early days of COVID-19 throughout Westchester County and lower Fairfield County expire.”
With the median sales price of homes increasing as the average price of listings dropping in the same period, there’s room for unprecedented growth in the real estate market. Judging by the market report, it’s definitely a great time to be a Westchester real estate investor, whether you just own your own home or have multiple rental properties. But it’s also easy these days to become complacent. When times are good, as they are now, it’s wise to take a breath and put our good fortune into some context.
In the third-quarter market report, the average price of a single-family home increased across many counties including Westchester. Some of these counties were Hudson Valley, Rockland County and Putnam County. If we take a look at the increase of home sales with the average single-family home, we can see that even if the home prices on listings are lower, the sale price ends up being higher. This discrepancy between home prices and final sale price is due to the high demand for homes we’re seeing.
On the positive side, I believe that our area will continue to benefit from some well-entrenched trends.
After a year of living under COVID restrictions, a significant number of Manhattan-based companies realize that it makes sense to have partial or completely remote-work employees. Of course, the effectiveness of working remotely varies by industry, but many service-based firms experience greater productivity and have a happier workforce now that the daily commute into the City has become a thing of the past.
Millennials are reaching the age where they desire a more suburban lifestyle. If they do not have the capital to enter the home buying market just yet, more millennials are renting single-family homes versus living in urban, multi-family units.
Interest rates, and therefore mortgage rates, remain near historic lows. With home mortgages available for people with good credit at 3.5% or so, the ability to qualify for an affordable home loan remains strong.
In 2021, real estate is the best option for many investors. Liquidity, returns, and economic factors are all signaling green. But savvy REIs always consider the downside – or at least the possibility of a downside.
So, what should we watch out for in the months ahead? Here’s a shortlist:
Slower Than Expected Economic Growth. Will the economy rebound as robustly expected? Growth could be limited by many factors, from a socio-economic crisis to a new Mid-East conflict to energy shortages. Lower growth means fewer jobs, and that could potentially dampen housing demand.
The Return Of Inflation. U.S. Consumers are concerned about rising prices. Bloomberg reports that “The University of Michigan’s preliminary sentiment index fell to a three-month low of 82.8 in May from 88.3 the prior month, data released Friday showed…Consumers said they expect a 4.6% increase in inflation over the next year, the highest reading a decade, while 43% of the survey’s respondents said prices could rise by at least 5%.”
Anyone born after 1980 has not experienced a high inflation, low growth economy, the dreaded “stagflation” of the late 1970s and early 1980s. Could we suffer through that malaise again? It’s possible, but not likely.
A Currency Crisis. The Federal government is spending trillions of dollars on various programs, from COVID relief to infrastructure. What impact will all of this money being injected into the economic system have on the value of the U.S. Dollar? So far, we’ve not seen any huge decline in the dollar’s value. But any good economist will tell you that a currency devaluation is at least a possibility given what’s happening right now in Washington.
My view is that we have every reason to believe that the real estate market in Westchester County will remain strong near and mid-term. I’m beyond cautiously optimistic, but I will also keep my eye on the horizon for any signs of trouble. Why? Because vigilance is a virtue. If we see problems on the horizon, we can often take steps to mitigate their effects.
If you have a home you are considering selling for any reason, now is a good time to get that done. At Sterling Property Solutions, we are both a full-service property management company and a real estate firm. Our decades of Westchester County real estate market experience allow us to maximize value for our clients on every property purchase or sale.
If you have any questions about rental property management or real estate in Westchester County, please give me a ring at 914-355-3277 or send me an email at Linda@Sterlingpsi.com.