THE WESTCHESTER COUNTY RENTAL MARKET IN NOVEMBER 2020
Most of us, myself included, will be thrilled to put 2020 in our rearview mirror. A year ago, who could have predicted the COVID pandemic, social unrest, and the economic turmoil we’ve all had to endure over the past twelve months? Instability has become the new normal. Ben Franklin’s old adage, “Nothing is certain except for death and taxes,” has never been truer.
Despite an economic and social landscape that is continually shifting, we know that at the end of October 2020, the residential real estate sales and rental markets in Westchester County are thriving. Increased demand has lowered supply, driving up Westchester County homes’ median sales price by an astounding 16.5% in the third quarter of 2020. The average sales price of a single-family home today in Westchester County is $812,000. Sales volume is up 11.7%. Mortgage rates remain at historic lows, further fueling demand.
Whether they are renting or buying, former New York City residents are flocking to Westchester County in record numbers looking for more space and a safer place to live. More people are working from home, so the necessity of a daily commute to the office has been dramatically reduced. This appears to be a long-term rather than a short-term trend. If this proves to be accurate, over the next decade we will see an exponential rise for rental housing in suburban communities surrounding all of America’s major urban centers, including and especially New York City.
When the initial COVID lockdowns ended in May, people desperately wanted out of the City. There was a surge in demand for short term rentals in Westchester. Here’s a link to an interesting Channel 12 television news report about this phenomenon. Since that time, the demand for rental properties has steadily increased in Westchester. Vacancy rates in New York City rental apartments have tripled, year over year. Landlords in the City are being forced into making large concessions to renters just to keep their units occupied. It is tough to make the case that the demand for residential rental property in New York City will do anything but decline over the next twelve months.
The economy is rebounding with a vengeance. Third-quarter U.S. GDP rose an astounding 33%. That’s good news for everyone. A rising economic tide definitely helps to float all ships. Are we due for another round of social unrest after the Presidential election? If so, that unrest may trigger another wave of people who want to leave the City.
Will New York State lockdown again in response to the surge of new COVID cases? Right now, all across Europe, national governments are locking back down in response to rapidly rising COVID case counts. If people are once again confined to their homes and movement is severely curtailed, all economic activity, including rental housing demand, will be negatively impacted.
When you add it all up, times are good for landlords in Westchester in November 2020. But potential storm clouds loom on the horizon. As we’ve all learned by living through the past year, things can change quickly, and often not for the better. So how do Westchester real estate investors approach the last quarter of the year and 2021?
- If you can bring new inventory online, now is the time. Returns on investment for residential real estate properties in Westchester are high.
- Hope for the best, but plan for the worst. Be prepared for the adverse effect of more lockdowns, a stagnant economy, and a continuing moratorium on evictions. But also be ready to take advantage of what could be an unprecedented demand for rental property in our county.
- Be aware of national trends because they often have local impacts. According to Managecasa, their survey of property managers, landlords, and investors found that almost two-thirds of them are optimistic about the rental property sector going into 2021.
As Charles Dickens said in his 1859 classic, A Tale of Two Cities, “It was the best of times, it was the worst of times.” I couldn’t think of a better way to sum up 2020 in general and the current state of the real estate rental market in Westchester County.