Residential Real Estate Sales Rise, But Prices Drop

Westchester and Putnam counties saw a second round of increased residential real estate sales during the third quarter, July 1 to Sept. 30, of this year, according to Hudson Gateway Multiple Listing Service.

While sales volumes increased for two consecutive quarters, selling prices have not. 

Realtor firms participating in the Westchester-Putnam Division of the Hudson Gateway Multiple Listing Service reported 2,243 closed residential transactions in Westchester, a 15 percent increase over the same period last year.

In Putnam County, the increase was 29 percent.

During the second quarter, the year-over-year increases were 13 percent and 24 percent respectively. For Westchester, the third quarter volume was the highest since 2007, and for Putnam, since 2008.

Taking into account the comparatively lackluster market performance of the first three months of 2012, the year-to-date sales rate in Westchester thus far is 10.6 percent above that of 2011, according to Hudson Gateway Multiple Listing Service.  If the current sales rate continues, Westchester will close the year with approximately 7,000 sales in all residential categories – single family houses, condominiums, cooperatives, and 2-4 family houses - resetting sales volume convincingly above the 6,639 unit level when our local market entered into real estate recession in 2008.  Putnam County will follow a similar pattern.

The increased sales volumes have not boosted selling prices. 

The third quarter median sale price of a single family house in Westchester was $630,000 or nearly 8 percent less than last year’s third quarter median.  The decrease in Putnam was 25 percent — although Hudson Gateway Multiple Listing Service notes the Putnam data is subject to large percentage swing because the overall base count is low. 

The lower average price in the region is mostly due to sellers’ price concessions in response to general economic conditions but also partly to a downshift in the proportion of high end ($1 million-plus) properties that were sold.  In Westchester, such properties accounted for 22 percent of all house sales in the third quarter; in 2011 that ratio was 26 percent, and in 2010 it was 28 percent.

The only sector to enjoy price gains was Westchester condominiums, up by 4 percent to a median of $349,750.  The cooperative apartment median fell by 7 percent, to $155,000.

The end-of-quarter inventory of properties listed for sale through HGMLS decreased by 10% in Westchester, to 6,398 units, and by 11 percent in Putnam, to 945 units.  The strong sales volumes of the past two quarters have braked the growth of inventory, but it is also true that inventory remains low on account of the continuing reluctance of potential sellers to test the waters.  

Consumer confidence in the general economy just isn’t strong enough yet to propel the real estate market to its pre-recession vigor, even with the attractive forces of historically low prices (for this region) as well as mortgage interest rates that are as low as 3.5 percent or less for conventional 30-year loans, according to Hudson Gateway Multiple Listing Service.  However, the beneficial effect of low rates is being offset in part by the increasingly demanding criteria by lenders with respect to the credit worthiness of borrowers.  

The closings posted with Hudson Gateway Multiple Listing Service in the third quarter largely reflected real estate sales and marketing activity that took place during the late spring and summer months of 2012.  Other than low mortgage interest rates in that period there was not much supportive energy from other components of the economy that affect consumer confidence. 

For example, the local unemployment rate has remained stuck in the high (for here) range of 7.5-7.6 percent range; and most consumers probably believe it is more than 8 percent due to the focus on that persistent national rate in the presidential election campaigns.  The equity markets, which many consumers regard as an index of economic well-being, performed well over the course of this year, but with a pattern of volatility along the way that would intimidate all but sophisticated investors. 

Still, posting two consecutive quarters of increased real estate sales in the region is encouraging because it occurred in the face of lackluster or even adverse economic circumstances, according to Hudson Gateway Multiple Listing Service.

"We are probably close to the point where buyers and sellers see eye to eye on the bottom line for prices, and where an increasingly active market generates its own energy for renewed health," the organization's latest report states.