A few years ago I communicated my concern about the housing market to friends, colleagues and clients. There was a bit of backlash and I heard comments like, “Mark is down on the real estate market.” I am going to take that leap again; because I feel it’s important, and explain what I believe is going to happen to housing prices in the near future.
In my efforts to keep you up-to-date on trends in Westchester real estate, I am not always going to be the bearer of good news. Currently, I’m getting indications that the local market is at a transition point.
Inventory is up in my office and most of these properties are priced competitively, but not moving as quickly as properties were in the first quarter of 2014. During the first quarter, our listings priced under $1 million were moving well, but that segment seems to have cooled off.
Having spoken with local realtors and realtors in other areas such as Manhattan, Connecticut, and New Jersey, and even as far away as Atlanta, they are saying the same thing. And from the building sector, the National Association of Home Builders says, “Excessive lending standards are affecting home sales.”
What I’m starting to see from my local perspective is backed up by a respected housing expert in a report he just wrote for the White House. A September 18th posting on DSNews.com reports that Joshua Pollard, the former head of the Goldman Sachs housing research team, sent a “sobering” 18-page report to the White House warning of a potential downturn in home prices. According to Pollard:
1. Home price appreciation is outpacing income.
That agrees with many other reports I’ve read that even though unemployment is going down, wages are flat and many of the new jobs are low paying.
2. Home prices are currently 12 percent higher than they should be and the U.S. is on the brink of a 15 percent decline in home prices over the next three years.
I agree that in some areas of Westchester County home prices increased too quickly after the recession.
3. “Flipped” homes have declined 50 percent in the last year and rising interest rates and values will cause a surplus that will lead to a decline in investor purchases.
In the Westchester market, investors also help to increase values and reduce supply, and the double hit of rising interest rates and higher values will reduce investor demand.
4. Student debt and a 45 percent underemployment rate for recent college grads has handicapped millennial buyers already.
That supports other studies that show that millennials - born between 1980 and 1995 - have poor job prospects and are becoming long-term renters with little interest in home ownership, which of course will have a negative, long-term effect on the market.
What advice do I give my clients?
If you are thinking about putting your house on the market in the near future, it may be wise to get ahead of these market changes and sell it sooner rather than later so you can get your cash out ahead of what looks like the next downward market cycle.
I’d be happy to talk to you personally about the Westchester real estate market and your current and future plans. Give me a call at 914-234-4444.
Mark Boyland
Mark@markboyland.com
Associate Real Estate Broker
The Mark Boyland Team at Keller Williams NY Realty
Keller Williams NY Realty
410 Old Post Road Bedford NY 10506
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