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2009 Year End Market Report and 2010 Outlook

2009 Market Summary

Real estate markets in the Bronxville area, throughout Westchester, and around the country were weak in 2009 as the market absorbed the aftermath of the events of 2008. Declines in job market stability and consumer confidence paralyzed buyers and sellers limiting the number of transactions completed. In the latter part of 2009, confidence returned to the housing market and deal flow increased, but prices were under pressure and volume remained low. Following is a summary of key statistics for New York City, Greenwich, Westchester, Bronxville Village, Scarsdale, and Rye through year-end 2009 (except where noted).

Bronxville Area Market

In general, volume was lower than in 2008 which also was a very low volume year. Prices also were down on a per square foot (“psf”) basis trending back to 2004-2005 levels. Prices now are down from their peak 2007 levels anywhere from 8%-23% in the Bronxville Area (Bronxville Village Homes and Town Homes down 12%, Bronxville P.O./Yonkers down 8% and Bronxville P.O/Cottle down 23%). Surprisingly, the higher end of the market has performed well. More substantial homes sold in 2009 than in 2008 which resulted in the Average Home Sale Prices actually increasing in some markets (hence the need to focus on price per square foot). Days-on-the-Market increased in Bronxville Village for both homes (191 days to 230 days) and town homes (148 days to 208 days) but was relatively consistent in the Bronxville P.O./Cottle and Bronxville P.O./Yonkers markets. The following are key statistics for the Bronxville Area Markets.

Where Are We Now?

The market in the fourth quarter was surprisingly busy. Buyers have been out looking and there has been an increase in open house attendance, showings, bidding, and accepted offers. Buyers seem more confident and interested in taking advantage of historically low interest rates and better pricing. New York City also saw an up-tick in buying activity in the third and fourth quarters resulting in more buyers freed up to buy and look in the Bronxville Area. In addition, certain motivated sellershave been more negotiable on price. Inventory is manageable at this point across all the markets but I do expect many new homes to come on the market soon. With interest rates historically low (but trending up) and increased buyer confidence, I anticipate a very busy first and second quarter in 2010.

Based on the activity in late 2009 and recent events, I have some preliminary thoughts on the 2010 Bronxville Area market:

• Bronxville Area home sale prices should stabilize and form a bottom in 2010 as volume increases. Most buyers lost confidence in early 2009. Unless buyers felt they were getting exceptional value, they put off buying. Sellers, unless motivated, didn’t sell. In 2010, I believe we will see a meaningful up-tick in volume due to the pent up buyer demand and the pent-up seller demand as well as the low interest rates.   Regarding prices, I believe that we are forming a bottom. The 10-year compounded annual growth rate for average price per square foot in Bronxville Village is 4.6%. Other area markets’ 10-year returns are between 4% and 7% percent which seems reasonable. In addition, values in the Bronxville market are down 12% cumulatively from the peak 2007 levels. Other markets, such as Scarsdale and Rye, which have seen volume stabilize or increase, have seen prices down in the 12-16% range off their highs.
• Price and Price Per Square Foot Does Matter. Buyers have been putting off buying for basically two years and are very educated on the market. Buyers want value. There are numerous examples of homes sitting on the market with little activity until there is a meaningful price reduction resulting in multiple bids. With increasing inventory expected in the first half of 2010, pricing a home properly will be very important. Another important consideration is financing. Appraisers are paying more attention to price per square foot as an important metric in understanding value and are under increasing pressure to appraise with significant numerical support.  

• The Bronxville Area will benefit from increased New York City buyer activity. Due to the changing economic climate in New York City, many families will investigate other attractive school alternatives outside of New York City, which should benefit the Bronxville Area. In 2009, many families from the city tried to use the public schools on an interim basis. As a result, there was overcrowding in the NYC public schools and many families were sent out of their school district. If they didn’t look at Bronxville in 2009 they will in 2010.