Sometimes there is no pretty way to say it, so I’ll just say it: January 2012 was not a very good month in Westchester real estate. According to the Empire Access MLS, both the transaction total and median sale price of single family homes in the county were down from the same time in 2011. Since 2011 started out far slower than 2010, the ramifications could be far reaching.
In January 2011, 237 single family homes closed at a median sale price of $540,000.
In January 2012, 219 single family homes closed at a median sale price of $485,000.
The last month of January the median price was below $500,000 was 2002, when the median was $472,000. That month, however, there were 415 closings, or almost double last month. 219 transactions is a shrinking pie to share amongst the over 6,000 licensed sales people in Westchester.
Median price is not average price, so rather than being more emblematic of where values are, it speaks to the buying public’s trend to buy less expensive homes. Clearly, the consumers are more conservative, discerning, and cautious.
There are other factors at work as well. Currently, there are 676 homes under contract in the pipeline. If only half of them closed in the next 30 days it would be a very productive month. However, getting that many deals closed is unlikely for several reasons. First, many of those deals are short sales that are months away from being approved by the sellers’ lenders. Also, the mortgage money supply continues to be quite tight, and many transactions are still caught in red tape, underwriting obstacles, and other roadblocks related to a crimp in the monetary system.
Last week I attended a dinner keynoted by Michael McHugh, president of Continental Home Loans. In his view, the tighter money supply is a result of Dodd-Frank, and this trend is expected to continue as the legislation continues to be implemented. Ironically, 4% interest rates and lower prices and are not enough to push the market out of the malaise. It is a complex issue, because the “fix” for the financial crisis is having a suppressing effect instead of strengthening the market it was designed to turn around.
This does, of course, spell a huge opportunity for buyers. The climate is very heavily tilted in buyers’ favor, but how many take advantage remains to be seen. While many conditions clearly make it a great time to buy, the overall mentality of caution is keeping many would-be buyers on the sideline. What buyers sitting on the fence should know is that if they are planning for the long term, they can get themselves a very good situations with excellent terms. They just have to get out there and make an offer.