White Plains, NY - The surge of sales activity in 2010 resulting from the stimulus of the federal home buyers tax credit program failed to spill over into 2011.

Rather, in Westchester County last year, as reported by Realtor brokerages participating in the Empire Access Multiple Listing Service, the total 6,194 closed residential sales were 6.0% fewer than in 2010.

Single family house sales were off by 4.4%, condominiums by 10.9%, and cooperatives by 8.5%. Putnam County house sales differed by only one
unit from 2010.

Considering the fourth quarter of 2011 alone, there was a marked increase in the sales volume  for co-ops which was up 20.1% from last year, but the single  family house sector continued to disappoint with a volume 5.0% below last year’s sales.  Seasonally adjusted (1), the fourth quarter’s rate of overall residential sales was 4.9% slower than the third quarter’s rate, and within the single family house sector, 11.0% slower.

Prices trended downward, too.  The fourth quarter median (2)sale price of a single family house  in  Westchester  was  $525,000 - 8.9%  lower  than  a  year ago, and the lowest median  for  any  quarter  since  2002.   Some of that decrease in the median was attributable to a fall-off in the proportion of high end ($1,000,000+) sales which accounted  for  only  13.7%  of total sales whereas 16% or more has been the fourth quarter norm of the past several years. 
Most of the decrease, however, was simply the result of weak demand that prompted price concessions from sellers.

The  largest  fourth  quarter  price  decrease  took  place  in  the  cooperative  unit  sector, where the median sale price of a Westchester co-op was $146,000, down 15.2% from a year ago.  But as noted above, the co-op sector also enjoyed a large increase in the number of fourth quarter sales, suggesting that this sector may have finally found the price points that generate traffic.

That conjecture is bolstered by the fact that co-ops were the only residential sector to post a year-end increase in inventory, albeit a small one at 2.7%.  Typically  in  this region, an improving market encourages potential sellers to list their properties, and thus contrary to classic supply and demand theory, inventory actually increases even as sales volume increases too.  The opposite happens when the market is seen to be uncertain  or  soft: sellers  withdraw their  listings  and  inventory  decreases  as  a  result.

Unlike  the  co-op  sector  this  year,  the  single  family,  multifamily  and  condominium sectors all posted reduced inventories from 2010, suggesting  a continuing lack  of enthusiasm by consumers to enter the real estate market, at least not for these more expensive housing types.

The reported fourth quarter closings largely reflected listing and marketing activity that took place in the summer and early autumn months of 2011.  Some of the major forces affecting real estate at that time were pushing in different directions – and still are.  For example,  mortgage  interest  rates  in  mid-2011 were trending downwards and had dropped below an average 5.0% rat  for 30-year conventional loans.  That average just recently dipped below 4.0% and in theory should be making housing much more affordable, especially for moderate income and first-time buyers.  Yet there is convincing anecdotal evidence from Realtors in our region that the benefit of low rates is increasingly negated by tougher qualification ratios, required higher credit scores, and slower processing by lenders.  Overly conservative appraisals are said to be impairing transactions too.

Consumer confidence in the economy also plays a major role in the decision to buy or sell real estate.  In July and August of 2011 consumers were confronted with a scary display of extreme volatility in the equity markets, largely brought on by a sovereign debt crisis in Europe, a surprise circumstance that probably had not been on the average person’s economic worry list.  Will there be more of that?

Another confidence-sapping economic condition is the painfully slow improvement in the job market.  Westchester and Putnam Counties are among the six counties with the lowest unemployment rates in  New York, around 6.3%.  But at the same time, the improvement over the course of 2011 was only around three-tenths of a percent – hardly enough to impart a sense of economic security for households contemplating a home purchase.

Perhaps the greatest erosion of confidence is of political origin, in the sense that there are no undisputed plans in place as to how the economy is to be managed, hence consumers don’t know what to expect, and they hunker down, postponing any decision making of consequence such as home buying.  If that is true, then we’ll have to wait for elections  to  establish  a  firm  action  agenda  for  recovery,  and  the  local  real  estate market in 2012 will look pretty much like 2011 as to sales volumes and prices, unless still deeper price reductions bring on a burst of sales such as appears to have been the case with co-ops in the fourth quarter.

The Empire Access Multiple Listing Service, Inc. (EAMLS) is a subsidiary of the Westchester Putnam Association of Realtors, Inc., the latter of which is pending a name change to Hudson Gateway Association of Realtors, Inc. Empire Access Multiple Listing Service, Inc. is located at 60 South Broadway, White Plains, N.Y. 10601.  For more information, visit www.EAMLS.com.

1
The seasonally adjusted rate is an annualized rate for a given quarter. It represents what the total sales volume would be for the whole year based on the quarter’s customary share of total annual sales.

2
The median sale price is the mid-point of all reported sales, i.e., half of the sales were for more than the median price and half were for less.  The median is not affected by unusually low or high sale prices.  The mean sale price is the arithmetic average, i.e., the sum of all sales prices divided by the number of sales. The mean does reflect the influence of sales at unusually low or high prices.