Dismal First Quarter, 2009, in Real Estate, But Stirrings of Hope

 By Bill Primavera

The Home Guru

As published in The Examiner

Last week’s report by the Westchester-Putnam Multiple Listing Service of homes sold in the first quarter of 2009 was a bitter pill for home sellers and realtors alike.  With only 850 closed transactions in Westchester, the report indicated that sales of all units were down 37% from the first quarter of 2009.  The single family house market was most deeply affected with a 41 % decrease. Putnam County, faring a bit better, had closed transactions that were down by 31% from last year.

It must be remembered that, while the first quarter results are grim, they really reflect the deals – or lack of them – being made in the last quarter of 2008 when the deepening recessionary conditions, rising unemployment, weak corporate earnings, concerns about economic policy and the effects of the various stimulus and bailout plans all joined forces to keep prospective homebuyers from entering the real estate market.

While it is typical for the first quarter to post the lowest closed sales figures of the year owing to greatly reduced sales during the holiday season and the winter months, when the statistics were adjusted for this seasonality, the 850 closing were equivalent to any annual rate of 4,230 sales, which signals the slowest pace the Multiple listing service has recorded since the 1985-1990 period.

At the same time that sales slowed down, prices decreased as well.  The median price of a single family house in Westchester was $532,000, a decrease of $90,500 or nearly 15 percent from last year.  The last time that price level was experienced was in 2003.  In Putnam County, the median price fell to $411,250, which is 20 percent lower than last year.  It is noted, however, that the decrease in Westchester is not entirely based on across-the-board price depreciation, but rather, reflects a significant contraction in the volume of high-end sales.  While houses selling for $1million or more posted 20 percent or more in prior first quarters, this year they accounted for only 13 percent of all sales.

Condominiums and cooperatives fared better. The median sale price of a Westchester condominium was $352,000, which reflects a 7 percent decrease, or $28,000, from last year.  The median sale price of a Westchester cooperative unit actually increased by 2 percent to $179,500.

Inventory of Westchester properties stood at 6,324 units at the end of the first quarter, an increase of 7 percent over last year, while Putnam County inventory decreased by 14 percent.  It is interesting to note that the 2009 Westchester inventory was actually less than that of the first quarter of 2007, but that indicates that the higher inventory reflected sellers’ attraction to list in the still-favorable market conditions at that time.  In 2009, the inventory could also be regarded as high but for the opposite reason.  Ironically, the 2009 inventory might also be considered exceptionally low when considering the 37 percent decrease in sales volume.

The Multiple Listing Service cites the wild card that defeats ordinary supply and demand analysis in Westchester to be the ability of potential sellers to time their listing activity to market conditions.  As of the last day of the first quarter, they were still largely on the sidelines.

But more on the positive side, the MLS report noted that our region’s close dependence on the banking and financial sectors, which brought the real estate bust home to Westchester and Putnam Counties with special speed and severity, may also be the factors that rejuvenate the local market as conditions improve. Since the bailout mechanisms have served to help stabilize the banking sector, and the stock markets appear to have stabilized as well, hopefully the real estate market will follow suit.

The Making Home Affordable Program enacted by the administration and Congress have served to help mitigate the market-corroding effects of foreclosures and, while Westchester does not have a severe problem with foreclosures, it should nevertheless benefit if some measure of control is achieved nationally.  Also on the positive side of the scale are the resumption of mortgage lending by community banks, the historic low mortgage interest rates and other inducements to buy, such as the $8,000 first-time homebuyers credit.

Such conditions and policies have favorably placed the housing market to take advantage of any turnaround in confidence in the general economy that may take place, such as lower unemployment and higher corporate earnings.

And, on a very local level, there are stirrings since the end of the last quarter that buyer activity is picking up considerably and that the spring market will improve as a result.  In a statement made to The Examiner by P. Gilbert Mercurio, Chief Executive Officer of the Westchester County Board of Realtors, these stirrings were confirmed. “It’s anecdotal at this point, but some of my members have been citing increased activity. This is springtime when business normally does pick up, but we’re not certain if it’s normal seasonal activity or more than that. But, whichever it is, they’re grateful to see it.”

He continued, “For the market to recover, we need confidence from large economic events or better corporate earnings and consistent upward trends of the Dow Jones and other equity markets. Right now, interest is very low, we don’t have a serious foreclosure  problem, first time buyers are taking advantage of the $8,000 tax credit and we don’t have a huge inventory, so we have reason to be optimistic.”

Anecdotal information comes from all corners.  Last week, Brian Baslik, owner of the East Bay Furniture Company that makes maple cutting boards given by agents as closing gifts to buyers, started his sales presentations at real estate offices in this area by announcing that his orders in the past month have been increasing steadily, indicating that there are more closing transactions in the near future of the Westchester/Putnam real estate market.

Bill Primavera is a Westchester, NY-based realtor ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) and marketing practitioner ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) who can be reached for questions or comment directly at 914-522-2076.

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