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Priscilla Toomey on 'Fits and Starts' of Bronxville Real Estate Market PDF Print Email

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June 29, 2011: Back when mortgage interest rates were 18% or more, sellers parked luxury cars in their driveways. Buy the house and they would give you the car. When rates went down to 12% borrowers were ecstatic.

Today, if rates were to go to 8%, borrowers would be horrified. But that's where rates were in 2000. There is a correlation between rates and inflation. When rates were at 18% in the early 1980s, they had been raised artificially in order to put the brakes on inflation. Of course, we are nowhere near that point in the inflation cycle today, but a trip to the supermarket or the gas pump is a telling sign that inflation is inexorably on the way. And when mortgage interest rates start to rise again, every 1% increase means a 10% decrease in a prospective purchaser's buying power.

This thinking puts a different spin on several issues currently on the minds of buyers and sellers. For example, there is the rent-versus-buy equation. Memories are short, but real estate is cyclical. We will only know prices have hit bottom when they start to increase steadily again and the bottom is behind us. Some people see only the short term. For them, renting may be the better option because we may not see "buy-and-flip" opportunities for a very long time. But for those who want to partake of "The American Dream" and plan to stay in their new home for five years or more, the economics of a purchase may make more sense than renting.

Other factors bearing on our individual decisions about how best to move forward have to do with what lenders are doing these days. Lenders generally are still functioning under tight standards as a result of the mortgage crisis, and this continues to have a chilling effect on residential real estate markets. Lenders are examining credit scores more closely, and anything below 700 is looked at askance.

They are asking buyers to put down at least 20% cash, and in some cases 25%. The conforming loan limit of $729,750 for high-cost areas, which gives borrowers a chance for mortgages at the lower rates (previously restricted to loans of $417,000 or less), is currently set to expire on September 30, 2011. And many, many lenders will only deal with prospective borrowers who have W-2 income, not the self-employed.

Let's hope this overreaction softens going forward so that both buyers and sellers can move forward in a more reasonable environment.

For real estate sales in Bronxville Village during the first five months of 2011, the signals continue to be mixed, moving forward in fits and starts. Between January 1, 2011, and May 31, 2011, the sales of 11 single-family homes closed, as did the sale of 1 townhouse, 5 condominium apartments, and 14 co-ops. During the same period last year, the sales of 11 single-family homes closed, as did 3 townhouses, no condominium apartments, and 15 co-ops.

Currently, there are 45 single-family homes (not including townhouses) on the Bronxville Village market, plus 3 under conditional contract and 13 whose sales are pending. Twelve townhouses are currently active on the market, 3 are under conditional contract, and there are 2 whose sales are pending.

There are 2 condominium apartments currently on the market for sale, and the sales of 5 have closed since the beginning of the year. Forty-six co-ops are currently on the market, 10 are under contract, and the sales of 2 are pending. Since last month, this represents a net reduction of 9 single-family homes, 3 townhouses, and 8 co-ops on the market and the net addition of 2 condominium apartments.

Mortgage interest rates were up fractionally versus the rates a month ago. According to BankRate.com, rates for a 30-year conventional fixed-rate mortgage were at 4.71%, versus 4.56% in mid-May. Fifteen-year conventional fixed-rate mortgages averaged 3.86% in mid-June, versus 3.80% in mid-May. Five-year adjustable-rate mortgages averaged 3.40%, versus 3.13% in mid-May.

The data reported above show that Bronxville Village inventory is down and the market is headed in a more balanced direction, although there is still a nine-month absorption rate for single-family homes and about a fourteen-month absorption rate for co-op apartments. We can only wait and see if progress towards a six-month absorption rate, the benchmark of a balanced market, continues.

Editor's Note: Priscilla Toomey is a real estate broker for Bronxville-Ley Real Estate and can be reached at 914-337-1234 or CLOAKING .

Pictured here: Priscilla Toomey.

 
Bronxville Real Estate Market Report: Year-to-Date 2011: See List of Sales and Prices PDF Print Email

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BRONXVILLE MARKET REPORT: Year-to-Date 2011 (as of 5/31/11)

Editor’s Note:  The data below was prepared by Priscilla Toomey, Associate Broker, JD, ABR, of Bronxville-Ley Real Estate

Bronxville Village # of sales Median Price Average Price Price per Square Foot
Single Family Homes (Except Townhouses) YTD '11 11 $2,320,000 $2,024,025 $532.57
YTD '10 11 $1,875,000 $2,124,727 $574.95
Townhouses (incl. Gramatan Ct.) YTD '11 1 $925,000 $925,000 $538.42
YTD '10 3 $860,000 $935,000 $452.92
Co-op Apartments YTD '11 14 $279,500 $395,286 $336.57
YTD '10 15 $255,000 $315,933 $321.33
Condo Apartments YTD '11 5 $285,000 $315,000 $344.56
YTD '10 0 N/A N/A N/A
Bronxville PO/
Yonkers
# of sales Median Price Average Price Price per Square Foot
Single Family YTD '11 17 $719,000 $895,912 $305.19
YTD '10 7 $600,000 $602,071 $291.45
Co-op Apartments YTD '11 50 $159,500 $180,175 $189.06
YTD '10 50 $156,000 $202,487 $213.10
Condo Apartments YTD '11 3 $279,000 $250,667 $265.74
YTD '10 10 $322,000 $329,400 $283.89

*Source: EAMLS (Empire Access Multiple Listing Service)

Prepared by: Priscilla Toomey
Associate Broker JD, ABR, Top5
Bronxville-Ley Real Estate
Cell: 914-559-8084
Email: CLOAKING

 
Priscilla Toomey: What Is 'Absorption Rate' and What Does It Tell Us about Bronxville Real Estate Market? PDF Print Email

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May 25, 2011:  When 13 single-family homes came on the market in Bronxville Village between May 1 and May 15, it looked as if a sudden buildup in inventory would further saturate the local real estate market.  Would it?

The "absorption rate" is the rate at which homes sell in a particular area.  It is a way of quantifying how the market is doing by using the number of sales in a specified category for a given period to determine how long it would take the market to absorb the number of homes currently on the market in that category if no more homes came on the market.  Essentially, it quantifies the ratio between supply and demand.  This ratio can be measured by using monthly sales figures or data covering a longer period.  Yearly sales figures are probably more telling.

For example, at the moment, there are 69 single-family homes (including townhouses) on the market in Bronxville Village and 76 homes that have sold within the past 12 months, meaning that, if no more homes come on the market, it should take a little less than a year for those homes currently on the market to sell.  For example, in Bronxville Village, 27 single-family homes with asking prices of $2 million or more are currently on the market, and 27 sold in the past year, meaning there is a one-year absorption rate.  Similarly, there are 15 townhouses currently on the market, and 15 have sold within the past year, which is, again, a one-year absorption rate.

Clearly, the above ratios indicate that we are still in a buyer's market.  If the absorption rate were only a few months, say fewer than 4 months, this would indicate a seller's market.  A six-month absorption rate, give or take, would indicate a market that is fairly evenly balanced between buyers and sellers.  Where the absorption rate is seven months or longer, it is generally recognized as a buyer's market.

What did the first four months look like in Bronxville Village compared to the same period last year?  Between January 1, 2011, and April 30, 2011, 8 single-family homes closed, as did 1 townhouse, 2 condominium apartments, and 9 co-ops.  During the same period last year, 11 single-family homes closed, as did 3 townhouses, no condominium apartments, and 11 co-ops.

Currently, there are 54 single-family homes (not including townhouses) on the Bronxville Village market, plus 1 under conditional contract and 11 with sales pending.  Fifteen townhouses are currently active on the market, 1 is under conditional contract, and there is 1 with a sale pending.  There are no condominium apartments currently on the market for sale, but sales of 4 have closed since the beginning of the year.  Fifty-one co-ops are currently on the market, 7 are under contract, and the sales of 3 are pending.  Since last month, this represents the net addition of 12 single-family homes, 4 townhouses, and 5 co-ops to the market.

Because the absorption rate is a bellwether of the market, the net additions reported above mean it is likely to take longer for homes to sell going forward, because inventory is rising.  This is clearly better news for buyers than for sellers.  A balanced market, with an absorption rate of about six months rather than the current one year, would help all around.  I will continue to track the absorption rate monthly going forward to see how it changes and whether we are getting closer to the six-month mark.

Mortgage interest rates were again down fractionally compared to the rates a month ago.  According to BankRate.com, 30-year conventional fixed-rate mortgages were at 4.56% in mid-May, versus 4.78% in mid-April.  Fifteen-year conventional fixed-rate mortgages averaged 3.80% in mid-May, versus 3.99% in mid-April.  Five-year adjustable-rate mortgages averaged 3.13%, versus 3.30% in mid-April.

Real estate has always been cyclical, and every indication is that it will continue to be.

Editor's Note: Priscilla Toomey (JD, ABR, Top5, Certified Eco-Broker, SRES) is an associate broker at Bronxville-Ley Real Estate and can be reached by cell at 914-559-8084 or by email at CLOAKING .

 

 

 
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