Home sales rose almost 10% in Westchester County this October compared to last October while the median price remained almost exactly the same at $575,000. The average (mean) sale price actually rose by $10,000. How can this be? How could prices remain steady yet the number of sales actually rise? Is Westchester that insulated from the economic woes of the rest of the nation? Neighboring Rockland county also had an increase in sales but their median price was down over 11% from last October. So what gives with Westchester?
There are a number of reasons why this was a better October than 2008. First, October of 2008 was utterly deplorable; the financial crisis had just hit, wiping out scores of pending closings as Wall Street reeled and Fannie Mae & Freddie Mac nearly went insolvent. Second, after a year of sluggishness, there was pent up demand that transcended circumstances for people still able to buy. Third, the tax credit made a difference, especially in view of the fact that many thought it would expire November 30 and buyers scrambled to beat the deadline.
Now wait, you might ask, people buying a $575,000 house didn’t qualify for the tax credit. Maybe some didn’t but who do you think bought their homes, if they weren’t first time buyers? I’ll tell you who: people who qualified for the credit, that’s who.
We are far from a solid recovery in my view. There are too many distressed homes to have a permanent upward trend in prices. We had a slightly better October than a rotten previous October. But better than “rotten” doesn’t make it great, any more than having the best suite in the Titanic made that trip any better. In spite of this piece of encouragement, don’t be shocked if prices go down even more.