Real Estate Madness
Westchester was known for high housing prices before the real estate market took off. With local homes now priced out of sight, many would-be home buyers (and even some homeowners) are finding their dream of a house here is beyond their reach
By Carol Hall
Photography by Iko
John Carini really, really wanted a yard.
“I like everything that goes with having a yard, even weeding,” he confesses. He and his wife would also like a yard for the children they hope to have. So they began to search for a home of their own in 2003. They lived in Dobbs Ferry in an apartment they rented, loved the area, and wanted to stay, but it didn’t take them long to realize they couldn’t afford a house there. In fact, after a year’s search, they realized they couldn’t afford a house anywhere in the county.
“We were looking to buy our first house and it was impossible in Westchester,” Carini says. “We looked at shoe boxes that were $400,000 to $600,000. We are two school teachers, we can’t do this.”
Carini, 33, is a music teacher in the Hastings public school system and his wife, Sheryl, 36, is a first grade teacher in Katonah; their combined income is in the range of $140,000. He still marvels at the cost and condition of one house they were shown in Hastings: unrenovated, 1,000 square feet on .25 acre of land, with an asking price of nearly $500,000. The Carinis pushed their search north, into Putnam County, but they decided it was too far to commute for work. “Even there it was tough finding a house,” he says. Finally, they bought a 900-square-foot co-op apartment in Hastings for $275,000 instead. “I would really like to have a suburban home with a garage and a workshop. But there’s a point where you say, â€˜OK, we’re going to buy something.’”
If you are reading this article, chances are you already live in Westchester. If you are fortunate enough to own a home here, you’ve watched as the value of your house has soared, making you much, much wealthier (at least on paper). Historically low mortgage rates—in 2001, the interest on 30-year fixed rate mortgages fell below 7 percent for the first time in 30 years—have convinced renters and others to start shopping for a home. As a result, house prices all over the country have jumped, but here in Westchester they have shown double- and, in some cases, triple-digit increases over the last several years. In fact, Westchester, with its irresistible mix of suburban living and proximity to New York City, is one of the hottest housing markets in the nation. (There is a good reason why so many of your neighbors have become real estate agents.) “We are not having any let-up in the numbers of buyers,” reports Liz Lindsey, manager of Houlihan Lawrence’s Bronxville and Pelham offices, adding that the average cost of a single-family house in the one-mile square village of Bronxville is currently $2.18 million. “I have agents that have been trying to take vacation, but there just hasn’t been any let-up in business.”
Home prices in Westchester have always been high compared to the national average (Though we still lag behind cities like San Francisco, and Boston). But in the national housing boom of the last five years, Westchester prices have become the stuff of legend. A fair bit of this has been due to Manhattanites deciding the time is right to make the leap into a suburban home. “There’s been a higher proportion of
But with only so many homes available here, prices are pushed up. This summer, the median price of a single-family home in Westchester hit a jaw-dropping $700,000, according to the Westchester Multiple Listing Service’s second-quarter figures, a rise of 6.1 percent from the same period in 2004. A full 26 percent of Westchester homes that were sold in the second quarter of this year closed at $1 million or more. Just four years ago, the median sale price was $465,000. For earlier generations, talk of that kind of money summoned visions of a mansion. Nowadays that kind of money might get you a small fixer-upper, at best. And just to give you a little perspective: the median price for a home nationally is $225,000, according to the Center for Housing Policy. Want to turn green? In 1980, the median price of a home here wasâ€¦$76,110.
There is a flip side to this gold rush. With every spike in house prices comes an increase in the number of people who are priced out of the market. For those seeking to cross the threshold and enter the market for the first time, the housing boom is more like a housing nightmare. First-time home buyers are having a hard time finding anything at a starter-home price. And many Westchester homeowners find themselves struggling to pay the ever higher and higher property taxes (in New Rochelle, for example, the average tax bill in 2000 for a single-family home was $8,124, according to the latest Census Bureau figures; in Briarcliff Manor, it was $10,247, in Bronxville, $15,852). Taxes have risen dramatically since then. And older residents, people who in many cases have spent decades in the same house, find themselves being squeezed out by high costs they can no longer sustain.
One group that is having a particularly hard time finding affordable homes are the nurses, teachers, police officers, firefighters, secretaries, etc., who work in Westchester—the people who perform the services that are vital to our communities and quality of life. Many of these people grew up in the towns where they work and assumed they, too, would one day live here, even if they had to buy their parents’ house. Now, most couldn’t afford their parents’ house. If they are very lucky, their parents will give them the house. “Unfortunately, the people that are making blue-collar wages can’t afford to buy in at even the lowest level,” says William Glover, a firefighter with the Mount Kisco fire department and a realtor with Houlihan Lawrence in Armonk. “A fireman who makes $60,000 a year can’t afford a $600,000 house. So you find your police, fire, and EMTs [emergency medical technicians] all live upstate because they can’t afford to live in the area.”
As we talk, he pulls up a current listing in
Jonea Gurwitt is an editorial researcher and writer at Consumer Reports in Yonkers. Single with no kids, she rented a charming 500-square-foot cottage in Croton-on-Hudson for more than 10 years. She decided it was time, at age 41, to buy something. She loves the area—she has friends there, it’s convenient to her work, the shopping is good and the hiking trails are great. “All that was available in my neighborhood were $900,000 houses,” she says.
Still, she looked for an entire year in Westchester, hoping for something that met her requirements: in the $225,000 price range, around 1,000 square feet, “a bit of land,” and in good shape. “I started going further and further north,” she reports with a sigh. She settled for a free-standing co-op in Putnam Valley, just over the Westchester County line. With a purchase price of $210,000, her house is on its own acre of land and, as part of an old camp, is one of 12 houses on 17 acres. Her co-op has central air, a wood stove and shares a pool with the neighbors. Her annual taxes are $2,400. While she is happy with what she found, she still misses the things she left behind: Westchester’s towns, like Mount Kisco, Croton, and White Plains and the cultural life, movie theaters, and restaurants. “I definitely sacrificed for a house I could afford,” she admits. “But now I have equity.”
Some people are managing to stay in Westchester, but making concessions to do so. Bani Dugal moved to the U.S. from New Delhi 18 years ago. Trained as a lawyer, she is now the director of the Office for the Advancement of Women, Principal Representative to the Bahai International Community, which works with the United Nations. For the past 16 years, she and her family rented a three-bedroom house in Pelham, in southern Westchester. Along the way, she and her husband divorced. Her two children are both in college. Now 45 years old, she thought the time had come to buy. She likes living in Pelham and likes her 29-minute commute into Grand Central Station, so, naturally, she wanted to buy a house there.
No way. “I made the mistake of waiting for the perfect house, and now I can’t afford anything,” she says. “Before my eyes, since the year 2000, things have skyrocketed, and now the taxes have gotten so high.” She bemoans the fact that she could have bought a large home on one of Pelham’s wide, tree-lined streets in the late 1980s for $200,000. Now, a home like that would cost well over $1 million. “Pelham is a wonderful place, but I realized last year that it is just out of reach.” This September, Dugal moved to a $400,000, four-bedroom townhouse in Croton-on-Hudson. “I thought I really should buy something somewhere,” she says. Her taxes are under $1,000, but her commute has stretched to well over an hour.
Let’s say, by the way, you wanted to buy one of those median-priced $700,000 homes. Just what does it take? Upfront, you need to make a down-payment. The standard is 10 percent, so that’s $70,000 cash you need right away. To secure a mortgage at a rate of 5.75 percent and take out a loan for that remaining $630,000, a bank would look for the borrower to have an annual income of about $180,000. According to Claritas, Inc., a market research company, this year’s median household income in Westchester is $72,672. That falls far short of what’s needed to buy the median-priced house.
A lot of people are willing to do whatever it takes to buy into the market, even if it means taking on more debt than their parents would have dared to. “There is an increased tolerance for debt in the United States now,” notes Alexis Perrotta, senior policy analyst with Regional Plan Association, an urban planning and advocacy organization located in Manhattan. “People are more comfortable with bigger debt,” she says, adding: “High house prices are not necessarily a sign that people have more money; they are a sign that they are willing to go into more and more debt.”
Wage increases have not kept up with housing costs since 1990. In the last 18 months, as the median price of a home has risen 20 percent, wages have remained flat, according to the Center for Housing Policy. And as people are putting more income towards mortgages and rents, they have less to spend at local stores. Higher house prices, taxes, and living costs take their toll on larger companies, too, by making it harder for them to recruit talented employees from other cities.
Should the bubble burst and house prices fall, homeowners who paid too much for their home or took on too much debt could find themselves in a financial bind. “With the new mortgage instruments and interest rates being lower, sometimes people are being talked into spending more than they can afford,” says Angela Witkowski, director of planning in Hastings. “You may have been able to afford something when you bought it, but if you lose a job, or some other catastrophe happens, you could be in trouble.” A study released this summer by PMI Mortgage Insurance showed that the New York metropolitan area was the 14th most likely market to experience a drop in house prices.
There is one more ramification of this housing bubble: the social shifts it is causing. If more people have to move farther away from their jobs, more people have to commute to work. That means ever-increasing numbers of cars on Westchester’s already clogged roadways. It means less time together for families. It even means more inconveniences like school “snow days,” because the teachers can’t get to work. And as house prices have risen, more people have to get a second job to afford a mortgage or have their spouse go to work. Parents who may want to stay home with their children can’t afford to. This exodus of house-hunters has contributed to the growth of Putnam County.
Between January 2001 and July 2003, 25,000 residents left Westchester, many of them for less expensive housing in Putnam, according to the latest Census figures.
Soaring house prices also mean changes to the neighborhood. A narrower range of newcomers can afford to live here, resulting in a chipping away at the diversity of Westchester’s 22 villages, 17 towns, and six cities. “I certainly don’t want Pelham Manor, or Pelham, to become ghettoized with people of a certain age and income bracket,” says Steven Flanders, a Pelham Manor trustee. In Hastings, Sue Smith feels the same way. “Hastings’s value is very much its mix of ages and incomes,” observes Smith, chair of the all-volunteer Hastings Affordable Housing Committee, the group that worked to bring affordable housing to that market. “People feel this has already diminished. Hastings has a lot of artists, but it’s gotten to where they have to be rich artists to live here.”
Or, they live elsewhere. Says Irene Mancuso, a fourth-generation Pelham Manor resident who works at a local school, “I see it more and more—as soon as the kids graduate from high school, the parents are out of here.” Older people are selling and moving out, too, she observes. “We’re going to end up with a community with no senior citizens,” she says. “Coming in are families with children. The schools are getting over-crowded, so they’ll have to build new schools.” She is worried about what that will do to Pelham’s taxes, which have risen steadily over the past decade.
Indeed, tax rates around Westchester just keep rising. In 2004, the county increased property taxes 18.8 percent. Local governments increased their taxes, too; New Rochelle hiked taxes by 13.9 percent, Mount Kisco by 13 percent. School districts boosted theirs by an average of 8.8 percent.
“It’s hard to ignore how ridiculous taxes are here,” admits a local real estate agent, who
asked not to be named. “It can’t keep going on like this. People are seeing other communities where taxes aren’t so much and wondering, â€˜Why?’” The agent says customers are looking at taxes in places as close as Connecticut and as far away as the Carolinas, or the Midwest and asking, “If they can operate their communities with lower taxes, why can’t we do that here?”
Yet, don’t look for things to change anytime soon. The big reason: with New York City as a draw, there is always going to be a demand for homes in Westchester. “The cachet of being in Westchester is enough,” the agent says, “even if you don’t always get that much for your money. There’s just a vast population that wants to live near New York City.”
From the outside, victoria and Nicholas Broccolo looked like they had the perfect life. The former classical ballerina lived in a Victorian house that she and her husband had renovated themselves. Nearby, they had a second house that they’d also fixed up and used as a rental property. She loved New Rochelle, where both she and her husband had grown up, a place where they were surrounded by family and friends. Nicholas Broccolo ran his own masonry and construction business. And Victoria, having retired from a 10-year dance career with the American Ballet Theatre and the Joffrey Ballet, had become a mother and had a job as a community liason for Amy Paulin, work she cared about. It was a dream life.
But last year, Victoria and Nicholas began to wonder how much longer they could afford the dream; in fact, they began to question the dream. The house that they lived in, near the Larchmont border, saw its taxes rise yet again, to more than $8,000 a year. Nicholas, 34, was always feeling the stress of running his own business. And Victoria, 37, had qualms about being the working mother of a young child but felt she had to keep earning.
Then, they started watching one of those TV reality shows where people agree to switch houses. “We used to watch and wonder, â€˜Wow, what would it be like to live with all that space?’” recalls Victoria. “So one night I said, â€˜Just for a laugh, let’s go on the ’net and type in Charlotte, North Carolina.’” They gazed at their computer screen as the Internet took them to a city they’d never seen, in a state they’d never visited, to look at houses for sale in the $350,000 to $500,000 range. “Large houses were coming up,” she says excitedly. “We looked at each other and said, â€˜What are we doing?” They saw a chance at a more affordable life and decided to move.
And that’s how they found Cary, NC. A suburb of Raleigh, Cary is a fast-growing new community (the Broccolos have added to its population with a second daughter). In Cary they saw the chance of a quality of life that they knew they could never afford in Westchester.
“It was gut-wrenching,” confesses Victoria. “This was really hard for us.” They felt bad about leaving friends and family. But they also worried: is there life outside a 75-mile radius of Manhattan? “How could we leave the city and its cultural environment?” recounts Victoria. Finally, during one of her reality checks, it hit her: “I realized I may read the restaurant reviews in New York magazine, but I’m not going to those restaurants; who am I kidding? If we stayed in New York, I don’t even think I could have afforded to take my girls to the ballet.”
The Broccolos moved to Cary in the spring of 2005. Surprisingly, their move met with less family resistance then they expected. Victoria’s widowed mother, who also lived in New Rochelle, liked the idea so much, she bought a place of her own and moved, too, telling her daughter that she was on a fixed income and couldn’t afford Westchester, either.
The reasons people MOVE out of Westchester are as varied as the reasons people anywhere move. Life happens, no matter how well you plan. Yet, the margin for error seems narrower here, thanks to the high cost of living. Families increasingly don’t feel they have much of a financial cushion. Should a wage-earner lose a job, the family can’t absorb the shock. A divorce frequently means a move, and if your child isn’t getting what he needs from the public schools, parents often have to choose between their house and their kid’s education.
Andrew and Heather Chestnut sold their house in Pelham Manor, with its annual tax bill of $25,000, and moved to Schenectady, NY, within a month of their son’s walking down the aisle at his high-school graduation. When they moved from France in 1991, the Chestnuts bought their house in the Manor. Andrew, who went through a couple of job changes by the end of 2003, began doing some soul-searching. “I was a CFO by trade,” he says. “It was a time when the people being awarded CFO of the Year worked for Tyco, WorldCom, and Enron. I realized that I was playing the wrong game, a game I didn’t want to win.” He was just turning 50 and thought about moving back to Schenectady, where both he and his wife are from originally. “I was interested in making the world a better place and thought I’d like to do something in my hometown. We realized we didn’t need to be here once our children were out of school.”
The Chestnuts moved in 2004; their tax bill is less than half of what it was in Westchester. “People here complain about the taxes, and I tell them that we used to live in the North Pole of taxes —everything is south of it,” he says with a laugh. They live in a house in Schenectady’s historic district. “It looks like a courthouse,” he says. He says they got half as much house with just 40 percent of the money they made from selling their Pelham house. His wife, who had been working in a retail shop, as well as at a realtor’s office in Westchester, is doing both again and also acting professionally. He has returned to grad school, this time for a master’s in social work. He plays with his band, Skippy and the Pistons, whenever they get a gig. “We’re very happy,” he declares.
Victoria Broccolo seconds that of her move to Cary, NC: “What we have found down here is a quality of life that is beyond the size of your house.” She mentions that she can now afford to stay home with her two young daughters. And she says something else is missing, too: “The fierceness you have to have to survive. In terms of the stress level, there is no comparison.”
Bob Gaffney, a marketing consultant in his mid-50s, who with his wife were long-time Pelham residents, couldn’t agree more that life outside the New York metropolitan area can be grand. “In the New York area, people devote themselves to their work,” he says. “I decided I wanted to work less, but in order not to work so hard, I had to move to a place where it is cheaper to live.” The Gaffneys moved to a home they already owned in Massachusetts this summer. They renovated it with money from their house sale in Westchester. But there’s something else that figured into his and his wife’s decision: “People here are less out for themselves every minute.”
A Westchester resident for eight years, Carol Hall knows all too well the pitfalls and expense of county real estate