What Is Your House Worth Now?

Plus Our Tips for Selling in a Turbulent Market

The bubble has burst. With all the talk of sub-prime mortgages, defaulted payments, and imminent foreclosures, the market has gone wild, and the ripple effects can be seen everywhere from the stock market to the credit industry to the unemployment rate. What does all that volatility mean for your own biggest investment—your house? We bring you the truth (and it’s not bad. . .really). 

By Dave Donelson

Housing Bubble Bursts!  

Homeowners Ruined!

Say It Isn’t So!

It isn’t. The headlines are dire, but the value of your Westchester home today, many experts say, is not much different than it was a couple of years ago. We had a great run up in home prices—the longest and strongest on record—but they didn’t plunge over the cliff when it ended last year. Still, with so much personal net worth tied up in our treasured center-hall colonials, salt-box Cape Cods, split-levels and ranches, we all want to know where we stand. Are we Westchester homeowners richer or poorer today? The truth lies somewhere in the tales of Mike Martin and Murray Lubitz.

“It was just one humiliation after another,” says Martin, a computer consultant who, with his wife, Jeanmarie, put their Pleasantville home on the market in January, 2007. It was their first home, and they were justifiably proud of all the improvements they’d made during the seven years they lived in it. Both baths and the kitchen had been remodeled with granite and marble countertops, a whirlpool bath, and new appliances. The small lot on a cul-de-sac abutting Graham Hills Park was full of fragrant roses. Following the advice of their broker, they listed the three-bedroom colonial for $549,000.

The response? “We had over sixty showings and almost zero offers,” he says. They did get one nibble, an offer for $520,000, but thought it wasn’t serious. Still, Martin says, he countered with $535,000, but the prospect walked away. With no more action after three months, Martin got aggressive. “We offered as much as $15,000 to the buyer at closing and $2,000 to the agent who brought us a buyer.” A month later, he lowered the price (on the advice of the realtor) to $519,000 with a $5,000 rebate and $1,000 to the selling agent.

“Weekends went past and nobody showed up,” Martin laments. Anxious to move into the home he and his wife had purchased in Katonah before school started, Martin finally leased the house with an option to buy at $515,000.

Attorney Murray Lubtiz had just the opposite experience when he listed his three-bedroom split level in White Plains in preparation for moving into his new wife’s home in Ardsley. “I knew I was getting married and didn’t want to maintain two homes,” he says, “so I told the realtor to price it to sell. He priced it appropriately, so I sold it in two weeks for more than the asking price because we had several people bidding on it.” The home was originally listed in the low $600,000s; Lubitz was reluctant to reveal the final sale price.

Would either Lubitz or Martin have received more for their homes if they’d sold them two years ago at the peak of the market? Undoubtedly, according to Westchester County Board of Realtors (WCBR) CEO Gil Mercurio: “The market has leveled off. We had our high point in 2005 with record sales volumes. The rate of sales fell off in 2006, although prices continued coasting upward for awhile. By the time we got to 2007, it was pretty clear that, just like the rest of the nation, we had undergone a dip, dive, correction, or whatever you want to call it.”

[The Boom That Ended

                   With a Whimper]

The dip, dive, or correction hasn’t been very severe, at least so far. The latest quarterly median price for a single-family home in the county is $700,000, down a scant $15,000 from the same period in 2006 and actually up from 2005’s annual average of $675,000. Harding Mason, associate broker at Houlihan Lawrence in Katonah and president of the WCBR, says, “I’ve seen prices come down pretty much across the board, but not falling through the bottom. We’ve just taken the edge off the highs, which is more realistic.”

There’s no question we had a great run. “Prices grew at a greater rate of increase than at any other historic period since we’ve been keeping records,” Mercurio says. The price of a single-family home in Westchester more than doubled in the last 10 years, with an average annual increase of more than
10 percent.

But all good things must come to an end and they did, beginning in 2006 when home prices grew less than 1 percent. “The market has corrected itself because every market eventually needs a correction,” says Lou Cardillo, broker/owner of Keller Williams Realty Partners in Yorktown.

[The Miasma in the Middle]

As you would expect in a market as diverse as Westchester, averages seldom tell the whole story. Prices in some sections of the county have held up better than in others—the southern tier may be a little stronger than the north simply because potential buyers looking for an easier commute tend to go there first—and some price segments are stronger than others, too.

“Anything between five-hundred thousand and nine-hundred thousand dollars is struggling,” reports Cardillo, whose office is in Yorktown. “When you get over the million dollar mark, it’s a different echelon of buyers and they’re still out there. Over three million dollars hasn’t been affected at all. If I’m looking for a three million-dollar house, I’m not affected by interest rates.”

Mason agrees: “Upper-tier homes are doing very well because there is a lot of money coming from Wall Street looking for a home in Westchester.”

Janice Linden, owner of Linden Real Estate in Rye, says she can’t get enough seven-figure homes, which may be somewhat reflective of her market area. “The most activity now falls in the one million to one-point-eight million-dollar category. We need more inventory there. In the under one million-dollar market, they’re not moving quite as well if it’s not priced right.”

“Upper-tier homes are doing very well because there is a lot of money coming from Wall Street looking for a home in Westchester.”

The most recent WCBR sales report showed $1 million-plus homes accounting for 28 percent of the Westchester sales volume. “That sector of the market is doing very well,” Mercurio reports. “The middle of the market, around six-hundred-and-fifty thousand to eight-hundred thousand dollars, is bearing the brunt of the correction.”

That’s where Rose Berte and her husband, Frank, thought their immaculate three-bedroom brick colonial in Pleasantville should be priced. “Every homeowner thinks they have a castle,” Rose says. “We just have to be realistic about what the market’s going to give us for it.” The Bertes put the home they built 35 years ago on the market in mid-2006 with high hopes of cashing out so they could move into a condo in Rye. “It was time to stop cleaning gutters and shoveling snow and cutting grass,” Rose says.

They thought they were being realistic when they priced the home in the low $700,000s—they should know, since he is a retired builder and she a retired real estate sales associate—but it turned out their timing wasn’t good. “It was such a hot sellers’ market for so many years, when the downturn comes, the buyers really try to put you up against the wall,” she says. “There are no compromises in either market.” After more than a year on the market and a 20-percent price reduction, the Bertes were still looking for a buyer, although they were optimistically negotiating with two when we spoke.

[A Dip or a Dive?]

Softness in the middle market is probably directly attributable to rising interest rates, although with 30-year fixed mortgages hovering between 6 and 7 percent, they’re still below historic highs (Remember, in 1996 the average rate was 8.5 percent and creative financing like ARMs wasn’t as available). Creditors are tightening criteria, too, as they react to the problems in the sub-prime market.

“The guy who has to come up with fifty thousand dollars for a down payment, twenty-five thousand to thirty thousand dollars  to close, and maybe make some improvements on a five hundred thousand-dollar home, is having a problem,” says Joe Garcin, owner of Home Hunters Realty in Yonkers. “Marginal buyers were buying two years ago,” he points out, “but they’re not able to buy now unless their credit scores are excellent.”

“That’s the changed paradigm in 2007 and 2008,” adds Nick Wolff, owner of Century 21 Wolff Realty, which has four locations in addition to the main office in White Plains.

“The mortgage bankers are predicting it’s going to be a two-year haul.”

So what’s a worried homeowner to think? Is the value of our largest (and, in some cases, only) significant asset going south?

“For the rest of 2007, you’ll see prices running somewhat below last year by a couple of percentage points,” Mercurio predicts. “By 2008, you’ll see price increases that look more like inflation than a run-up by boom conditions.”

Mason points out that “if you sold in the last few years, you certainly did very well. If you bought in the last year or so, you’re going to be fine unless you have to sell within the first six months of buying. That’s true anytime. Just relax. If you’ve got your monthly payments covered, you’ll be okay.”

Even if you want—or need—to sell right now, you shouldn’t panic. “For people who don’t insist on getting ten percent more than their neighbor got in 2005, we’re selling their homes in days and weeks just like we used to and getting asking or above in many cases,” Wolff says. “If you ask a little less than you might have asked a year ago, you’ll probably get more. But it’s hard to get people to wrap their minds around that. People figure if they ask eight hundred ninety-five thousand dollars, they’re going to end up with seven hundred fifty thousand. That isn’t true if the eight-hundred ninety-five thousand is a real number. They could get nine-hundred twenty-five thousand dollars if there are multiple interested parties. We did thirty-five deals in the first half of the year where we got asking price or higher.”

“For people who don’t insist on getting ten percent more than their neighbor got in 2005, we’re selling their homes in days and weeks just like we used to and getting asking or above in many cases.”

You’ll probably want to adjust your expectations in other ways, too, Cardillo advises. “Brokers are working under longer listing agreements and preparing longer marketing plans today—six months or better, depending on the price point.” He explains that some other things have changed, too. “This is the first buyers’ market we’ve gone through where the Internet has been so big. Buyers and sellers are more savvy now. They do a lot of the work online.”

Peter Bell, president of Balch Buyer’s Realty in Mamaroneck, has a different perspective than most realtors since he represents buyers instead of sellers. He reports some other changes in the market. “A year ago, if you tried to buy a home under a contract contingent on selling yours, most buyers would turn you down even if you’d agreed to pay their asking price,” he says. “Today, sellers are working with buyers more in that way. When you make an offer, the deal isn’t just about the price. Terms can be just as important.”

If you’re still concerned about whether you’ll be able to sell your home at a reasonable price, keep in mind that 2,407 single-family homes were sold in the first half of the year—5 percent more than the first half of 2006. Very few of them were bought as investments—homes are to live in, not get rich on. There are still plenty of buyers like Ken Shelley, a customer of Bell’s, who paid $549,750 for a four-bedroom colonial in Yorktown ($20,000 under the asking price). It wasn’t a long, drawn-out event, either, according to Shelley: “Another couple came to look at the house as we were leaving. We made an offer from the driveway on the way out, the owner made a counter-offer a half hour later, and we took it.” What made him and his wife, Carrie, such motivated buyers?

“We have a two-year-old Labrador retriever running around in circles in our condo.”

What One Million Will Buy

A million dollars isn’t what it used to be, especially when you’re talking real estate in Westchester. Not that the properties below could be called starter homes, but they’re not the über mansions you would get in most other parts of the country. Plus, oh those taxes! 

Croton-on-Hudson

1970 Cedar Log Ranch in

Mount Airy neighborhood

4 BR, 3 full baths, 4.25 acres, 2,900 sq ft

Taxes: $20,033

Pluses: What is attractive about this home are its lake access, heated pool, its many skylights—and the fact that it can be subdivided. Minuses: Some families may balk at the narrow spiral staircase to the lower level, where there’s a family room, bedroom, and bath, plus the bedrooms tend to be on the small size (the typical bedroom is 12’ x 14’ and, in this home, the largest is 9’ x 12’).

Mount Vernon

2007 Colonial in Oakwood Heights

4 BR, 2 full baths and 2 half baths, .24 acres,

3,740 sq ft

Taxes: $28,777

Pluses: This home is brand new with a grand entryway featuring a cathedral ceiling, a kitchen designed for a gourmet cook, hardwood floors, his/hers walk-in closets in master suite, and finished basement. Minuses: There is only a one-car garage and the backyard is on the small side.

Pound Ridge

1737 Mercy Waring House

4 BR, 2 baths, 3.69 acres, 2,529 sq ft

Taxes: $12,933

Pluses: This is the oldest house in the bucolic hamlet of Pound Ridge with a lovely sunroom, a wood-paneled library with doors leading to a stone terrace, and three fireplaces including a massive stone cooking fireplace with bread oven. Minuses: The bedrooms tend to be on the small side (11’ x 15’); the garage sits 75 feet from the house; the bathrooms need updating; and the house is located on a main road.

Somers

2001 Toll Brothers Colonial

4 BR, 2 full baths and 1 half bath,

.5 acres, 4,000 sq ft

Taxes: $17,254

Pluses: The house features a gazebo, finished walkout basement, hardwood floors, large kitchen (23’ x 16’), formal dining room, and homeowners can join the community clubhouse association and thus have access to the club pool, playground, and tennis/paddle court. Minuses: The house is vinyl-sided and a portion of the basement floor is unfinished.

Tuckahoe

1928 English Manor House

6 BR, 3 full baths and 1 half bath, .028 acres, 4,000 sq ft

Taxes: $16,392

Pluses: Beamed ceilings, French doors, three porches, and two fireplaces lend a cozy feel. The home also features a deck, screened-in porch, hot tub, and pool overlooking woods and a waterfall on the Bronx River. Minuses: There is no garage (homeowners must park in driveway) and it sits in the Yonkers schools district area, which for some families may be a negative.

White Plains

2007 Colonial;

4 BR, 3 full baths and 1 half bath,

.16 acres, 3,050 sq ft

Taxes: approximately $15,000

Pluses: This house sits only one mile from the White Plains Metro-North station and is located on a cul-de-sac. It has a gourmet kitchen, large master BR suite (15’ x 20’ with two walk-in-closets), oak floors, and custom moldings.

Minuses: The backyard is narrow (more of a sideyard than a backyard).

Sold! Pre-Sale Pointers

Even if you don’t plan TO sell now, you (or your heirs) will someday. Tom Ralph, owner of Thomas J. Ralph Realty in New Rochelle and among the top 1 percent of Westchester sellers for the last 20 years, offers a few pointers on home projects that will pay off when you do.

[ Kitchen ]

“The number-one decision-influencing area in the home is the kitchen. If you have good quality cabinets but the floor is in bad shape, put down a new floor. Ceramic tile or a good vinyl floor is a good investment. If you have beaten-up Formica countertops, replace them. Same with your appliances. And remember that there are trends in what people are looking for. Twenty-five years ago in the kitchen, people wanted oak cabinets. Today the trend is for cherry or maple.”

[ Lighting ]

“Light fixtures are inexpensive. If you have dim lighting in your kitchen, for example, it will make it look small and dingy.”

[ closets ]

“Buyers want big closets. If yours are so full of stuff you can’t see the back, they look small. So clean out your closets. Maybe invest in some closet organizers to make them look bigger.”

[ HEAT & ELECTRICITY ]

“Your buyers will have a home inspection before they close. The electrical service and heating system will come into play at that time. If you have a fuse panel instead of circuit breakers, the inspector is going to pick on that. For twenty-five hundred dollars you can upgrade your electrical service. That’s a really good investment. If the roof is shot, you should replace it. If the gas hot water heater is more than ten years old, you should replace it. These things will make your home more saleable and prevent problems at the eleventh hour.”

[ WALLS ]

“Not every home improvement has to be expensive. A gallon of good quality paint is worth twenty-five dollars in the can. On your walls, it’s worth thousands. You don’t even have to do the whole house. For example, if you have stairs with basic oak treads, the risers are usually painted, but they collect scuff marks and chips that look bad. The same holds true for woodwork, especially around doors. Get rid of those crayon marks and handprints.”

[ PLUS ]

“When it comes time to sell, make a trip to Town Hall to make sure there are no unresolved building permits on your property and that the certificate of occupancy is up to date. This short step will help you avoid delays at closing.

“In terms of the return you’ll realize from investing in these things, you have to consider the value you gain by making your home more saleable. When you’re in a softer market like this one, buyers have more choices, so your home has to stand out from the competition. You can’t control the location and the size of your home, which are the first two factors in the buyer’s mind. But you can always improve the condition.”

Dave Donelson lives and writes in West Harrison in an old farmhouse no one

could possibly confuse with an investment vehicle.