By John E. Baer, SRES, SRS
The year 2018 was a seller’s market. More buyers were looking to purchase a home in Westchester than sellers selling homes. 2019 will also be a seller’s market. However, the inventory of homes this year will be slightly greater than last year and because of gradually higher mortgage rates, there will be slightly fewer buyers.
Just a word or two about buyers in the New York area. Nationally the number of buyers are expected to be fewer this year than last year. However, because of a number of factors in our region including the fact that Google plans to create 20,000 jobs in NYC, thereby attracting a large number of new people to this area. I anticipate a healthy number of millennials looking to purchase in Westchester this year.
Having addressed the issue of buyers in our area let me go back and talk about retirees living on their savings.
If you are among the large number of homeowners with property taxes in excess of $10,000, you will be paying for the foreseeable future higher taxes than you did prior to the Trump tax law. Further, whereas the average US home value rose 8% from March 2017 to March 2018, this year according to Zillow, the expected value is only going to be 2.4%. With the potential of a recession on the horizon, home values may begin to decrease shortly thereafter.
Further, there is no guarantee that your home will continue to rise in value according to the American Institute of Certified Public Accountants. This on top of the fact that if you do remain in your home, you may have to deal with ongoing maintenance costs, as well as larger expenses like roof replacement, electrical and plumbing updates, and more.
Maybe you raised four kids in a home with a corresponding number of bedrooms. Now there are just two of you, and downsizing sounds appealing. If so, you’re in good company. More than half (52%) of adults in a recent USA Today survey said their next home will be smaller.
If you sell your current home and buy a less expensive one in cash, you can still be mortgage free. In addition, you may have money left over for other things that are important to you such as travel or helping with your grandkids college costs.
Another option is to rent. My wife and I sold our Scarsdale home in which we lived for 46 years a year ago, and are now enjoying a luxury rental apartment with great views of the Hudson River and the Palisades. Renting lets you try out different options. You can see what it’s like to live in a large urban area, a tiny beach town, a smaller home or a one level condo. If you’re not happy where you are, you can move, no obligation. Living in a rental typically means your landlord, not you, is responsible for ongoing repairs, outdoor work, and more. If you decide to travel, it is also easier to leave your rental unit unattended.
The Bottom Line: although in 2019 it remains a seller’s market, sellers will need to be mindful of their increasing competition and shouldn’t necessarily expect to name their price and get it in full - a change from the past few years. Above median priced sellers will find it will take longer to sell and requires offering incentives such as price cuts or other offerings. With less demand in the market, there will be fewer bidding wars and multiple offers. However, with inventory expected to remain limited in most markets, sellers who price competitively can still walk away with a handsome amount of profit, but not the price jumps observed in previous years.
John E. Baer, SRES, SRS is a NYS licensed real estate salesperson associated with Berkshire Hathaway HomeServices Westchester Properties of Scarsdale and Larchmont. He can be reached for questions at 914/600-6086 or at 914/844-2059. His website is www.WestchesterHomes.info.