From the desk of Paul Breunich, President and Chief Executive Officer of
William Pitt and Julia B. Fee Sotheby’s International Realty
You may have seen the recent news stories regarding Westchester County real estate, in publications ranging from Bloomberg on July 12 and August 1 to The Wall Street Journal on July 12, claiming that closed sales “plunged 18%” county-wide in the second quarter of 2018 compared to the same period the prior year. We at William Pitt-Julia B. Fee Sotheby’s International Realty conduct our own extensive research for our proprietary quarterly market analysis, summarizing information from the Hudson Gateway Multiple Listing Service (HGMLS), and have found the data cited in these stories to be wholly inaccurate. As the second largest real estate brokerage in Westchester County, and one of the largest Sotheby’s International Realty affiliates globally, we are concerned that these stories are spreading misinformation and miseducating consumers.The actual picture, in fact, is dramatically different. Sales for the second quarter this year were only lower by 5% compared to the second quarter of 2017, a significantly less substantial decrease than the news stories have indicated. Here are the facts.
These stories cited the Q2 2018 Elliman Report, which was sourced by the HGMLS, and stated that there were 2,179 unit sales county-wide in the second quarter, versus 2,648 during the second quarter of 2017, amounting to a 17.7% decrease. We believe this data was pulled too early, before all closings for the quarter were finalized and entered into the HGMLS. Our findings suggest the report’s data was pulled sometime between June 24 and 25, as many as six days before the quarter ended. By the end of the day on June 25, the HGMLS reported 2,206 sales including single family, multi-family, condo and co-op sales, exceeding the numbers in the report under question. The truth is that through June 30 there were 2,522 closings county-wide for the second quarter of 2018, and 2,662 during the same period in 2017, a decrease of only 5.3%. The report referenced in these national news stories missed 343 sales occurring between June 25 and 30, 2018, accounting for nearly 14% of all transactions for the quarter.
The last few days of the second quarter historically represent the largest closing period of the entire year in Westchester County, so it is critical to wait to consult the MLS data until it is finalized. Since brokers are allotted 24 hours to enter a closing into the MLS, the most accurate data is not available until July 2.
The discrepancies extend to all areas of the report, including single family, multi-family, condo and co-op unit sales numbers. For example, the report claims 1,319 single family sales in the second quarter, but the HGMLS reports 1,558. The report is off by nearly 240 single family units. The actual quarter over quarter decline in single family home sales is a modest 5%, not nearly as high as the 18.9% reported.
Moving past the second quarter, a quick glance at the figures for July reveals that sales are continuing relatively on pace with last year. Closings for the month are down a mild 2.3% versus July 2017, dipping by just 24 units from 1,058 to 1,034, while closed dollar volume actually increased for the month by 3.6%. This trend appears to be quite different from what the Bloomberg and The Wall Street Journal articles presented.
The stories contend that the market slowdown is resulting from the recent tax law changes. Yet as we have demonstrated, this conclusion is being derived from inaccurate data. The slowdown is far more minimal than we are being told. From our perspective, it would be irresponsible to draw a firm conclusion on how the tax reform might shape the market for the simple reason that at this early stage, it is still impossible to know. These news stories are effectively contributing toward a perceived negative narrative about the state of the real estate market in Westchester County.
Here are a few points that didn’t make it into the stories. Historically, the key leverage point in determining the outlook on real estate is consumer confidence. This, in turn, is largely driven by several important economic factors, which include interest rates, the stock market, unemployment and the GDP. Throughout the first half of 2018, interest rates have inched up but remain at historic lows, unemployment has held close to its lowest rate since 2000, and the stock market, while certainly fluctuating at times, still stands at incredible heights. The GDP increased by 4.1% in the second quarter, its fastest growth rate in four years. Taken together, these positive factors represent a rare and significantly favorable phenomenon to a strong economy, and they perfectly correlate with soaring levels of consumer confidence. The Conference Board Consumer Confidence Index’s reading in July yielded a strong index of 127.4, nearly an 18-year high, after holding at consistently elevated levels during the first six months of the year. The average Index was 127.8 from January to June 2018, with a peak of 130.8 in February. When consumer confidence is this healthy, we typically see demand in the real estate buyer pool follow suit.
There are still plenty of consumers purchasing and investing in Westchester—about 95% of the number of people who bought here last year, in fact, as of the end of the second quarter. Our purpose here is to correct the record, present a fair picture on all the factors that affect supply and demand, and to provide accurate information so you, the consumer, can make informed decisions regarding your real estate needs. Our own second quarter market report, which we believe to be far more accurate, is available to read on our website, williampitt.com.
I welcome you to contact me if you have any questions about our analysis.
Paul E. Breunich