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The simple answer to the thread title is this - You can wait until next year, or longer.
How fast home prices in Westchester will decline is debatable, but prices likely won't go up by much next year or after so you lose nothing by waiting.
According to some people knowledgable in real estate markets whom I've checked with, buying in the suburbs is a tricky bet. The main forces that will drive the market going forward are not so much the economy, but rather demographics. There are two forces at play here simultaneously - (1) aging suburban households looking to sell out (or cash in by renting out their homes) and (2) educated young families wanting to stay within or closer to cities/urban areas. In the future, people who will move to the suburbs are more likely to be lower-earning minorities being pushed out of cities because of urban gentrification (as per force #2). It's started happening in Harlem and Brooklyn in the early 2000s and will continue to happen as gritty NYC neighborhoods gentrify.
The question then becomes whether these newly-suburbanized households will share the same priorities as the past and current residents of the communities they move into. Will they invest money and sweat on good municipal services, and good schools? Will they vote for more challenging academics, or more remedial school programs? Will they spend the time to take care of their homes and yards - keeping them pleasant-looking instead of unsightly? Maybe they will. Or maybe they won't. That will ultimately determine whether home prices will hold or simply continue to decline in the years to come.
I have worked in Harlem for 15 years and have seen the gentrification firsthand and have never heard of a family moving to Westchester. Most go to the Bronx. The neighborhood where I grew up was all white and is now filled with minorities who want to own a home in a nice safe area.
For the OP, I was in a similar position. I stay home with my kids and buying a house without me working was very tight financially. I go back to work in Sept and can afford a bigger house. I bought because the interest rates were at record lows and are already up a bit. I also saw many home prices going up. I am not an expert but I was outbid several times. Things that were priced right were selling.
I am not sure where you are getting this info. S&P case schiller for the NYC area is 166 for Jan 2011 up from 100 in 2000. 100 in 2000 is 130 in 2011 if you adjust for inflation. So prices in NYC have to come down 20% to reach the 2000 levels adjusted for inflation.
However, for the reasons I mentioned earlier, even a further 20% correction cannot account for neither higher property taxes nor the dismal finance prospects.
When it comes to understanding the local market, things like Case Schiller that average out the entire metro region are useless. The NYC market has been much stronger than the Westchester market, with prices in some NYC neighborhoods even hitting peak boom levels again. That throws the average totally off. You need to look at the county level, and even that doesn't tell you too much since markets differ widely within the county.
My info comes from loads of anecdotal evidence in many towns--I look at what has sold recently and compare current selling prices to previous selling prices (adjusting for inflation). (Why do I do this? It’s an addiction.) There are loads of places selling for same or less than what they sold for in the 90's. Yes, it’s totally anecdotal and not at all scientific, but it gives a real sense of current values.
As for the idea that prices have to go down because homes are no longer affordable, I don't buy that at all. Homes are as affordable as they were before the boom. During the boom people got this idea that everyone should be able to not only buy a house but even buy their dream house right off the bat. Prior to the boom, home ownership was something people strove for and saved for, and people bought small and then moved up the property ladder. Now we are going back to the way things were, and should be--you save, you get a down payment and a viable mortgage so you can buy something moderate, then you slowly trade up over the years.
I agree with others that demographics are changing, and you need to look at current trends in the specific areas you are purchasing in. Lots of the types of people who used to move to Westchester no longer do. Some areas of Westchester are seeing influxes of lower income families pushed out of the city, while others are seeing influxes of educated "creative professional" families pushed out of the city by rapid price increases. You need to look at the micro market. Who is buying? Where are they coming from? How will that impact the future market?
I have worked in Harlem for 15 years and have seen the gentrification firsthand and have never heard of a family moving to Westchester. Most go to the Bronx. The neighborhood where I grew up was all white and is now filled with minorities who want to own a home in a nice safe area.
My comments were forward-looking and not about the present. Even the Bronx and Bushwick will someday be hit with gentrification as demand for urban residential space by educated and relatively affluent families increases.
Currently many of the people who left the boroughs for those reasons have gone to parts of Rockland (Spring Valley) or LI (Hempstead, etc.).
If prices in Westchester go down low enough (because of the other factors that I mentioned), and/or if homeowners wanting more cash demand to rent out their homes at cheap enough rates, then you could see more urban minorities moving into Westchester.
When these things happen, it's usually a confluence of several factors working together and not just one factor in isolation.
Anecdotally. I have seen more price declines in the last 4 or 5 months, than at any other time since the bubble burst.
Incidentally, no owner in the ny area agrees with the case-shiller index. They all think that their area somehow eludes the dismal state of housing. However had they paid a closer attention to this index, many would avoid being underwater!
I'd rather wait and get a good discount for the high taxes. It got to the point that owning means actually 'renting" (the town is your landlord) due to the high property taxes but worse as you are now responsible for the upkeep efforts and maintenance expenses of the "rental".
Anecdotally. I have seen more price declines in the last 4 or 5 months, than at any other time since the bubble burst.
Incidentally, no owner in the ny area agrees with the case-shiller index. They all think that their area somehow eludes the dismal state of housing. However had they paid a closer attention to this index, many would avoid being underwater!
I'd rather wait and get a good discount for the high taxes. It got to the point that owning means renting due to the high property taxes.
My point was that the Case-Shiller index is far too positive--the Westchester market has declined far, far more than indicated by the index. The index is skewed by NYC numbers. The market in most of the county is already down to historic levels of affordability and I personally doubt that prices will go down more, unless the city market collapses. But your guess is as good as mine.
I don't know what areas you've been seeing huge drops during the last 4 or 5 months, but in the prime lower Wsch communities, I've actually seen prices rising.
My point was that the Case-Shiller index is far too positive--the Westchester market has declined far, far more than indicated by the index. The index is skewed by NYC numbers. The market in most of the county is already down to historic levels of affordability and I personally doubt that prices will go down more, unless the city market collapses. But your guess is as good as mine.
Even if for the moment we assume that the prices in your area have reached 2000 levels adjusted for inflation, my point is that they are still unaffordable because not only income did not follow inflation but in many cases property taxes have doubled.
Even if prices went back to previous levels of affordability (which I claim they have not according to objective data) houses would still be unaffordable because maintaining them is much costlier now.
Property taxes, commuting costs, etc and need for future savings (uncertain employment retirement and medical benefits) have shot up.
The market is sending a clear message: there is more offer now (owners looking to unload unaffordable but overvalued properties) than demand.
I don't know what areas you've been seeing huge drops during the last 4 or 5 months, but in the prime lower Wsch communities, I've actually seen prices rising.
Correct! some see price chops some see increases, different agendas, that's why objective data from trustful sources is the only way to go (case-shiller from s&p).
Even if for the moment we assume that the prices in your area have reached 2000 levels adjusted for inflation, my point is that they are still unaffordable because not only income did not follow inflation but in many cases property taxes have doubled.
Even if prices went back to previous levels of affordability (which I claim they have not according to objective data) houses would still be unaffordable because maintaining them is much costlier now.
Property taxes, commuting costs, etc and need for future savings (uncertain employment retirement and medical benefits) have shot up.
The market is sending a clear message: there is more offer now (owners looking to unload unaffordable but overvalued properties) than demand.
What's changed since the boom is what we think of as being "affordable." Home ownership wasn't that affordable in the 90's--mortgage rates were high and banks actually wanted 20% down (!!). My property taxes, adjusted for inflation, are 2K over what they were in 2001--not a big increase at all. Commuting costs are up, as are heating costs, but they are outweighed by savings in my mortgage payments.
As for jjinla's comment--exactly my point. Westchester itself has many mini-markets, so it is pointless to talk about the entire county, let along the entire NYC metro region. Case-Shiller is useless because it averages out so many distinct markets. Even in a single town there are many markets--the over a million market is doing very well in my neck of the woods and has seen some price increases in the last 6 months, but the mid-range market has dropped a great deal. If you want to know the market, you need to look at specific properties in a specific price range in a specific area.
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