Photo credit: Angela Gaul | A “sold” sign hangs outside a home located at 293 Congers Rd. in New City. (Dec. 28, 2012)
Westchester County’s white-hot rental market trails only New York City and San Francisco as the most expensive in the country, and the combination of low inventory and high prices may be pushing prospective renters to consider buying instead, according to analysts and recent statistics.
In the fourth quarter of 2012, the average rent for Westchester County properties across all property types, from studios to penthouses, climbed .4 percent to $1,852, according to preliminary data from real estate research company Reis Inc. The vacancy rate expanded 14.3 percent — from 3 percent to 3.5 percent — but remained 1 percentage point below the national average of 4.5 percent.
Ryan Severino, senior economist at Reis, said that renters who avoided buying property as the housing bubble collapsed may reconsider.
“You have a segment of the population who delayed buying houses because of deflationary expectations,” he said. “They’ve already had to stomach 8-10 percent rent increases. What we’re starting to see at the top of the food chain is people are going to say: ‘Why pay two, three thousand in rent? Maybe I should buy into the for-sale housing market again?'”
For those who remain in the Westchester County rental market in 2013, Severino forecast that rents will climb 2.5-3 percent and that the vacancy rate will expand a hair, by .1 to .2 percent. That compares with a 2.2 percent increase in rents in 2012 and a .6 percent increase in the vacancy rate.
Steve Bernasconi, a real estate agent at Better Homes and Gardens Real Estate/Rand Realty in Nanuet, said that the Rockland County rental market also is showing signs of a turn.
“More people are in a buying mode,” he said. “In today’s world [with rents of] $1,900 a month, if you’ve got any sort of credibility, you have to be buying.”
Of the 240 Rockland County rental properties on the Multiple Listing Service, the median price was $1,785 for a two-bedroom, one-bath unit with 948 square feet. Skewing the prices, however, are properties at the top end, like the nearly 7,000-square-foot single-family house overlooking the Hudson River at 28 River Rd. in Grand View-on-Hudson. Monthly rent? $18,000.
Though market forces are prompting some to consider buying, Lori Morrow, a broker with Coldwell Banker Residential Brokerage in New Rochelle, said individual circumstances sometimes can take precedence.
“Most of the people who are renting at the high end — there’s a purpose for their renting,” she said. “They’re not going to be here very long or they want to test the area or they don’t have the down payment or the credit score.”
In some cases, renters are newly divorced and want to take a year to transition before they buy, she added.
Tougher mortgage requirements by banks and a sluggish employment market also have conspired to keep prospective buyers out of the market.
Rental prices in New York City averaged $2,985 in the fourth quarter of 2012, far outstripping No. 2 San Francisco at $1,970 and almost triple the national average of $1,048, according to Reis.
Vacancy rates in the New York City market were 2.1 percent, the tightest of the 82 metropolitan areas surveyed.
The average fourth quarter rent for northern New Jersey was $1,531, and Long Island’s was $1,609.
Morrow said scores of co-ops are sitting vacant in Westchester County, and the county’s apartment inventory would expand if the boards of cooperatives allowed more units to be rented.
“They can’t sell them and they can’t rent them,” she said. “We have co-ops all over the place just sitting there. Boards just don’t allow rentals.”
There is a 22-month backlog of co-op units for sale in New Rochelle, Morrow said, and that likely reflects market conditions in the rest of Westchester County. By contrast, at the end of September, there was an 11-month supply of condominiums, she said.
