Posted on September 26, 2013 by David Laidlaw

After over 9 years in our current house and 14 years in town, my family is moving from Mount Kisco, NY to Chappaqua, NY. Our move was motivated by the desire for a larger house closer to town and a change in school districts for our children. While the real estate market has improved markedly over the last few years, my impression is that the local market is still depressed.

The market conditions and general environment are much different from the last time we moved. In 2004, when we moved out of our starter home, demand from buyers was strong and there was pressure to make an offer quickly for fear of losing a house to another bidder. Banks were generous (foolish) and it was easy to get a mortgage without too much paperwork or due diligence. The bank’s appraiser miraculously appraised the value of the house we bought at $1,000 more than the purchase price. While we ended up over-paying for the home we purchased, we also realized a gain of over 100% on our first home that we had purchased only five years beforehand.

When we started looking at houses in early July of this year, the supply of homes on the market seemed quite limited. As a general rule, most of the homes had been on the market for at least 3 or 4 months. The condition of the homes were less than pristine as it seemed many sellers were fatigued with the process of staging their homes for sale. The inventory of new homes also did not change substantially from week to week. The house that we ended up buying was the only one that met our needs. We would not have moved if we had to settle for the other options after scanning dozens of properties on and Zillow and visiting the ten or so houses that appeared to be worth a look.

Financing the purchase was also much more arduous than in the past. We obtained a mortgage from the same bank that handles all of our business and personal accounts. Even so, the bank asked for explanations for every single money transfer between accounts. The mortgage was approved within five to six weeks, but the volume of paperwork required was daunting.

Regarding selling our Mount Kisco home, demand appears very tepid. We are getting two to three showings each week and have not received an offer since the property was listed last month. I assume that the level of traffic is a result of the low inventory of homes for sale, rather than strong demand from potential buyers. We also have no expectation of “making” any money on the sale. We are listing the house for 7% less than the purchase price in 2004 even though we “invested” roughly $100,000 in capital improvements during our tenancy.

The financial press and national statistics regarding housing have painted a much more positive picture than our local impressions. According to the most recent Case Shiller report, home prices climbed 2.16% between May and June and are over 12% above prices from last year. Those markets that lost the most during the downturn that started in 2007 have rebounded the strongest. For instance, home prices in Las Vegas have increased 14.5% over the first 6 months of the year.

The real estate market in suburban New York is driven by the underlying health of the financial sector in New York City. Banks are still trimming their workforces and the prognosis for higher payouts is poor given the stricter regulatory environment. Technology is growing in Silicon Alley in New York, but most of the employees in that sector are more interested in urban Brooklyn, rather than sylvan Westchester. Westchester is also struggling with maintaining high standards in the public schools without runaway increases in property taxes. These local factors in combination with national trends have produced a stable, but very sedate, housing market. While I wish we were selling into a stronger market, the current environment seems to be an accurate reflection of today’s more sober economy.