NOREEN SEEBACHER
THE JOURNAL NEWS

Real estate agent Peter Bell reluctantly counseled his clients to bid well over the $569,000 asking price for a house in Chappaqua.

"So they bid $650,000," recalled Bell, owner of Balch Buyers Real Estate in Mamaroneck.

Matthew Brown/The Journal News

Realtor Peter Bell shows a house to Tracy Dubin on McBride Avenue in White Plains.

But like dozens of other prospective homebuyers, the couple discovered offering even more than the asking price is no guarantee of getting a house in Westchester County. "My clients were outbid, by not one but two buyers," Bell said. "The market has just gone crazy."

In an area with a persistent low inventory of homes for sale, high demand — and, frequently, enough buyers with the resources and inclination to get the property they want at any price — house hunting can be frustrating.

Housing prices have soared an average of 21 percent in Westchester in the past year. They've gone up almost as much in Rockland and Putnam counties, increasing 19 and 14 percent in the past year, respectively.

"Let's see. Have I ever done anything I found less enjoyable than looking for a house? Actually, no," said Jenna Albright of Yonkers, who claimed she has all but given up her dream of moving to a house from her apartment.

That's too bad, because there are plenty of people who would eagerly snap up her apartment if she vacates. Like houses, apartments are still in short supply.

"There has been a terrible shortage of rental units," said Gil Mercurio, Executive Vice President of the Westchester County Board of Realtors.

In the past year, the rental apartment market has loosened, at least slightly. A few new complexes, including Avalon Bay in New Rochelle, have opened. Several more are under construction in both New Rochelle and White Plains.

If construction on all of the complexes in White Plains alone continues, the city could have more than 2,000 new apartment units available for rent. But it's going to take time. Most of the units are more than a year away from occupancy, which doesn't help anyone looking for a place to live today.

In addition, most of the new apartments fall into the luxury category. Renters can expect to pay more than $2,000 a month for even a one-bedroom unit in most of the complexes now under construction. Since experts recommend spending only about 25 percent of income for housing, prospective renters will need annual incomes of about $100,000 just to move in.

The median income for a family of four in Westchester is about $83,100, according to the Westchester County Planning Department. That means the average family would be better suited with a two-bedroom apartment renting for around $1,700.

But there just aren't many around, real estate agents concede, in either apartment complexes or private homes.

The rental shortage can be traced at least in part to the county's overheated housing market. Because houses still sell in hours or days rather than months, fewer sellers get desperate enough to rent their properties.

When the housing market is slow, and offers are few and far between, motivated sellers may agree to rent instead. In most cases, that still isn't happening.

The challenge is finding something to buy. Take that typical Westchester family that earns $83,100 a year. Assuming it had $20,000 in savings and monthly debts of no more than $500, it could afford to buy property with a maximum sales price of around $220,000.

The average price of a house in Westchester is more than $525,000, according to statistics from the New York State Association of Realtors. That's 21 percent higher than the $435,000 average a year ago and more than 41 percent higher than the $372,500 average two years ago.

"Where I live, $500,000 get you a darn nice house, with a big yard, great schools, and a three-car garage. Here, the $500,000 houses look like the ones that sell for about $100,000 at home," said Judi Heenan, who recently traveled to Westchester from Western Pennsylvania to visit a niece.

Nationwide, Westchester ranks as one of the most expensive housing markets. The national median existing-home price is about $155,000, the National Association of Realtors reports.

The median is the midpoint, which is a typical market price where half of the homes sold for more and half sold for less. It includes one-bedroom cottages to multimillion dollar mansions.

But the cost of housing is high even if you exclude the smallest and largest homes. Runzheimer International, a Rochester, WI management consulting firm, recently looked at what the average middle-income buyer could get for his money in 300 markets nationwide.

The company compared the cost of 2,200 square foot, eight-room, four-bedroom, 2.5 bath homes in areas that middle income workers would likely live.

Buyers in the New York metro area pay almost twice as much for that typical house than those in other locations, almost $400,000; buyers in Standard City, USA, an average cost location, pay about $222,700, Runzheimer reports.

Property taxes in the tri-county area add another significant expense to housing budgets. In most locations in Westchester, for example, the taxes on a $500,000 home are about $12,000 to $15,000, according to statistics from the Westchester County Tax Commission.

Scott Stiefvater, co-owner of Stiefvater Real Estate in Pelham, said the high cost of property taxes there have motivated some homeowners to sell.

Even if they've owned their homes only a few years, they can reap substantial profits, move to a lower cost housing market, get a bigger house with more amenities – and significantly lower their property tax bills.

Pelham residents pay about $15,000 in taxes on a $500,000 house.

Unfortunately, unless a seller is willing to relocate out of the area, the options are limited.

That adds to the Catch-22. Because inventory is so low, even homeowners who would like to sell stay put because they can't find another house. As a result, inventory levels stay low – perpetuating the cycle.

But there could be some changes ahead.

In the past few weeks, Stiefvater said inventories have increased slightly, at least in some segments of the market.

"More buyers have been negotiating again rather than immediately going over the asking price. There seems to be a little more flexibility," he said.

David Lereah, chief economist for the National Association of Realtors, said housing should continue to be a bright spot in the economy over the next six months.

However, "Going forward, the trend should be a gradual decline in home sales activity."

Stiefvater agreed. "I don't see this suddenly turning into a buyer's market. But I also don't think it will continue to be as strong of a seller's market than we've had in the past two years.

"I think will get back some balance."

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