-On the Market: 99
-In Contract: 7
Sixty eight homes have sold in Rye City in the past six months compared to One Hundred Thirty Four during the same time period last year (in our November 2007 Update this time last year there were 59 homes on the market and 9 in contract). Eighteen or about 26.5% of the past 6 month's sales have been under $1,000,000 for an average price of $784,116 and fifty or 73.5% have been over the $1,000,000 mark at an average sales price of $2,243,410.
Rent vs. Buy
We know the local sales inventory has risen in recent months but what about rentals? Some buyers have been considering renting for a year and waiting for the market to "bottom out", but is that really a wise option? Is the market poised for a turnaround with Obama in charge?
A prospective buyer explores a concept called the "Rent Ratio" in a recent NY Times article in which he describes the real estate market's version of the stock market's P/E ratio – a measure of how expensive an asset is relative to the underlying economic fundamentals. The is done by finding a similar house for sale and for rent (or better yet, the same house) & dividing the sales price by the annual rent. As he describes, "Throughout the 1970's, '80's, and '90's, the average rent ratio hovered between 10 and 14. In the last few years, though, it broke through that historical range and hit almost 19 before the market peaked in 2006, the premise being that a rent ratio above 20 means the monthly cost of ownership will exceed the costs of renting."*
*As Home Prices drop Low Enough, A Committed Renter Decides To Buy, 5/08
I tried a quick test of my own and calculated the rent ratios of 5 houses currently on the market simultaneously for sale and rent in Rye of various price ranges and styles, and the rent ratios ranged from 12.76 to 16.47 (my own listing at 9 Eldredge Ct being 12.76). Is it finally time to buy? If you are interested, click this interactive calculator to find out!
Also keep in mind:
The percentage of rentals relative to sales has narrowed, as some clients are waiting to buy and others are opting to rent for a year , including relocation clients who may have bought in the past with the likelihood of a rising market.
Half of all of the Rye single family homes listed for rent are also on the market for sale – 27/56 currently listed.
- At last count, 6 of the active Rye rentals are new construction homes.
*Data per WPMLS, Zip 10580, RCSD & RNSD.
November 2008 Market Update and Article written by Judy Croughan, Licensed Realtor, Coldwell Banker, Rye.
Click here for more real estate information broken down by school district.