It looks like six more weeks of winter, according to Punxsutawney Phil, the famous groundhog who saw his shadow yesterday morning on a tiny hill northeast of Pittsburgh, among 13,000 spectators still celebrating the Pittsburgh Steeler’s 27-23 victory over the Arizona Cardinals (is anyone else old enough to still remember them in St. Louis?).

Well, it has certainly been a cold and snowy winter here in Rye, but at least it is pretty….I took local pictures of some of my favorite places around town after a recent snow that you may find interesting, especially those of you from out of town!

On the Market - 94

In Contract - 7

Fifty ninesingle family homes have sold in the past six months in Rye City, compared to ninety five during the same time period last year. Fourteen or 76 1/4% of the saleswere under $1,000,000 for an average price of$768,036, while forty five or 23 3/4% of the sales were over the $1,000,000 mark for an average sales price of $2,314,400.

As you can see below, sales are down from last year, but the past 3 months sales in Rye (since the credit crisis) are nearly half of 2007. Prices have remained steady to slightly higher year to year as a whole but are starting to level off since September. Slightly more homes have been rented but the average rental price has dipped. Will the buyers come out of hiding in 2009 if the U.S. plans to push down interest rates to spur homes sales, as per a recent Wall Street Journal article?

Rye Quick Facts:

            2007

Shop Talk:

-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 “RentRatio” 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