One of the biggest mistakes sellers make in pricing their home is assuming that they will get at least 100 cents on every dollar they put into that home since they bought it:
“Well, I bought it for $450,000 ten years ago, and I put in a new kitchen for $50,000, so it’s worth at least $500,000.”
Unfortunately, it doesn’t work that way. You almost never get 100 cents, or even 75 cents, on every dollar you spend.
Why? Well, for one thing, you did that work according to your own tastes, and hopefully, you got a lot of enjoyment out of it. But maybe your new buyer won’t love the granite countertops you chose or the way you organized your closets. It’s not worth as much to them as it was to you.
For another, many home improvements involve equipment that you put in, which quickly starts to depreciate once you use it. Homes appreciate, but the stuff in them doesn’t. That new washer? It’s used. That new fridge? It’s worth 50% of what you paid for it the minute you plugged it in.
So if you never quite get 100 cents on the dollar for home improvement projects, how much do you get? It’s tough to say. The most bang for the buck is usually in anything that increases square footage or the number of rooms, the least comes from improvements that are based on depreciating equipment.
If you’re looking for a general guide to the return you can get on home improvement projects, Remodeling Magazine puts out a helpful guide every year called the “Cost v. Value Report,
which compares the projected return on different types of projects. It’s not definitive, and its methodology is not based on actual real-life data. But it’s a useful indicator of the relative perceived value of different times of home improvements.
Remodeling Magazine provides a national average and also breaks down the information for different regions of the country. Here is the expected return on projects for mid-Atlantic states:
If you are thinking of doing some major renovations, you should talk to your real estate agent. Why? Because they can help you in making decisions that will preserve or enhance the value of your home, and whether certain improvements are worth making.
The housing market in Westchester and the Hudson Valley closed the year with a flourish, with regional sales and prices up modestly but meaningfully. The market overall continued to show signs of recovery from the suppressive effects of the 2018 Tax Reform’s Cap on State and Local Taxes (i.e., the “SALT Cap”). Although we are still seeing more demand in the lower-priced than upper-priced markets, the overall trend suggests continued growth in 2020.
Single-family sales were up regionally and in most of the individual counties. Regional sales rose 2.8%, only the second quarterly increase since the end of 2017 and the inception of the SALT Cap. For the 2019 calendar year, sales were down just a tick, but they picked up steam in the third and fourth quarter, after a weak start to the year. Within the individual counties, quarterly sales were mixed, tending to rise more in the higher-priced counties. Why? Because they were the hardest hit in 2018 by the inception of the SALT Cap, so their 2018 baseline numbers were suppressed more than in the lower-priced counties. As the SALT Cap continues to get priced into the market, we expect that sales will rise throughout the region in the spring.
Similarly, single-family prices were generally up across the region, reflecting some rising strength in the high-end. Regionally, the average price rose 2.8% from last year’s fourth quarter, following a similar increase in the third quarter. Most importantly, Westchester seemed to be recovering from the impact of the SALT Cap, with average prices up almost 3% for the quarter. Indeed, we might be seeing a long-awaited recovery in the high-end Westchester market: sales of super-luxury $3M+ homes rose 37% from last year’s fourth quarter. Westchester pricing tends to drive the rest of the market, so this was a welcome increase for all regional homeowners and sellers.
Inventory was still low, but rising. The lack of inventory throughout the region has held back sales growth, with most counties and property types well below the six-months of inventory level that signifies a balanced market. Inventory was still relatively low as the year ended but was trending up in just about every county market and property type. It might be that sellers are seeing prices go up, and are getting tempted into the market.
Going forward, we believe that the market is poised for a relatively robust 2020. Housing fundamentals are all positive: prices are still at attractive levels compared to the last seller’s market, interest rates are back down to historic lows, the economy is solid, and inventory might be loosening up. Accordingly, we believe that demand will continue to grow and that as the lingering effects of the SALT Cap dissipate, we will see more widespread price appreciation going into the spring market.
In the fourth quarter of 2019, the Westchester housing market continued to recover from the impact of the 2018 Tax Reform cap on state and local taxes (i.e., the “SALT Cap”). Single-family home sales were up almost 4%, the second quarterly increase in a row following seven straight declines after the SALT Cap went into effect. And prices were up as well, rising almost 3% on average and over 2% at the median. For the calendar year, Westchester’s single-family home sales and prices were mostly flat, due to the weak first half to the year. But the trend does seem to show that Westchester buyers are pricing in the SALT Cap after 18 months of doldrums – indeed, the high-end is well into recovery, with sales of $3M-plus homes rising 37% from last year’s fourth quarter. Going forward, we believe that Westchester will experience a robust spring market, responding to strong housing fundamentals like low-interest rates, a growing economy, and pricing still below the heights of the last seller’s market.
Activity in the Rockland housing market surged in the fourth quarter of 2019, even while the 2018 Tax Reform cap on state and local taxes (i.e., the “SALT Cap”) continued to suppress pricing growth. Single-family transactions rose over 7% for the quarter, and almost 6% for the full calendar year, reflecting high levels of demand spurred by strong economic fundamentals. But the SALT Cap has suppressed demand in the higher-ends of the market, which has held back pricing for single-family homes overall. In contrast, 2019 full-year prices in the lower-priced condo market were up over 8% on average and 10% at the median, because buyers at those price points generally don’t itemize their taxes and are mostly unaffected by the SALT Cap. Going forward, we do believe that the SALT Cap will ultimately get priced into the market and that the strong housing fundamentals will drive a relatively robust spring market.
Pricing in the Orange County housing market surged in the fourth quarter of 2019, even while low levels of inventory continued to stifle sales growth. Pricing was up across the board, with single-family home prices rising over 8% on average and almost 9% at the median compared to last year’s fourth quarter. And for the full 2019 year, single-family prices were up 3% on average and almost 5% in the median. Condo prices were also generally up, rising 5% on average and over 6% at the median for the year, even while the quarterly numbers were mixed. We note that sales activity for both single-family and condo homes was down for the quarter, but that was largely based on a lack of inventory rather than a slackening of demand. Orange inventory is way down, finishing the year with under five months of inventory for single-family homes and an unprecedented two months for condos. Going forward, we think that rising prices will tempt more sellers into the spring market, and that buyer demand will stay strong with rates low and the economy growing.
The Dutchess county housing market surged again in the fourth quarter of 2019, closing a robust 2019 with a flourish. Sales activity was way up, with single-family home sales up almost 20% from last year’s fourth quarter, which made up for a lackluster start to 2019 – as you can see, even with the fourth-quarter surge, sales for the full year were basically flat. Quarterly sales were also up almost 13% for condos, finishing the year up almost 7%. Pricing for the quarter was a bit more mixed: single-family homes were down about 3% on average but up almost 4% at the median, while condos were up about 5% on both the average and the median. But for the year, pricing was up meaningfully, with single-family homes up almost 3% on average and over 4% at the median, and condos up over 4% on average and almost 3% at the median. Going forward, we believe that Dutchess is entering 2020 in good shape, and the strong economic fundamentals will drive a relatively robust spring market.
The Bronx housing market slowed down just a bit in the fourth quarter of 2019, with sales falling slightly and prices topping out after a robust run-up for most of the year. We believe that, like other high-priced markets throughout the region, the Bronx might be feeling the impact of the 2018 Tax Reform’s Cap on State and Local Taxes (i.e., the “SALT Cap”), particularly in the higher end of the market. Even with the suppressive effects of the SALT Cap, though, we believe that the housing fundamentals are strong, and expect a relatively robust 2020.
Pricing. Overall pricing was down slightly compared to the fourth quarter of last year, falling more than 1%. The individual property types were mixed: average prices were down 3% for single-family homes, up almost 2% for multi-families, down 2% for coops, and down 20% for condos. We caution not to read too much into the condo number since the Bronx condo market is a relatively thin slice of data. For the year, though, pricing was up 5% overall, and up for all property types other than condos.
Sales. Sales were down slightly, falling over 2% from last year’s fourth quarter and finishing the year down almost 6%. Previously, we have attributed slow sales to a lack of inventory, which has stifled sales growth by denying the Bronx enough “fuel for the fire.” But the Bronx market might also be hurt by the SALT Cap, which particularly impacts buyers in higher price ranges, who are more likely to itemize their taxes. And while some micro-markets in the Bronx are probably not affected, we note that the average price overall in the borough is about $500,000, which is about where home buyers are more likely to feel the pinch of the SALT Cap limitations on property and state income tax deductibility.
Inventory. Inventory was generally up, rising for all property types and down only slightly for condos. Inventory is still in the 5-6 month range for most property types, a level that usually indicates a seller’s market, but it’s definitely opening up a bit. That might start to push sales up in 2020.
Outlook. Going forward, we believe that Bronx sellers and homeowners continue to have reason to be optimistic about where the market is going. The fundamentals are very strong: the economy is growing, inventory is still low, interest rates are near historic lows, and demand is strong. We expect that even with the challenges of a slowdown in Manhattan and the pinch of the SALT Cap, the Bronx market will continue to see price appreciation and sales growth through the winter and the spring markets.
Pricing in the Bronx housing market surged again in the third quarter of 2019, as robust demand continued to push prices up even while a lack of inventory held sales down. Going forward, we believe that the fundamentals are strong, and expect a robust market through the winter and into 2020.
Pricing. Overall pricing was up over 6% compared to the third quarter of last year, and up for most property types: rising almost 10% for single‑family homes, 5% for multi‑families, and 4% for coops. The exception was pricing for condos, which fell about 7% for the quarter. For the rolling year, though, average prices were up for all property types, rising 11% for single‑families, 6% for multi‑families, 3% for coops, and almost 10% for condos. Demand in the Bronx is strong, which continues to push prices up.
Sales. Sales were more mixed, falling almost 7% compared to last year’s third quarter and now down almost 7% for the rolling year. Sales varied depending on property type: rising slightly for condos and single‑family homes but down sharply for multi‑families and coops. We believe that a lack of inventory is stifling sales throughout the borough: simply put, the Bronx lacks “fuel for the fire” to meet the demand for housing. That demand, coupled with low levels of inventory, is what is driving pricing up.
Inventory. The inventory challenges, though, might be easing. Inventory was up for all property types, probably because homeowners are attracted to the rising prices. Inventory is still in the 5‑6 month range for most property types, a level that usually indicates a seller’s market, but it’s definitely opening up a bit. That might start to push sales up in the fourth quarter.
Negotiability. The negotiability indicators – the listing retention rate and the average days‑on‑market – indicate that sellers are continuing to gain negotiating leverage with sellers. The listing retention rate was a little mixed, but the days on market were down for all property types, indicating that homes are selling more quickly – a clear sign of a growing seller’s market.
Outlook. Going forward, we believe that Bronx sellers and homeowners have reason to be optimistic about where the market is going. The fundamentals are very strong: the economy is growing, inventory is still low, interest rates are near historic lows, and demand is strong. We expect that, even with the challenges of a slowdown in Manhattan, the Bronx market will continue to see price appreciation and maybe even some sales growth through the winter and into 2020.
The Westchester housing market surged in the third quarter, showing signs of recovery from the lingering effects of the 2018 Tax Reform cap on state and local taxes (“SALT Cap”). Single‑family home sales were up about 1% compared to last year’s third quarter, the first year‑on‑year increase since the SALT Cap was passed. Similarly, single‑family average prices rose 3.3%, the largest quarterly appreciation since the inception of the SALT Cap. Moreover, the luxury market showed signs of life with 38 sales of $3M+ homes, an increase of almost 23% from last year’s third quarter, and the most quarterly sales in over four years. In the condo and coop markets, prices were also up significantly; sales results were more mixed, but only because inventory levels are down to about 3‑4 months. Basically, we believe that higher‑end home buyers are finally starting to price in the effects of the SALT Cap, and that the overall strength of the housing market – historically low rates, attractive overall values, and a solid economy – are going to continue to drive demand through the end of the year and into 2020.
The Rockland housing market surged forward in the third quarter of 2019, showing the first signs of recovery from the lingering effects of the 2018 Tax Reform cap on state and local tax deductions (“SALT Cap”). Single-family home sales were up over 8% from last year’s third quarter, the largest increase since 2017, before the SALT Cap took effect. Pricing for the quarter was a little more mixed, with the median price rising over 3% but the average price down 1.5%, probably because the SALT Cap is still suppressing some demand in the high end. Indeed, if you look just at the condo market, which is priced well below the single-family market, you’ll see how strong demand is in the entry-level price points: prices in the quarter spiked over 13% on average and 12% in the median. Condo sales were down over 15%, but that’s largely due to a lack of viable inventory; demand remains exceptionally strong. Going forward, we believe that the SALT Cap is eventually going to get priced into the higher-end of the market, and that average prices will start to appreciate more aggressively by next year.