Bidding Wars in the Suburbs
by Lisa Prevost, New York Times.
By 5 p.m., they had submitted an offer for the full asking price of $942,000. The sellers wanted to give it more time. After several days, the couple raised their offer to $999,000. The sellers wanted another week. “We asked them to give us a number they would take it off the market for,” Ms. Krivickova said. “They said no.”
The couple really wanted the house. They huddled with Mr. Scinta, who analyzed recent sales prices of similar properties to help them strike a balance between a strong offer and an overzealous offer, which, if it exceeded the bank’s appraisal, could cause problems with financing.
Finally, on a Monday morning, they submitted their highest offer: $1,087,000, a full 15 percent premium. Mr. Scinta heard back that afternoon.
“Arthur called and told us there were nine other offers,” Ms. Krivickova said. “But we got it — by three or four grand.” And fortunately, the bank appraisal came in on the nose.
The family moved in last December; a third child is expected to arrive in August. They are delighted with their new home. But as for the angst involved in buying it? “It was awful,” Ms. Krivickova said.
The bidding wars that have become the norm in New York City are now also common in select suburbs within easy commuting distance. Buyers priced out of the city are heading for the ’burbs, driving up demand and creating a more fraught buying process in close-in towns that have long enjoyed reputations for good school systems, lively downtowns and ready access to the city.
“The city is this pot of water that’s spilling over on the sides, and that excess demand is going to the suburbs,” said Jonathan Miller, the president of Miller Samuel, a New York appraisal and research firm. “It’s all being driven by the lack of affordability.”
Across Westchester, northern New Jersey, parts of Long Island and lower Fairfield County, Conn., the competition is fiercest for move-in-ready homes toward the lower end of the price scale — under $1 million in some markets, under $2 million in others — in places within a 40-minute rail commute to the city. Walking distance to a lively downtown, a train station or both heightens the appeal.
Well-priced homes in good condition in these markets often draw multiple offers within days of coming on the market. An analysis of first-quarter sales this year conducted by Miller Samuel showed the highest percentages of Westchester properties (23 percent to 44 percent) selling at or above asking price — signs of likely bidding wars — in places like Larchmont, Irvington, Bronxville, White Plains and Pelham. The average premium ranged from 1.7 percent to 4 percent, actually lower than a year ago at the same time, when buyers were paying more like 5 percent or 6 percent over the asking price.
Fairfield County and Long Island could not claim the same intensity in sales activity in the first quarter, Mr. Miller said. In Fairfield County, Stamford, Norwalk, Greenwich, Fairfield, Westport and Darien, 2 percent to 13 percent of properties sold at or over the asking price. On Long Island, Garden City, Huntington, Levittown, Port Washington, Franklin Square and Manhasset showed signs of bidding wars on 1 percent to 3 percent of transactions.
Mr. Miller said he suspects bidding wars may have been more prevalent in those towns a couple of years ago, while now, “Westchester is center stage.”
Mr. Miller’s firm does not cover New Jersey. But there, “the housing market is looking better than it has in a very long time,” said Jeffrey Otteau, the president of the Otteau Valuation Group in East Brunswick, N.J. Among the briskest markets are Hoboken, Glen Ridge, Maplewood, Montclair and South Orange, judging by their very low levels of inventory, he added.
Generally speaking, buyers are not lining up for luxury properties. High-end homes — upward of $2 million or $3 million, depending on the location — are still going begging across the metropolitan area, agents said. Demand for these homes is weakest in affluent suburbs without a train station. “The reason is clear: The high-paying jobs in the region are now disproportionately located in Manhattan,” Mr. Otteau said. “And if that’s where you’re going, there’s just not enough hours in the day to involve a car in that commute.”
At the same time, the luxury market in rail-centric towns is also slow, as they vie for fewer Wall Street bonus dollars and compete with a growing preference for urban living. Said Mr. Otteau,
“Because of the dramatic improvement in urban life in the last 20 years, it’s no longer a given that when you’re ready to raise a family, you need to go out and buy a house in the suburbs.”
But many buyers who would prefer to stay in New York City simply can’t afford to. In Pelham, “almost all of our buyers are coming from the city, increasingly from Brooklyn,” Mr. Scinta said. “They are being priced out in terms of the additional space they need. They’ve outgrown their apartments and can’t afford to move up to the next-size apartment.”
In their search for a home, Anil and Smita Abraham, who are moving from the Washington, D.C., area for Mr. Abraham’s financial services job in New York, have hit many of the market hot spots, like Greenwich, Conn., and numerous places in lower Westchester. But on a Sunday in mid-May, the Abrahams and their two children, ages 6 and 4, were concentrating on open houses in Pelham. “Pelham is our top choice, I would say,” Ms. Abraham said. “We really loved Greenwich, but it’s too far to commute.”
They were among a dozen or so buyers checking out a six-bedroom Georgian colonial that had been listed for $1.465 million the previous Thursday. The couple were smitten with the updated house, particularly because of its ample bedroom space — room for visiting grandparents — and large basement playroom. Although the open house wasn’t busy, the listing agent, Caroline Baccellieri, an associate broker with McClellan Sotheby’s International Realty, already had two offers in hand before it began. By that night, she had two more — including one from the Abrahams.
But the sellers took one of the earlier offers. “It came in at over asking the day the house went on the market,” Ms. Baccellieri said. “We felt like they were going to see it through and there weren’t going to be any problems.”
Earlier this month, the Abrahams were in negotiations for another house in Pelham, but weren’t certain they would reach a deal. With the spring season slowing and fewer properties coming on the market now, Mr. Abraham said they would buy elsewhere in lower Westchester if need be.
Mike and Wendy Buzzeo of Jersey City were outbid three times as they searched recently for a home in Montclair, Maplewood and South Orange, N.J. During a crowded open house at a five-bedroom Queen Anne Victorian in Montclair last month, the Buzzeos, who have two sons, ages 1 and 3, said, based on their previous experiences, they suspected the list price of $539,000 was set deliberately low to spark a bidding war.
“We figure you have to add at least $100,000 to the list price to get an idea of what the house is really going for, and usually it’s more than $100,000,” said Mr. Buzzeo, the head of international marketing for FXCM, an online brokerage firm.
Betsy Ceccio of Keller Williams in Montclair, who had the listing along with her business partner, Joyce Slous, disputed the notion that homes were being underpriced to spark a frenzy. But she acknowledged that many homes were selling above their list prices, especially in the $500,000 to $900,000 range. Even with older bathrooms in need of updating, the Victorian, which is within walking distance of downtown and a train station, wound up netting 13 offers, all over asking, and several a full 20 percent higher, well beyond what the sellers expected, Ms. Ceccio said.
“Buyers were waiting and waiting for inventory to open up, and they’re looking at the school calendar and thinking they need to get settled before the school year starts,” she said. “The clock is ticking.”
The Buzzeos were not among the bidders on that house, but Ms. Buzzeo, the director of digital marketing for MetLife, later said that they had made an offer that had been accepted on a house in Maplewood.
The dearth of lower-priced inventory relative to demand is sometimes sparking bidding wars in towns where they are usually few and far between. In Weston, Conn., for example, which has no train station or downtown, and where sales have been sluggish this year, JoAnn and Doug Cohen found themselves in an unexpected bidding war earlier this spring for a three-bedroom split-level listed for $635,000. Having sold a large house in Westport two years ago, the Cohens, who have an 11-year-old daughter, had been renting in Weston while they looked for a modestly sized house priced under $850,000.
“I didn’t want another large house,” said Ms. Cohen, who works for an accounting services firm. (Her husband is a talent scout for a recruiting firm.) “We’re on a seven-year-plan — we’re going to move to a different area when our daughter graduates from high school.”
The split-level was the nicest house they had seen; others in their price range had tended to need a lot of work. (The median sales price in Weston from February through May averaged around $780,000.) This one had an open floor plan with lots of natural light, a newer kitchen and a flat two-acre yard on a cul-de-sac.
“There just aren’t a whole lot of these out there,” said Gabrielle DiBianco, the agent with the Higgins Group who represented the Cohens.
Still, the Cohens were surprised when they made an offer under the asking price and were told they were competing with two others. They raised their bid enough to secure the house, and closed earlier this month.
At the same time, in some of the rail towns on Long Island, houses sell so quickly that some agents aren’t even bothering with open houses, said Maggie Keats, an associate broker with Douglas Elliman Real Estate in Manhasset and Port Washington.
“They have sufficient traffic by appointment,” she said.
Calling Manhasset and Port Washington “the ‘it’ markets” for buyers moving from the city, Ms. Keats said the towns were benefiting from highly rated school districts, a quick commute to Penn Station, “true” downtowns and waterfront access.
“In both of these communities, some of the movement you see is people within the community, whether up or down,” she said. “You don’t see a huge amount of turnover, and we do not get a great amount of inventory. So when something new comes on, there’s high demand.”
In Garden City, properties in good condition for under $1 million routinely draw multiple bids, as buyers are waiting in the wings, according to Stephanie Cullum, an associate broker and manager at Coach Realtors. In 23 years of selling real estate, Ms. Cullum said, she had never seen first-time buyers as determined to get a home as they were at the beginning of the spring market.
“A lot of them have bid on something and lost it,” she said. “They get out to see homes right when they come on.”
In her opinion, not only the high prices in the city are driving demand; rising rents on Long Island are as well. “Two-bedrooms are asking $2,900 to $4,500 a month,” she said, referring to Garden City.
“You could get a nice mortgage for that.”
Not all buyers are motivated solely by budget considerations, of course. George and Brooke Antonopoulos have spent most of this year looking for a home in Darien, Conn. They’ve lived in Manhattan for 10 years, but as they consider having a family, they are looking for more square footage for their money, along with the lifestyle they grew up with: “yards and barbecues,” said Ms. Antonopoulos, who works in accounting.
They have made offers on two houses so far; neither worked out “for various reasons,” said Mr. Antonopoulos, who works for a hedge fund. But they’re not frazzled. They don’t have to stand in line for a good property under $1.5 million, like so many other would-be Darien buyers. Given their budget of up to $4 million, the Antonopouloses say, the market, in their case, is tilting in their favor.
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