We are excited to announce that 2016 was another exceptional year for real estate in our market areas, and continued the upward trend in sales we have observed each year since the recession began to wane. While our third quarter Market Watch suggested that sales were starting to level off after a strong first half for 2016 in most of our 
regions, including Westchester County, N.Y., Connecticut and the Berkshires, Mass., we can now look back at that quarter in the context of the entire year and see that it was little more than a brief lull in an otherwise stellar 12-month period. The fourth quarter exceeded all expectations in most areas, not only with closings delivering healthy gains over the prior year, but also with a tremendous upswing in buyer activity. With the exception of a few pockets, most notably the slower moving high end communities of lower Fairfield County, the story we are hearing across all of our markets is the same: Our agents are busy with buyers who are jumping off the sidelines and into the market in droves—so busy that they hardly had time to settle down and enjoy the holidays. As a result, we can’t help but feel that 2017 is already off to an excellent start.
Region by region, the majority of our markets were up year over year. In Westchester County, 2016 unit sales were 8% higher and dollar volume 6% higher than the calendar year of 2015, with the sales growth occurring in both the lower and upper counties. Southern Westchester experienced year over year growth in units of 14% and volume growth of 5%, while Northern Westchester had gains of 13% in units and 8% in volume. Our Connecticut Shoreline market also concluded the year ahead of 2015, by 12% in units and 7% in volume. Litchfield County maintained steady sales through year’s end, with an 8% increase in units and 9% increase in volume, and a noteworthy uptick in sales between $1 and $2 million. The Southern Berkshires ended the year 12% above 2015 in units and 8% in volume, and witnessed a late year burst in sales between $550,000 and $750,000, a higher end market for that area. Only Fairfield County’s figures were more modest, largely resulting from the slower activity in southern county communities like New Canaan, Darien and Westport. While the county overall was about flat year over year, with a 3% increase in units and 3% decrease in volume, the lower county was softer, and Northern Fairfield County was a robust marketplace with sales booming at all price points.
The promising recent sales data in our markets is mirrored on the national scene, as existing home sales in November reached their highest level since February 2007, according to a National Association of Realtors report released in December. What happened during the fall of 2016 to drive this surge? One key piece of course was the Federal Reserve’s quarter point December rate hike, only the second in a decade, and an expected move that loomed large on the horizon all season long. The rate increase has caused mortgage rates to begin to rise, and as has been widely reported, three additional increases may be on the way in 2017. If history is any indicator, this will further affect mortgage rates. The hike is a signal of faith in the economy, which grew by a substantial 3.5% in the third quarter of 2016 according to the Commerce Department, and the Fed has projected that the economy will grow by another 2.1% in 2017 and 2% in 2018.
All of this news paints a very positive economic outlook, which is further bolstered by recent government data that the unemployment rate in November fell to its lowest since 2007, that hundreds of thousands of more jobs have been added, and that the election is now settled, which historically gives certainty to the country and brings stability back to the market. In addition, consumer confidence has jumped sharply, standing in December at a pre-recession level of 113.7 (1985=100) according to The Conference Board Consumer Confidence Index®. Consumer confidence is always encouraged by rising interest rates and a booming economy, and it is the leading indicator of a healthy real estate market.
So ultimately we are bullish on where the market is headed in 2017. Short term, purchasers who are concerned they will lose buying power as mortgage rates continue to creep up in the coming year will feel the urgency to become serious participants in the marketplace, even as sellers experience that same urgency and seek to take advantage of the buyer pool before it becomes more impacted by the rate changes. Given the flurry of activity in our markets in late 2016, we are already seeing this phenomenon take hold. It should be noted that some people pay for homes in cash, and they won’t be as affected by the mortgage rates. In the long term, a strong economy and strong consumer confidence should continue to support a strong real estate market.
We hope you find this report informative on what’s happening in your market, and invite you to contact one of our sales associates if we can help you with any of your own real estate needs. Be sure to check out the entire report here for further details.
Paul E. Breunich
President and Chief Executive Officer
William Pitt • Julia B. Fee Sotheby’s International Realty
