Many often think they can “time” the real estate market, but as we know it is virtually impossible. With the current prevailing uncertainty, most buyers are nervous even when the signs show that it has hit or is near bottom. That said, waiting that out may result in a missed opportunity. We think it is an excellent time to purchase a home for the following reasons:
- Fear & Uncertainty Create Opportunity
Most savvy investors will say that when everyone is negative on the market, it is often a good time to buy.
- Mortgage Interest Rates
While already historically low, mortgage interest rates have been further reduced to near record levels.
- Higher Negotiability
Price reductions and sales below their original asking price have become commonplace these days as sellers are still facing the realities of the softened market. Properties that are not priced properly linger and eventually become stale, this creates the impression that there is something wrong with the property or that it is overpriced. Stale properties can represent a great opportunity for a savvy buyer.
- Buyer Incentives
Many new developments are offering buyer incentives whether it’s a break on closing costs or no-cost for a building amenity such as storage or parking.
- Increasing Inventory
As we stated earlier, inventory has been on the rise for the past two years hitting a high in this year’s second quarter. This provides a buyer with a larger selection of properties with less competition.
- Investment Timeline
If you are planning to own a home for 7 to 10 years, you are likely to see a higher rate of return upon sale than in other investments.
- Decreased Competition
The spring market (February – June) is historically the most active period of the year as buyers generally search for a home to buy so they can close in the summer months. In the autumn, between settling into the new season and a new school year as well as major religious/secular holidays, there is less time for the market to heat up. In addition, fewer buyers are focused on purchasing a home during this period which translates to less competition and greater opportunities for good deals.
- Buying and Selling Concurrently
Buying and selling under the same market conditions can be advantageous as the reduced prices on the buy side often make up for the lower sale side. There are some exceptions to this as certain market segments are stronger than others.
- Properties with Flaws
In NYC, everything has a price but in a strong market, buyers will overlook certain flaws to acquire some other features they want. In a weak market, or one that favors buyers with a large inventory, it is harder to overlook less desirable features, and sellers will have to be realistic about value.
As we leave 2018 behind, it is important to survey what happened last year, especially since sales prices and volume decreased dramatically compared to 2017. There are several factors that contributed to the downward market, including:
• The Tax Reform bill, which has significantly affected New Yorkers due to the high state and city taxes that can no longer be deducted from the income tax
• Substantial increase of inventory in new development projects and units
• The loss of foreign buyers due to the depreciated value of foreign currency compared to the dollar
• Increased mortgage interest rates, due to the overall rise of interest rates.
• Domestic political uncertainty, the stock market fluctuations, and increased concerns of depreciation in value property.
All of the above contributed to a dramatic slowdown in residential real estate.
2018 was a year of transition: sellers had to come to the realization that prices were significantly lower, and buyers needed to understand and feel some confidence that the market has come to or near its bottom.
OUTLOOK FOR 2019:
While most sellers have finally accepted the new reality, there will always be some who feel that their apartment is exceptional and believe it will fetch a relatively higher price. And of course, there will be buyers who believe that prices will decrease further and won’t make offers because they want to wait till what they perceive as the “true bottom of the market.”
In addition, the geopolitical and domestic political climate could become even more combative and divisive. This is likely to create continued volatility in financial markets and will affect the residential sales market in New York City. In fact, the market may be as tough as it was in 2018. Nevertheless, many sellers and buyers may hold firmly to their beliefs that the market will still shift in their favor, which will make the broker’s task of bridging the gap even more difficult.
The role of a skilled real estate agent will likely be more important and at the same time more difficult. Brokers need to be knowledgeable not only about real estate markets, but about the financial markets and geopolitical issues as well. Agents will also need to carefully hone their marketing strategies to be effective. Learning top negotiation skills will allow an astute agent to bring about a meeting of the minds between their client and customers, and have both sides feel mutually gainful.
If you’re interested in buying property in NYC, our exclusive Buyer’s Guide will assist you in understanding what is involved in purchasing residential real estate in Manhattan, and will explain how we provide you with the best service throughout the process. Or if you need any further information or valuation of your property, please do not hesitate to contact us. I will be more than happy to answer any of your questions.
All the best–
NYC Real Estate Current Data-Based Snapshot
Guest blog post by Noah Rosenblatt of UrbanDigs.com
Today feels very different when looking back to the NYC real estate market from 2013 to 2015 when there was a continued progressive reflation following a severe housing crash in 2008. Those three years were ‘peak times’ for sellers, where market dynamics included super low inventory, bidding wars, and ever rising price trends. Buyers across all price points had to deal with a lack of supply options, intense competition and concessions in order to beat out competition and seal deals.
Today sellers no longer have the leverage they enjoyed during the peak years. The market dynamics are working in the buyers favor while sellers scramble to adapt. The two critical questions should be: how long will buyers enjoy this combination of favorable market forces and will there be another cycle down?
The 2nd question is a bit easier to answer. Nobody can predict what the markets will do in 6, 12 or even 24 months from now. There are too many external factors that can potentially impact NYC markets.
A necessary way to evaluate the market right now is to only analyze the very recent and current real-time market data. We are now seeing signs of life in the sub-market that started it all, the higher-end price points could be the moment for buyers to act as prices in the very high-end are significantly down from their peak.
More options. More negotiability. Discounts from peak. It’s a recipe buyers should embrace, especially in prime global city markets like Manhattan.
It’s enough to get this data geek bullish given where we have come from and where we are now.
Here are some key takeaways when looking at today’s market vs the peak period in 2015.
1. More Supply Options
2. More Negotiability
3. Discount from Peak*
* We must note that sales price trends lag the market by about 6-8 months. When discussing the peak period in mid-2015, those sales will show in the data approximately 6-8 months after contract execution due to delays in closing and public record filings.
Read more in our Fall 2018 Newsletter!Read More »
We all know renovation and design quality can affect the sales value of an apartment or home. As a top broker in the city for over 3 decades, I have seen my share of successful and unsuccessful renovations. Why is this so? It all depends on choices that an owner makes, starting with the architect or designer. Here are four steps and suggestions to consider if you want the best results when selling:
- Hire an architect/designer with a track record of successful sales. Most owners look at the design results in photos and even current finished properties that were designed by the architect/designer. But if you are interested in resale down the line, find out how many have sold successfully! That is an important and not a standard question.
- Look at properties you have liked that have sold – even had mulitiple offers and see what designs are selling. What do each have in common with the other?
- Ask your favorite agent about which apartments they have seen that have sold extremely well. Get their ideas of what has sold and why. Ask them if they know of an architect or designer where the apartments have consistently sold well.
- If at all possible, go to see a recent renovation of an architect/designer whose designs sell well. Step into the apartment and get a feeling for it to make sure that you will be happy living in it.
Read More »
This market is less active than the 5-room co-ops. Currently there are 15 contracts signed with an average of 104 days on market which means there is 1 in contract to almost 3 active listings and average price is down from last year by 10%. There are more sales happening but at lower prices. It is a good time to buy in this category!Read More »
In the first of our sub-market series, we review the 5 room co-op market on the Upper West Side where there are 41 current active listings and 20 pending contracts. This reveals a volatility index of 2 (where supply is 2 times the number of pending sales). This lower index shows a strengthening market. This is certainly a good time of year to purchase a property this size, as interest rates are still relatively low and sellers either have come down in price or have shown increased negotiability in the late summer months.
In terms of closed sales over the last 3 months — this year is much stronger. In the last 3 months, there have been 33 closings and in the same time period last year there were only 23. Also this year the average sales price is up 11% from the same time period last year. All good signs for the 5 room upper west side coop market!Read More »
Establishing the right price to list a property in the current market is challenging. Data has declined due to lower sales volume and prices have come down in most market segments. Typically we analyze comparable sales activity over the last six months, however this is no longer an accurate reflection of the market. Properties that closed six months ago reflect the market over nine months ago when they went into contract and that was a different world. I recently studied a particular market segment that I had analyzed only three months prior and I was astonished at my recent findings. Prices were down in the segment between 4 and 10% since April! There is not a lot of data but the numbers are showing a significant drop. The most accurate pricing indicators are properties going into contract right now. The ability to get that information is key to understanding where the market is in any particular segment.
Part of the problem is there are not a lot of properties going into contract. It is important to look at where properties are priced right now and anticipating where the market might be two to three months down the line. The most successful sales have been properties that have dropped significantly (5 – 10%) in one fell swoop. These price reductions tend to attract attention depending on how high you started. If you started where properties were six months ago and you drop 5% than you should be in a much better place.
Sellers have to be bold on pricing and willing to come down lower than they may have wanted. If a seller is not prepared to do that right now than their property may sit and stale listings do not do well in any market. My advice to sellers right now is to think carefully about pricing and how much you need to sell in this market. The market may turn but it is very difficult to predict when so it all depends on your timeline.Read More »
Given the steep drop in the stock market, buyers as well as sellers are asking me if this is the right market to buy or sell. For now, I will address the sale side. For those considering selling, this may be one of the better times for the foreseeable future. I say so not because I am a broker and obviously I can benefit from sales, but because of many other factors that bear directly on the market, providing sellers (and buyers) the opportunity to make deals that are mutually beneficial.
To begin with, the state of the stock market does not reflect the nature of the economy. Stock market fluctuation is not a strange phenomenon; the market goes up and down, and even when it occasionally does so precipitously, it does not suggest that an economic shakeup is in the offing. The real estate market responds to many other economic indicators, especially interest rates, the level of unemployment, earnings, bonuses, and the general health of the economy, consumer confidence, along with the supply and demand of residential real estate.
Sellers who wish to sell should put their property on the market this spring for the following reasons:
First, the market has been weaker over the past few years and we are coming off a weaker fall season where there were fewer sales and therefore lower sales prices. The first and particularly the second quarter of the year are the most active times in an annual cycle because of buyers’ desire to move over the summer. This is most often the best time for sellers to attain higher prices.
The second reason is that it has already been indicated that the Federal Reserve will again increase interest rates. This often prompts buyers to buy now rather than that wait and end up paying higher mortgage interest rates.
Third, bonuses are generally higher and many first-time buyers will try to take advantage of the softer market conditions and buy now. Thus, the potential that sellers can achieve relatively higher prices because of the anticipated demand is much more promising.
Fourth, waiting for the prices to increase may not be wise because, as I indicated earlier, we are now about to begin the high season, and the market will definitely slow down once the summer comes around. As a rule, in a slower market, prices dip and sellers may not be able to achieve as strong a price.
Based on the above, I encourage sellers who need to sell, not to wait any longer. With effective marketing and skilled brokers, sellers can achieve the strongest possible prices that the market will bear.
If you need any further information or valuation of your property, please do not hesitate to call or write to 646-665-4961 or to firstname.lastname@example.org. I will be more than happy to answer any of your questions.
All the best–
International buyers have always been a part of the NYC residential real estate market. Each year there are waves of buyers from different parts of the world. Foreign investment in the US residential markets – especially in NYC – occurs when certain market and financial conditions align. Foreign buyers invest when the dollar is weak, as it is cheaper for them to buy under such advantageous conditions. Additionally, when they experience economic instability in their own country or other desirable cities like London or Paris , foreign buyers focus on residential property in New York City, because in any case NYC in particular is considered a safe place for real estate investment.
As real estate brokers, we are often asked by sellers if their home is one that may be attractive to a foreign buyer, especially when it is widely advertised with a focus on overseas.
This week’s Ask an Expert column from the popular real estate blog Brick Underground featured information for overseas buyers who wish to buy in NYC, which I recommend that sellers review.
Some sellers do not know that overseas buyers mainly buy condominiums in NYC, since co-ops typically require applicants to have substantial assets in American banks, along with domestic social networks and tax returns for two to three years. Thus, condominiums are usually the investments of choice, and most often, new development condos are favored.
In the Brick Underground article, the question arose as to how a foreign buyer might obtain a mortgage. There are a limited number of banking options available, but generally there are enough options for foreign buyers who are qualified to obtain a mortgage; it just takes a little bit more time due to the complexity of the transaction.
Most US banks have created programs to accommodate international buyers. Foreign buyers can usually finance 50 to 75% of the purchase price, depending the size of the loan. Documentation requirements can be stringent, but some lenders are willing to waive these requirements in return for a slightly higher interest rate, to offset the increased risk associated with loans not fully corroborated. Moreover, most lenders require foreign buyers to show proof of income, assets, and monthly payments and carrying charges for any other real estate owned. US credit is not required, but a few banks require an international credit report.
An overseas buyer must be aware of certain tax implications of owning and selling real property in the United States. To ensure a smooth purchase process of a home or apartment in NYC, one is always advised to check with their accountant and/or financial planner for the most up-to-date rates and procedures, as they are subject to change. It is imperative for a foreign buyer to retain capable advisers on all aspects related to buying—including a knowledgeable real estate broker, a good lending institution, and an experienced real estate attorney.
Fortunately, we have very strong relationships with lenders and mortgage brokers in New York who are happy to work with foreign buyers.
If you are a foreign buyer looking to invest in New York real estate or are interested in more information, please do not hesitate to contact me for a free copy of my New York City Real Estate Buyer’s Guide, by emailing email@example.com or calling 212-937-7011.
All the best–
Home hunting in New York City is a unique experience and since there are so many listings in Manhattan, a seasoned and experienced real estate broker can guide you towards a home that meets your needs and within your budget. However, some people get into a mindset that may leave them at risk of losing out on a great opportunity. When viewing properties, be sure to keep the following in mind:
- Look past bad décor
Because of some buyers’ lack of vision, looking past bad décor or décor that simply does not meet their taste or style can play a major factor in achieving a lower purchase price. If they can envision what is possible, they may find the ‘frog that becomes a prince’.
- Consider flaws that cannot be changed
Good values can be found in flawed apartments, but expect a longer sales process. Such flaws can include:
- A dark apartment; although some people may prefer that over another property that receive a lot of natural sunlight
- No views
- High monthly maintenance
- Odd layouts that cannot be corrected, such as a small living room with no ability to expand, or a room without a window (which is not considered a room by NYC standards)
- Consider how long you plan to own the property you are about to purchase
If you plan to live in an apartment for 7 to 10 years, don’t worry too much about a small difference in value. Negotiate as effectively as possible to purchase a property at the lowest possible price. If you find an apartment that appeals to you and find yourself close to an agreement on price, but you still need to increase your offer slightly beyond what you were planning to pay, I would generally say “go for it.”
History has repeatedly shown that real estate—like everything else—is cyclical and that values increase over time. Therefore, if the new apartment or house would accommodate you for a reasonably long period of time, trying to exact the last dollar from a seller in a negotiation may not be the wisest thing to do, especially if you really want that particular apartment.
That said, if you plan to live in the apartment for a shorter period of time and your long-term plan is to sell it and purchase a larger unite keep in mind that when you sell and buy again, and if you are buying in the same general location, the price in various segments of the real estate market will have moved up or down in tandem. This means that if the market is down when you sell and you do not recover the entire value on your current home, your next purchase will also be affected by the same market condition and you will be able to purchase a larger home at a price that corresponds to the overall decrease in prices.
For more information about buying or selling an apartment please do not hesitate to contact me for a meeting or for a free copy of my complete New York City Real Estate Buyer’s Guide by emailing firstname.lastname@example.org or calling 646-665-4961.
All the best–