All the Stars are Aligned……Why Now is a Great Time to Buy in NYC
The real estate market in Manhattan over the past few years has been more favorable to buyers especially during the past pandemic year. Since January however, there has been a steady stream of good news proving New York City’s resiliency and causing many to feel that sales prices will begin to rise and could shift the leverage back to sellers. The just-released Second Quarter numbers further strengthened the overall positive reports. Manhattan had the best spring season for closed sales in six years and the strongest second quarter for contract activity since 2007. The number of Manhattan signed contracts has been climbing since last September and rose nearly sevenfold versus last spring’s “pause” from 700 to almost 5,000 contracts. As many buyers remain focused on the desire for more space, the high-end of the market performed well with increases in the sales of larger homes (3 bedrooms or more). Due to improved sales in this category, pricing statistics climbed versus last quarter, giving the $5M+ market a nice boost. But even with incredibly strong sales, inventory remains stubbornly high. As of mid-June, 7,939 units were actively listed in Manhattan, 31% more than last year, although inventory then was artificially low due to pandemic-related showing restrictions. Inventory did moderate, albeit slightly, versus 1Q 2021—the first time since 2013 that inventory fell between the first and second quarter of the year.
The combination of pent-up demand, historically low interest rates, increased negotiability and consumer confidence have boosted sales over the first half of the year. The optimism has only grown since more and more New Yorkers have been vaccinated and the city has re-opened. Those with kids know for certain that schools will be open in the fall, which is what everyone has waited for over the past year. That said, the most significant factor in the market rebound has been lower prices, but the high level of activity in the Second Quarter indicates buyers understand that window is closing.
Window of Opportunity
By all accounts, we do expect a strong fall market. The economy is improving and will likely continue to improve. While it is nearly impossible to time the real estate market, we feel there is a rare window of opportunity right now to purchase property in NYC. Inventory is still high, offering buyers leverage on homes, especially those that are un-renovated or specifically renovated that may not appeal to all buyers. Interest rates are still low and will likely rise moderately before the end of the year. There is still negotiability and reduced or non-peak prices on many homes. Not every segment of the market is active with properly priced properties flying off the shelf. There are certain locations not considered ‘prime’ or apartment categories that have continued to suffer losses without much of a recovery. New development concessions have begun to wane and will likely be eliminated as we enter the fall market. Lastly, with buyers returning from their summer away, especially in the high-end, and foreign buyers re-entering the market, competition could increase as the year progresses.
Now more than ever it is important to have an excellent, experienced broker representing you in your purchase. If you would like to discuss your goals and options this summer, we would be happy to help. Click here to contact us.
Proper pricing is key to achieving the highest and best price in the quickest timeframe. However, setting the right price is not always so easy in a soft market with a lot of inventory. There are many options for buyers which gives them the time and opportunity to be deliberate. In the past, pricing at a very competitive asking price or slightly below has sparked increased interest at the outset and even garnered multiple bids. Buyers in today’s market feel they must have a ‘deal’, so make sure to add room for negotiation to your pricing and absolutely do not overprice! Overpricing leads to under-selling. It is important to honestly discuss pricing and strategy with an experienced broker who has a track record in your area and has navigated challenging markets successfully.
First impressions matter. Top-notch staging, de-cluttering and even sometimes minor kitchen and bathroom upgrades will help you achieve the best possible sales price. Even priced appropriately, an apartment can sit on the market if it does not show well, especially in a buyer’s market. The investment in time and/or money up front will save you time and money in the sale of your property. Make sure you work with a broker who knows what it takes to appeal to the broadest audience and make your apartment stand out among the competition.
Be aware that in the current market, inbuilt flawed features that cannot be changed can have a significant negative impact on the value of the property. Examples include lack of views or light, a high maintenance, a low floor and/or limited building amenities. In a strong and competitive market, some of these flaws may be overlooked in exchange for other features, however in a softer market, they are harder to overcome. There are some ways to mitigate some of these through staging, painting, lighting and furniture placement. For others, make sure you are priced appropriately.
Choose a broker who understands how to create an effective marketing strategy that is tailored to your property. Be certain they understand the selling points and can customize an approach to appeal to the most suitable buyers.
Although it is a buyer’s market, there is an advantage for sellers as well. This market offers a wonderful opportunity to ‘trade up’ for a new home that is either larger or has upgraded features to that of your own such as better views, nicer amenities, or superior location. Buying and selling under the same market conditions can be beneficial as the reduced prices on the buy side often make up for the lower sale side.Read More »
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–
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–
Regardless of how the tax reform bill is finalized, it appears that overall the residential real estate market in New York City may benefit as a result. While some buyers and sellers remain uncertain, in general, it seems that the market will continue to gain momentum as we approach 2018 and beyond. This projection is supported by the current economic indicators—the stock market continues to rise, bonuses are likely to be higher than last year, unemployment is down, interest rates are still near record lows, and the overall economy remains very strong.
For many sellers, buyers, and brokers, this year was a tough year to make or hold together deals because of the political uncertainty that the Trump administration has created. The constant barrage of news stories engendered some fear in the minds of many buyers, and trepidation among sellers. This created a situation of false starts and stops: buyers second-guessing themselves and sellers feeling alternately lucky that they sold their property, albeit upset because they were compelled to sell at a lower price than they expected.
Due to the lower buyer’s confidence in 2017, some serious sellers had to lower their prices. That created opportunity for buyers. In fact, it appears that some of the pent up buyer’s demand is manifesting now in the number of contract signings. As of the beginning of December, the number of contracts that were signed in Manhattan properties during November was up by nearly 5% over November 2016. While contract volume is down from 2014-15, thus far the number of contracts signed in 2017 exceeds the number sold in 2016. I attribute this to savvy buyers who understood that they had an opportunity to purchase at lower prices, as well as to realistic sellers who recognized that the market had changed.
In short, reality has begun to sink in the marketplace and buyers have become more confident. All this is notwithstanding the impending tax reform bill. I think that says a lot about the potential strength of this market! Right now, I am advising sellers who want to put their properties on the market in the New Year. As the new season begins, and it would be wise for buyers to consider purchasing early in the year in the event that prices escalate as some predict will happen during the first half of 2018. If you have any inquires about the market conditions, please don’t hesitate to write to firstname.lastname@example.org or call 646-665-4961.
All the best–
Negotiating to purchase a home can be an daunting process, especially in New York City – which is one of the most competitive places to live and work. The competition in Manhattan to purchase residential real estate can be fierce! However, if you find yourself in a situation where you have to negotiate against multiple offers to purchase your ideal apartment, remember the four P’s: be Prepared, Plan, be Proactive, and Personable.
Even though it may be tempting to negotiate on your own behalf, most people feel uncomfortable doing so because of lack of expertise and objectivity which may undermine your effectiveness. For this reason, I recommend using an experienced broker who has a good track record in and understands the nuances of negotiation. This usually is a crucial part of the purchasing processes of a home where you can feel satisfied and pleased with your purchase.
- Have your professional members who would be involved in the purchasing process ready including: real estate broker, attorney, and mortgage broker.
- Have your papers in order: a completed REBNY financial statement and mortgage pre-approval letter, should you need a mortgage.
- Know what’s on the market and what has been sold recently – with this knowledge, you’ll be able to establish a well-educated value and its relevance to your intended purchase.
- Learn as much as you can about the seller: their profession, age, cultural orientation, marital status etc. More often than not you can find much of this information online which can greatly enhance your understanding of the negotiating style of the seller and help you negotiate much more effectively to reach a mutually beneficial deal.
- Ascertain the seller’s motivation which gives you a much better sense of how flexible he or she may and how eager they want to sell which would have a direct effect on the ultimate purchase price. A cautionary note, do not assume that anything about the seller’s motivation to sell unless you can verify that, because the wrong assumption may prolong the negotiating process and could end up in failure.
- Planning any negotiating process require special skills and extensive experience. In order to negotiate effectively and arrive at the best possible price you need an experienced broker who would develop a negotiating strategy.
- You should ask your broker to share with you his/der negotiations strategy and show you why and how he or she are taken this or that negotiating strategy. This would include the number of moves, the objective behind each move, and how this process of give-and -take will eventually lead to a meeting of the mind.
- Remember that even under the best of circumstances no broker, however skilled in negotiation, can gage exactly how the negotiations would evolve. That said, a negotiating strategy ought nevertheless be developed to provide you with a better sense about the process and why, for example you might have to pay more than you expect or how and why you might even pay less than anticipated.
- Finally, if you happen to be a skilled negotiator do not dictate to the broker how to proceed with the negotiations a step-by step, particularly because you are not in direct contact with the other broker who is representing the seller. You certainly can make some suggestions but let your broker utilize your ideas as he or she sees fit.
- When buyers are circling around a well-priced and desirable new listing be aware that the first person who makes an offer can have an advantage over others. Waiting is not always the best choice especially if you know the apartment is priced well and is a good deal when considered against other comparable unites.
- While the strongest offers are all cash, most buyers cannot afford this option. The next best option is to make an offer which is not contingent upon financing. This suggest to the seller that you are confident to secure a mortgage which is often treated as if you are an all cash buyer. Needless to say, you should check with your banker prior to making such an offer because you need to be comfortable with the risks involved.
- If you are financing, and would like a financing contingency, a pre-approval letter or commitment letter from a bank will be necessary. You can sweeten the deal for sellers by also putting down a larger down payment and end up financing a lower amount.
- Other terms that can aid in making a deal at the price you agreed to pay are related to:
- CLOSING DATE: If it is possible, make sure to offer to close the sale at the seller’s convenience.
- QUICK CONTRACT SIGNING: Another competitive posture is to agree to sign a contract within a short period of time and to facilitate that you would need a proactive attorney.
- Make a good impression on the seller’s exclusive agent by taking the time for a friendly chat when appropriate to give the broker for the seller a better sense of your sincerity. Seller’s broker often conveys his/her impression of the prospective buyer especially when they feel that the buyer is solid and enjoys a good reputation.
- Some buyers shy away from letting the broker or owner to know how much interest they have in a property believing that it puts them at a disadvantage. In fact, letting the broker about your interest and even enthusiasm about the prospective purchase works to your advantage as well as it demonstrates your level of commitment to buy that particular property.
- In a written offer, be sure to compose a personal letter and attached to your offer. In so doing you convey to the owner how happy you are at the prospect of purchasing his/her home. Given that most owners have deep sentiment and attachment to their home, they would want to sell their property to someone who appreciate the property and ‘loves’ it as much as they do. Writing such a letter is especially important under a competitive bidding scenario.
- If for whatever reason your offer isn’t chosen, let the seller’s broker know that you remain interested and ask that your offer is kept as a backup.
If you want to learn more about Negotiations or becoming an ‘expert buyer’ of Manhattan residential Real Estate, contact me for a meeting or for a free copy of my complete New York City Real Estate Buyer’s Guide by emailing email@example.com or calling 212-937-7011.Read More »
Earlier this month, Brick Underground posted an article “Why I’ll Never Buy an NYC Co-op Again” that narrated the woes of one individual’s experience living in a co-op apartment. There are over 7,000 co-op buildings in New York City and it’s unfortunate that the writer’s negative experience brushes over all of these great residential opportunities. Given that the article now has hundreds of shares on Facebook, I find it necessary to remind real estate readers why co-ops are one of the most financially beneficial investments for Manhattan living.
- Co-ops are an Excellent Value: Overall, co-op apartments offer more space for less money. The price per square footage for co-ops can be between 10-50% less compared to condo apartments. This is a huge price difference: a 1-bedroom condo on the Upper West Side could cost $1.2-1.6M, while a 2-bedroom co-op in an equally nice – if not nicer – co-op building in the same location could be similarly priced, perhaps even lower.
- Knowing your Neighbors: The Brick Underground article states that the writer isn’t concerned about the finances or personal lives of the neighbors, but buyers of co-op buildings like to have the comfort knowing that their neighbors are vetted financially and personally, and will make good and responsible fellow residents.
- Issues can Arise. In a condo, a buyer can spend $6M for a home and unknowingly become saddled with neighbors who a) are not friendly or respectful, b) frequently host rowdy parties (although there are rules in condos as well), or c) may be more apt to lending out their apartments to friends. These potential inconveniences may make a buyer’s purchase a regrettable investment and uncomfortable home. Because co-op board reviews and interviews are necessary to become a resident shareholder of the building, owners in the building have a great deal of confidence that their neighbors are good, friendly people who are personally and financially responsible.
- Overall Living Experience: When a buyer invests their hard-earned money into a home in Manhattan, a co-op building offers security for a comfortable living community. The exclusivity of co-op buildings and the preparation involved for a co-op board interview may be too much for some people to handle, but they are necessary for co-op shareholders to vet tenants that will maintain a comfortable lifestyle for their neighbors and offers protection for an owner’s investment in their home.
Co-ops may not be for everyone, but they are a wonderful opportunity for people who want to buy a home in Manhattan and know that they are paying for a spacious residence at a great price, in a well-run building with good neighbors as well.
If you have any other questions regarding co-ops, the co-op board application process, or to find out more about my co-op listings, please contact me at firstname.lastname@example.org or call 646-665-4961.
All the best–
This series features advice on how to build the best team of professionals who will help you with the buying or selling of your Manhattan home. Assemble your Home Team by also reading Part 1: Real Estate Agent, Part 3: Mortgage Specialist and Part 4: Professional Renovator.
Whether it’s buying or selling an apartment, you’ll want a reliable real estate attorney on hand. Your real estate broker focuses on searching for the perfect apartment for you as a buyer or preparing a comprehensive marketing plan for your apartment as a seller, as well as develop a negotiating strategy and the terms of purchase or sale. To that end, you will need an attorney at the ready to begin the contract process or purchase of sale. If you are purchasing a home, the attorney will perform due diligence on the property you wish to purchase and negotiate the contract of the sale sent by the seller’s attorney. If you are selling, your attorney will draw up and negotiate a contract of sale. At the end of the process of buying or selling, it is the real estate attorney that sets up the “closing” of the sale which occurs when you officially purchase or sell your home. So how do you choose a good real estate attorney?
Ask friends to recommend an attorney they have had a good experience with, who managed the process successfully to their satisfaction. Your real estate broker might also know an attorney who is skilled in residential real estate transactions. When you’re ready to call or meet with the attorney candidate, have a list of questions that you want to ask them. Those questions and considerations may include:
- Do you only handle residential transactions or are those just a part of your practice? If residential transactions aren’t their only practice, ask how many residential real estate transactions they have handled.
- What’s their fee structure? Some attorneys charge per transaction while others charge by the hour (which can get costly). Find out if there’s a different fee structure in the case of a deal falling through.
- As a seller, it’s important to know that a contract goes out almost immediately upon a negotiated sale, so look for an attorney who is responsive and acts quickly. Don’t hesitate to ask how fast they can produce a contract once they have a summary of the deal terms. If it is longer than 24 hours (not including weekends), ask why it would take that long.
- If you’re purchasing, you’ll want to be certain that your attorney commits to the due diligence required for the building and negotiate the contract quickly. Often the time it takes to finalize a deal is critical. Therefore you should ensure that they are set up to conclude the process in just a few days.
- Ask them if they would be available for urgent phone calls on evenings and weekends. There are real estate attorneys who give out their cell phones when the deal is time-sensitive or when there is a concern about a new and urgent matter. In an active market, issues pop up more often than you might think!
- You should feel secure that they know and are familiar with the customary real estate practices from beginning to end. If you’re dealing with co-ops, you’ll want to know that they’re familiar with the practices of co-op boards and the entire application process.
Some of top qualities you’ll want in a real estate attorney are:
1) Solid experience with residential transactions
2) Someone who can review or send out the necessary documents quickly – even on short notice – which is important for many buyers/sellers
3) Someone you like well enough on the phone or in person, who communicates and responds clearly and with whom you feel comfortable working. After all, the process from contract signing to closing could take 3-4 months or longer so it is helpful that you trust and have the the attorney you chose!
For more advice on finding a real estate attorney or other real estate questions, please contact me at email@example.com or call 212-937-7011.
All the Best—