Tips, Trends and Tales from a Pro
Stats for 2019’s first quarter show that as inventory continues to expand, transaction volume and sales prices are declining. Despite the recent highly trumpeted $238M condo purchase at 220 Central Park South, New York’s housing market remains sluggish. The good news is that mortgage rates are holding and even dropping, and despite an increase in the mansion tax, residential buyers retain the upper hand.
First introduced in NY State’s legislature five years ago, a pied-à-terre tax is receiving renewed attention as a direct reaction to the recent $238M sale at 220 Central Park South. The state seems to be scrambling to fund coffers to pay for a host of capital projects, following New York’s ill-fated Amazon loss and delayed efforts to monetize the legalization of marijuana and casino gambling.
Are the challenges for homeowners who need to buy and sell at the same time any different in a fast seller’s market with limited inventory than in a slow buyer’s market with abundant supply? A strategic approach to a simultaneous closing of your current home and subsequent purchase is essential in any market.
Last August, I characterized 2016-2018 as “real estate’s great adjustment years” when four trends prevailed: rising inventory, slipping prices, more time on the market and multiple price reductions. We’re in for more of the same in 2019 as buyers and sellers come to terms with market changes and prices stabilize. In the current environment where uncertainty reigns, it behooves the real estate professional to be especially vigilant in the preparation of the all-important co-op board package and recognize the co-op’s obligation to protect the interests of shareholders as they evaluate a buyer’s qualifications and also seek to maintain property values.
Are we approaching a turning point in Manhattan’s housing market? Are prices nearing the bottom? Only with the benefit of hindsight can we determine highs and lows, but it feels very much like 2009 when home prices sank and remained flat until regaining traction and climbing past the peaks of 2007 to new highs seven years later in 2014.
Much has been made in the press of late of the shifting New York real estate market. Although buyer’s decidedly have the edge today, all is not lost for sellers. If you are in the fortuitous position of trading up to a larger property, while you may not do as well as you would hope for on the sale, you will more than likely make up for that deficiency on the buy. In this current climate, two important strategies can boost sales: pricing realistically and doing your best to convert that first offer into a sale.
We’re just past the 10-year anniversary of Lehman’s 2008 collapse and into the 9th year of U.S. economic recovery which trumpets at least three robust measures: a 3.7% unemployment rate that’s the lowest in nearly 70 years, a 20% rise in GDP, and a bull stock market that’s up more than 50% from 2007 even after the last two-day downward slide.... The current housing slowdown which began in NYC at the upper end of the market is now palpable in every market category... Since 2009, there's never been a better time to purchase a home, despite spiking interest rates and tax reform concerns.
Last week I was interviewed by a reporter from an online lifestyle blog who was writing a story on building a dream team for home buyers. She referred to her own “miserable” recent experience of…
Change in our local residential real estate market, and for that matter in life, is a given and our only constant. For every up, there comes a down, and for every step forward, there’s a step or two back. Life has its turns, and real estate has its cycles.
Buyers have the edge today. There’s more inventory to consider and less pressure for buyers to act quickly. With a slower trading pace, there’s more time to explore and evaluate increasing inventory options. With sluggish sales, sellers have adjusted their expectations, and they are reducing prices to more realistic levels to get deals done. Developers are also dropping prices, negotiating and offering upgrades and concessions. Even national builders like Toll Brothers are incentivizing homebuyers to boost soft sales. This month until July 29th, Toll Brothers is offering to pay mansion and transfer taxes to buyers of their condominiums in New York and D.C. This downward value trend is likely to continue for several more quarters.
Homeownership rates are steady. Despite incrementally rising mortgage interest charges, rates remain historically low, encouraging owning over renting. According to U.S. Census Bureau statistics for 1995-2018, homeownership percentages peaked at 69% in 2004 and 2005, then dropped to a low of 63.4% in 2016, but remain virtually unchanged at 63.9% in the last two years. Although last year’s tax reform puts limits on the tax advantages of ownership, it appears that more renters are opting to purchase to build wealth, create community and improve lifestyle, contributing to pride in ownership. It will take time, at the very least until next April 15th, to measure the tangible impact of the revised tax law on homeowners.
“Now is not the time for risk taking and speculative investment. If you’re making a purchase, choose a home in the best location possible where quality product will withstand market fluctuations.”
Gradually rising interest rates cause buyers to favor fixed rate products. Fed fund rates which control short term interest rates increased in June to 2%. With more rate hikes expected in September and December, buyers are choosing fixed rate products over variable options. As mortgage financing becomes costlier, affordability declines particularly for entry level buyers of studio and one bedroom apartments.
Fewer showings have become the norm. Sellers are asking, “Why aren’t you showing my home more often?” The truth of the matter is we are experiencing fewer showings, and not only because it’s summer. For nearly every property, first visits occur online. When a potential buyer actually visits the residence, the meeting is akin to a second showing.
A beautiful online presence has never been more important. In a nation of Facebook and Instagram, the visual image drives the consumer. As the first point of contact for the buyer, the online presentation matters more today than ever. If the image shows a cluttered home and fails to attract visually and emotionally, it’s too easy for the prospective buyer to click next. There’s no good reason for the homeowner not to take the time and spend the money to clean, declutter and stage the home to its best advantage.
Research shows millennials prefer home ownership to renting. Those born between 1981-1997 share the American dream of owning a home, much like their parents and grandparents. However, millennials appear to be postponing a purchase and renting for a median of six years in order to pay off existing debt (especially student loans), improve credit scores, repair credit history and save up for a down payment and closing costs.
If now is the time to buy, what about investing? Now is not the time for risk taking and speculative investment. If you’re making a purchase, choose a home in the best location possible where quality product will withstand market fluctuations. Lock in a fixed rate mortgage, reduce debt, increase savings and build wealth. If your purchase is investment driven, your time horizon should be 5-7 years, and don’t expect an immediate return.
A brief word about our newest property. If by chance you are looking to establish residency in Florida or buy a second home, we have an affordable choice for you to consider in Bay Harbour. Away from the tumult of downtown Miami and South Beach, The Sophie is a 7-story condo with 26 units, full amenities including beach club membership and 2 parking spaces. Prices approximate $500 per square foot. Do call if you’d like more information.
In a 35-year career, I’ve worked up markets, down markets and everything in between and can say unequivocally, each market presents challenges and opportunities for buyers and sellers.
So, you’re thinking of putting out a For Sale By Owner sign. It’s understandable you want to save money and skip the brokerage fees. But are you doing yourself a disservice?
Multiple bidding is occurring with increasing frequency especially for entry level homes and well priced properties under $2M. As competition heats up, it’s worthwhile to review four competitive bidding tips.
Technology has changed the way we live and work. Advances in the digital age have transformed industries from medicine and health care to defense and education.
Staging has always been important in home sales, though it hasn’t always had the recognized trade prominence it’s gained in the last two decades.
Tax reform has been on everyone’s mind of late, and the political noise and rhetoric has stirred up uncertainty in residential real estate markets, creating tension and highlighting hesitancy.
A heated bipartisan debate began earlier this month in the House and Senate over proposed changes to the Federal tax code. While it’s too soon to predict exactly how a revised structure will play out, tax incentives for homeownership are in jeopardy. How will reducing and maybe even eliminating tax benefits for owning a home affect our housing market?
Numbers tell only part of the story. At the end of each quarter, we’re showered with statistical reports that require us to consider the macro and the micro of our market. Yet each neighborhood and even each building has its own contextual history. To best serve buyers and sellers, agents need to dig deeply into quarterly reports and then plough even deeper into individual comps, examining both sold and current properties to scrutinize every factor that influences a sale including condition, staging, monthly carrying charges, price drops, time on the market and extenuating circumstances.
According to nyc.gov, Bedford-Stuyvesant measures 2.782 square miles and has a population of 154,332: 64% black, 20% Hispanic, 11% white, 5% other. Occupying north central Brooklyn with Crown Heights to the north, Clinton Hill to the east, Williamsburg to the south and Bushwick to the west, Bed-Stuy is a small fraction of its parent Brooklyn borough which totals 71 square miles and 2,629,150 residents. Its housing stock, dominated by an estimated 6,000 3-4 story townhouses that date mostly from the late 19th century, is increasingly attracting more and more homebuyers who feel priced out of the other residential markets as well as U.S. and foreign investors looking for steady return and appreciation.
Buying a home for the first time in New York City, one of the nation’s most complex and competitive real estate markets, can be a daunting and overwhelming experience. But it doesn't have to be. Real estate novices are advised to collaborate with an experienced professional who will narrow the multitude of choices, minimize the stresses and streamline the process from start to closing.
