Ninety five percent of the time, buyers I work with rightfully express shock at NYC real estate prices and take offense at the bidding wars and other indignities they are subjected to. Nevertheless they happily purchase despite that, because they know real estate here is a great deal: prices will rise even higher and their assets will be worth more, usually with 4 or 5 times leverage because of financing. And they'll own a piece of New York.
But in those rare periods when NYC real estate becomes a buyers' market for a brief period, many fail to take advantage. In 2009 and '10, at the bottom of the Great Recession, when even WARREN BUFFET was urging, begging, people to buy real estate, many held back. Some because they didn't have the means, others because they wondered if Planet Capitol could ever climb back. But almost every buyer I worked with in 2014, '15, '16 and the beginning of 2017 said at some point, "Why didn't I buy in 2009 or '10?"
Various factors suggest that now, in late 2018, after 4 straight quarters of reduced NYC sales and prices, may be the time to buy:
1) 2009 prices are probably not coming back. At that time, the stock market had lost 30%-40% of its value, long-established financial institutions were disappearing, the auto-industry was threatened, and hundreds of thousands of homes were taken back by banks. Price adjustments we've been seeing over the past year are nothing like what happened then. But the cumulative reductions over the past 4 quarters are substantial.
2) The Federal Reserve Bank raised interest rates a quarter point in September, the third increase this year, with another expected in December, three more in 2019 and one more in 2020. Bankers I've spoken with (talk to yours) have guesstimated we'll have mortgage interest rates up a half point by spring (which would have us at a still historically low @5%, with lots more room to climb). Every half percent means a $750,000 mortgage will cost $2,700 more per year, or $27,000 more out of pocket during the first ten years of a 30-year mortgage (assuming you sell or re-finance by then; the full 30 years would cost an additional $84,000). Corresponding numbers for a $1.5 million mortgage would be an additional $54,000 out of pocket over the first ten years and $162,000 over 30 years. That's for every 0.25% increase. Remember, those added costs are largely no longer tax-deductible. But buyers who get into contract by year-end can probably take advantage of longer rate-locks now being offered by some banks. And those not in contract until spring will still beat higher rates possibly coming later.
3) Sellers are somewhat beat down. They have finally accepted that the zooming market of 2011-2016/early'17 eventually reached (and probably overshot, because of momentum) rational price levels. They're no longer setting their prices based on the highest recent comparable price (except by discounting from them). They have adjusted asking prices accordingly, though reluctantly and haltingly. And still they've been sitting on the market.
Now we are approaching the dead of winter, when offers, and even open house attendees, slow considerably. Very. With 8-10 months worth of inventory (current listings, or "supply" - compared to current new contracts, or "demand") on the market, those few buyers who do come through have wide choices. A balanced market is 6 months of inventory. And come next spring, sellers know a whole bunch of new inventory will hit the market. During the coming shorter, darker days of winter, any buyer who comes even close to being within a reasonable distance of sellers' already discounted prices, will likely have a reasonable chance of getting the deal.
Please call or email me if you'd like to discuss, or have me do a custom listings search for you.
Associate Broker, CitiHabitats
387 Park Avenue South - 4th Floor
New York, NY 10017
I always strive to cause your friends to thank you for referring me.
Associate Broker - Platinum Award
387 Park Avenue South 4th Floor New York, NY 10016
Real estate agents affiliated with Citi Habitats are independent contractor sales associates and are not employees of Citi Habitats. Citi Habitats is a licensed real estate broker located at 387 Park Avenue South, NY, NY 10016. All information furnished regarding property for sale or rent or regarding financing is from sources deemed reliable, but Citi Habitats makes no warranty or representation as to the accuracy thereof. All property information is presented subject to errors, omissions, price changes, changed property conditions, and withdrawal of the property from the market, without notice. All dimensions provided are approximate. To obtain exact dimensions, Citi Habitats advises you to hire a qualified architect or engineer. This is not intended to solicit property already listed. Equal Housing Opportunity.