Super confused about the state of Real Estate? You're not alone. It's insanely hard to see the forest through the trees right now. Let me break it down for you. But first let's be clear who I'm talking to, because every market in every zip code is different right now. If you are interested in buying or selling in the five boroughs of NYC, listen up!
We've all seen the headlines- "Housing Market Collapse Could Cause Prices to Fall 20%," "The Housing Market Mess, Explained," "Will the Real Estate Market Crash in 2022?!" These are all articles aimed at the national market. The New York market has always differed drastically, and that is true now more than ever. Remember all the 2020 headlines predicting the fall of New York FOREVER? Yeah, we're doing fine. But yes, the interest rate hikes are a big new factor in your buying and selling decisions. But New York is doing much better than most other cities around the globe. Real estate is a solid investment here and always will be.
So what the hell is going on in the market? Before answering that, I want to go back to advice I continually give. If we're talking about your home, don't try to "time the market." When is the best time to buy? Buy when it's best for you. Selling? Sell when it's best for you. Every individual home journey is unique. You can be smart in any market. (For more on that, just going to drop this little video post right here.)
That said, if you're hoping to be smart about the current NYC market, here's what you should know currently. The market was extremely slow this summer, 39% slower than in 2021, primarily because of the rate hikes. Interest rates going up mean prices should be coming down. And they are. But not as much as you might think, because there have been fewer listings coming onto the market. We usually see a sizable uptick in inventory after Labor Day, yet this year it has been very minimal. Limited inventory means more competition, even with the decrease in buyers on the hunt (another result of the rate hikes). For the big picture though, this means a mutual cooling off on both sides. This is healthy. And much needed after the great buying frenzy of 2021.
Lower price points have been the most affected by the rate hikes. Just one or two points means so much to the under $1M market. Many buyers no longer qualify to purchase. Though with rents being as high as they have been, it has brought new buyers to this market so the numbers say it is down, but out in the field, I've had steady interest and competition for my listings at this price point. The $1M to $10M is down from 2021 significantly, but only slightly down from pre pandemic days, which suggests a very healthy stabilization. As for the luxury market, it has slowed as well, but it's resilient. People are still seeking to increase their square footage post pandemic. And high-net-worth individuals see NYC real estate as an inflation hedge, a safe place to park their wealth.
Market Pulse Graphs curtesy of Urban Diggs
Which brings me back to the local big picture: New York is a safe investment. We have a long record of being one of the best long term investments in the US. Home prices have nearly doubled in the last decade. Zillow predicts values to rise 4.8% by June 2023. Now if the pandemic has taught us anything it's that anything is possible. But bottom line, if you have a way around the rate hikes, this is a great time to buy. We've just entered into a buyer's market in Manhattan this past week, strictly looking at the numbers. So the market is down, but not terribly. Brooklyn is in a neutral zone. So buyers have good leverage with low risk in both areas, as illustrated in the graphs above. And if you're a seller, the market has not plummeted as much as the headlines may make you think. New York is still in demand. It's a much calmer, enjoyable process now on both sides, compared to just a few months ago.
So how can you work with the rate hikes if you need to finance? Here are a few things to consider:
Buying down your rate with points.
Considering an ARM with a low intro rate.
Using a shorter loan term.
Making a bigger down payment.
Shopping loan products with different lenders (some will offer to cover some closing costs or have better programs for first time buyers or buyers in certain neighborhoods.)
Making lenders compete.
Working with a mortgage broker.
For a great read on these options, check this out from The Washington Post--
And as always, I'm here to help you navigate NYC real estate, from the brutal to the beautiful. Reach out anytime. Happy home hunting NYC!