I was speaking to a new client the other day, briefing her on the process, talking about next steps for her search, getting poised to take full advantage of the fall market, when all of a sudden she stopped mid must-haves list and asked, "I mean, am I crazy to want to buy, NOW?" She went on to list all the reasons why she shouldn't buy now, the summary being Brooklyn prices are high and she has a rent controlled apartment in the village. A lot of you reading this would say, "Yes, she is crazy, I would give a limb to have a rent controlled apartment in the freakin Village!" But in this barrage of reasons not to, I got the overwhelming sense she really, REALLY wants to. She needs more space for her family and needs it now. That's the bottom line.
In my opinion, that's all that matters. Well, and that you have the money to make the purchase, of course. But if you are looking for your home, what the real estate market is doing is little concern. I've written about this before, sharing my own pandemic home buying saga, and other client stories of buying when it was considered a "bad time to buy". It's even the topic of one of my video series episodes (I'll just drop that in this post as well!). But I now have even more to say on the subject.
The market has rebounded from the sad days of the shutdown and has been really strong for the last two quarters. Lots of buyers, and now low inventory. Though, I have found some great deals for my buyers, because of specific situations. Discounts seem to still be possible because people remain nervous and the pandemic is not over. One of my buyers in February knew what she wanted and found it in the first afternoon of looking. We negotiated an amazing price and getting into contract was simple. Nothing else in the process was. It was a sponsor sale in a condo building that had not been approved by the attorney general yet, a step every new condo goes through. It is impossible to predict how long that process will take, that is normal. But here, paperwork was filed improperly and just as we neared the finish line, the building had to refile and start over again. Finally, she was allowed to close on the home. But the next day, while moving in, there was a flood caused by the sponsor's plumber installing her washer/dryer unit. What followed has been the most complicated finger-pointing I've ever been a part of. Finally the sponsor has agreed to repair the floors. We hope she'll be able to move in soon. It is now six months since she offered on the unit.
Another buyer found a property right on Central Park South; location is ideal. We had to beat out other buyers for this one, but ended up winning the bidding war in the end, not by being the highest offer, but by giving the most favorable terms. Triumph. Though we got into the board application process and it was the most complicated package I have ever put together. Then the buyer's financing fell through. We scrambled for another lender, we got the package together (a document I consider one of my crowning achievements, second only to my son), to finally get rejected by the board. After all that work, you can imagine our shock. The package was flawless. But after some probing we found out the sale was turned down because the board felt the price was too low. After the dip in the market during the lockdown, they want to get prices back up. (I have a lot to say here about how this is wrong on so many levels, but it's too much to include here. Happy to have a drink and vent sometime if anyone would like to hear the full story!) We go back to the seller and negotiate a higher price with credits back to the buyer at closing. It now needs to be an all cash deal. After weeks we figure out how to structure the new deal and present it to the coop. The board has just recently come back to us asking for adjustments to the contract that both buyer and seller attorneys say are "legally questionable." (I KNOW! Again, ask me about this one over a glass of wine, or four...) But the buyer wants the apartment. So we're currently STILL trying to work this one out.
Don't let these stories scare you, most clients get through their purchase unscathed. Though there are always hiccups in the process to work out. Some big, some small. One pied-a-terre buyer recently wanted to purchase the seller's furniture with the apartment. The situation added complications, but we made it work. She also wanted to purchase with a trust, something with which this coop was not familiar. We worked it out. Another buyer was purchasing in a tiny townhouse and the sale stalled when the bank needed the proprietary lease updated. The self-managed building was not getting back to the bank so we needed to get to the bottom of who might have this document. Once we got that settled, the attorney went on vacation. So closing was delayed a few weeks. But we worked it out.
Why do I tell you all these stories? Because in light of all that can possibly happen during a home purchase, "the market" is not something to worry about. It just happens to be a factor people can try to predict, when so many things about this process are unpredictable. It's one factor to take note of when getting started, not a reason to, or not to, begin your process. It's useful for me, in pricing and negotiating. It's useful for you to set your expectations. Perhaps higher than normal prices will mean you don't find the amount of space you wanted. You will either adjust or decide to wait and try again in a few months. That's listening to the market by experiencing it, which is always better than trying to predict it.
Yet since the market is one factor you should consider when buying or selling, let's look at how it's doing and what might be happening in the near future. This is simply to be as informed as possible before entering into the process. The spring quarter had its most active season in six years. Buyers took advantage of lower prices, low interest rates, and renewed confidence because of the vaccine. And they were out in record numbers, looking to improve their space with the new work-from-home norm. This has brought inventory down and stabilized prices. Summer is historically a slow time for NYC real estate, and with people eager to actually travel, many predicted it would be very slow. It has proven to be quieter than the spring but overall a pretty active summer, since all those contracts that were signed in the spring are now closing. In July we saw a slight uptick in prices, but compared to years past, prices are still down. Inventory is low because it is considered a bad time to bring new properties to market, when there is record heat and people remain out of the city.
What does all this mean for the fall market? We expect it to be amazingly active. It is hard to tell how the Delta Variant will play in, though. If buyers and sellers remain confident, we expect a lot of new listings to hit the market after Labor Day and buyers to be ready to nab them. Timing is very favorable this year for the fall as well, as the Jewish holidays are less spread out as in years past, leaving more time to be active and create momentum. Sellers should feel good about listing as they should see less time on the market and more competition, which could drive prices higher. Buyers should be encouraged by the remaining low interest rates and incoming inventory, though they should be prepared for a competitive home hunt.
There you are. Some simple market thoughts to be as informed as possible. Use it as you will, but base your decision for a new home on your life, not the market.
Ready to get started? Reach out any time! Happy home hunting, NYC!