As prices have declined between 10 percent and 20 percent and inventory has increased year over year in the NYC residential real estate market, it has become widely recognized that we are in a “buyer’s market.”
In spite of this climate, many buyers lack any sense of urgency to step up to the plate and make meaningful offers on properties of interest. You might question why, but the answer is simple.
It is human nature for a buyer to question: “When is the best time to buy? Will the market continue to decline?” or wonder “If I wait longer, can I get the home I’m interested in for less?”
While I wish I had the ability to predict the future and answer these questions, I don’t. However, I can suggest the following five tips that I share with my buyers when I explain why this winter is a great time to “get off the fence” and make a move.
1. Everyone wants a good deal, and nobody wants to be ‘that person’ who overtly overpaid on a property, especially in a down market.
It’s impossible to know when the market is going to bottom out, as hindsight is 20-20, so it’s always easier to look back.
When a buyer feels like they’ve overpaid, they are likely to point their finger at their real estate agent for not advising them correctly. That said, I always present my buyers with current sales opportunities in contrast with historical sales data showing the value in today’s market compared to the value of that same home a few years ago.
Helping a buyer understand the value given current market conditions is critical and will enable them to see that there’s a great deal of opportunity within our current market. So don’t hesitate to take advantage of the opportunities that exist before it is too late.
2. While the greater interest rate environment has risen, residential mortgage loans remain very competitive for homebuyers.
The impact of downward pricing pressure on the NYC housing market has been largely experienced because of the combined fear of rising interest rates and the surplus of condo inventory.
As a result, I have found it to be effective to educate my buyers about where mortgage interest rates stand today versus the historical averages so they can jump into the market and take advantage of the relatively low rates.
3. When you’re buying a home, it’s a must to think long-term.
In my experience, buyers who stretch to purchase something slightly larger than they initially anticipated never regret their decision and are able to live comfortably for a longer period of time.
Buying and selling real estate has many ancillary costs. Given the unpredictability of the market, the longer you can stay in your home the better, as the likelihood of breaking even or coming out ahead increases over time.
In addition to educating my clients about the relative value in today’s market (compared to a year ago), I encourage them to stretch if possible to buy a home with one extra bedroom where they can stay longer-term. I encourage this even if it means taking a larger mortgage and having slightly higher carrying costs today.
Given where residential mortgage loans are pricing combined with reduced pressure to sell due to life circumstances, in time they will be thankful for their decision to buy the larger home.
4. The climate of our current market is the perfect environment to trade up for more space.
Although it might seem counterintuitive if you have to sell for less than you would have hoped to buy a larger and more expensive home, you ultimately make up the difference with your purchase.
Just do the math.
For example, if you sell at a lower price but purchase a larger home that is now 10 percent less than it was a year ago the delta between the value you’re getting on the new purchase is typically greater than the discount at which you’re selling your current home.
And the bigger the “trade up,” the more value there is to be had because large apartments (especially if they need updating) are experiencing the greatest discounts. Educate your buyers, as it’s a great time to move on up.
5. Take advantage of natural seasonal lulls in the market.
The winter months historically create a slower selling environment as buyers become complacent in the cold and dreary weather.
Additionally, in markets that are driven by school acceptances, buyers tend to wait until mid-February when they find out where their kids will be attending school next year before making a decision of where they will move.
As a result, January and early February is a good time to find value in the market when sellers are feeling anxious that they aren’t getting enough activity.