Today’s New York Value is inspired, as usual, by a combination of real life events and an article I read, and it’s all about buyers!
Yesterday I submitted a board package for my FIRST sales deal (all 350 pages of it), which is equal parts exciting and terrifying. Co-op boards are like the Wizard of Oz: no transparency, no peeking behind the curtain, simply an announcement of whether your client is granted an interview. If not, they don’t tell you why, and you’re left to dejectedly speculate. But I’m sure this will go well. My client is a gem. Positive thoughts, yo! The Secret! Tony Robbins! High Frequency!
Then today we had our agent sales meeting, where frustrated listing agents talked about their strategies for price drops in a market where seemingly nothing is moving. The even more frustrating part is that buyers are not acting on this opportunity, but are still waiting for the floor to fall out, worried that mortgage rates are going up while the market may still drop lower. As one agent put it, the market is going through turbulence and buyers are strapping in, preparing for a crash. The turbulence isn’t actually a sign of a crash, however, but a market correction that was inevitable after the past years of rapid price increases.
The value here is how much data is available in NY real estate, although not in real time (yet, but don’t worry, Compass is on it). You can run comps for any apartment or building, no matter how bizarre and unique. You can read endlessly about the new development being proposed or built, to predict how neighborhoods will look years down the road. Quarterly reports, The Real Deal, Brick Underground, broker spam (my spam is the best spam, though), no other market has quite as many resources or as much activity, or as much data about said activity, as this city.
The actual real estate value is related to this article in The Real Deal. Brokers have been telling buyers that it’s a buyers’ market for months. And it is. Just ask any seller or listing agent; they will rant about it. But because there is a lag between when new development is planned/priced and when it hits market (years), a lag between when someone thinking about listing their place and when it goes into contract (months), and even a lag between when something goes into contract and when it’s actually listed as sold (months/weeks), many of these homes priced too high, that aren’t moving, were priced based on the data available when the market was still artificially inflated.
Also due to the lag time in information, buyers have remained skeptical of acting, concerned that the market will continue to drop and that they should wait it out. But today, FINALLY, The Real Deal published an article backing us (the experts, if you will) up. The New York Times is writing about the power buyers currently have. Now that the news has caught up with our reality, buyers will start jumping into the pool, the market will readjust, and prices will stop falling. It’s 2009 all over again!
This is true at all price points; I was able to negotiate a price 10% below listing for my co-op buyer, at the sub-1 million point, which is usually the most competitive. The more expensive the property, the smaller the buyer pool, and the more leverage you generally have in negotiation.
So, if you are in the market to buy, start looking. We’re reaching the bottom, and if you don’t act now you’ll end up with higher interest rates, less inventory, higher prices, and less power. I’m honestly just upset I am not currently in a financial position to purchase an apartment…or the plane tickets I’m constantly looking at (travel bug forever).
If you’re aiming to sell, check back in next week. Because my team just had a closing yesterday on an apartment that should have been hard to sell, but wasn’t. If you price your place right, it will sell, and sell quickly (unless it’s above $5 million, but that’s always a tricky market). If you insist on listing it way above its value, it will sit stagnant, which will lead to a whole host of problems I will get into next week on New York Values!