((From my weekly newsletter on 9.30.22))
It’s strange! It's difficult!
Real estate speculation has led everyone to believe their home will appreciate wildly, that they are entitled to this. Sellers who couldn't or didn't list in 2020 and 2021 are now staring at a vastly different landscape but expecting the same prices. Many buyers simply cannot pay the amount they would have when rates were lower, because monthly costs have gone up. (Remember, you don't live in the purchase price, you live in the monthly payment.
So we have sellers with unrealistic expectations met by buyers constantly pummeled with news of layoffs and uncertainty and rising costs across the board. It's caused a slowdown, which we honestly needed after the past two years. But it's a bit like pulling an emergency break and everyone's adjusting.
The slowdown hit co-ops and apartments that need renovation more than condos/mint properties. It's hit uptown more than downtown, because uptown was already slower. It's hit Manhattan more than Brooklyn, for a combination of reasons but lower monthly costs and more flexible purchase options in much of BK influence this.
But it's not all bad! It's bad for agents who don't know what they're doing and can only thrive when everything is easy. It's bad for sellers who have non-prime properties but want prime prices. And it's bad for buyers who were rate-sensitive and may no longer qualify for the home they want, especially if they were looking at co-ops.
So who is it good for? A lot of Brooklyn sellers. It's good if you are selling a downtown Manhattan trophy property and buying something else. It's good if you are a buyer who can handle the rate increase, especially if you're looking uptown where things are slower and there's more negotiability. You can actually take your time and feel like you have options. And it's good for agents who treat this like a systems-heavy business rather than "brokerage" (more on that at the end).
Why do you care though?
Honestly what DON'T I care about? I care about market conditions because it impacts my role in peoples' lives, how to handle listings and buyers, and it's directly tied to our housing crisis. I'm also fascinated by the ways that human behavior shapes our housing market, and even things like mortgage rates are tied to consumer actions.
So where do I see this going? Brokerages have been pushing teams for a few years now over individual agents. And a big reason is how the role of an agent changed in the past decade. Once upon a time you were the only one who had access to for-sale properties, and you just had to be a successful gatekeeper. With the rise of accessible information, our role has shifted much more into a consultant and facilitator position, and more volume is required as splits and commission percentages have dropped. Some agents are terrified of this, because it's hard to earn peoples' trust and convince them to work with you if they don't technically need you. I'm fortunate that I do not have to cold call or try to convert unrepresented buyers; I just do things like this. We're seeing a huge increase in "being your own brand" and social media, creating content for buyers and sellers. Was I doing this from day one? Yes. Are you going to see more and more from other agents, especially video? Yes. But where I need to step it up is acting more like a true business owner and being willing to take on responsibility for other people. I need to hire in order to scale, and that is scary! But we're doing it.
As far as where our market will go, NYC is its own beast and I think we've gotten back to normal post-COVID lockdown. By which I mean prices are not swinging wildly and will be impacted by all the normal factors: interest rates, buyer sentiment, sellers' willingness to budge, elections, policy...this is why it's impossible to know where things will go. Remember when Putin invaded Ukraine? We could not have planned for that a year in advance, nor do we know what the Fed or other government bodies will do.
But that's why you're all here, right? If you read this far you seem to be invested. So I'll keep the updates and info coming, and you can promise me not to try to "time the market" too much.