Buying or Selling? Ten Tips From A Real Estate Professional
By Michelle Larsen
When people who want to move ask: “How’s the real estate market?” I have specific advice for buyers and sellers, see below, but first, here’s my distilled answer to a couple of current questions.
What about recession? People worry about the last economic recession, triggered by the Great Financial Crisis (GFC), itself triggered by the Subprime Mortgage Crisis in 2007. The GFC disruptions in real estate markets across the country resulted in price declines of 50% in some cases, and warnings like these by Yale University economist Robert Shiller: The examples we have of past cycles indicate that major declines in real home prices—even 50 percent declines in some places—are entirely possible going forward from today or from the not-too-distant future.
Schiller’s prediction was fulfilled in many places. However, New York City faced no such dramatic fall. Its housing market remained more stable due to the predominance of co-ops and other unique real estate features. In fact, in the decade following the GFC, some sellers in Manhattan enjoyed double-digit returns.
Today’s market is not like that following the GFC. Since the fourth quarter of 2015, though there have been weakness and price declines in the Manhattan real estate market, notwithstanding the general strength of the economy, they can be largely traced to things like overbuilding by developers in the face of strong recent returns, and the decline in the number of foreign investors. So, while 2018 experienced approximately a 15% decrease year over year in some sectors of the market, I have seen no warnings such as Schiller’s for the immediate future. So, if a new economic recession hits the US, the effect in the City is likely to be muted compared to other real estate markets around the country.
What are 2019 market trends? in Q2-2019 Manhattan saw a first annual rise in seven quarters with buyers who were incentivized by an imminent tax deadline in July. Sales increased 12.5% year over year for the first time after six consecutive quarters of declines. The most significant rate of annual sales growth occurred for properties from $2 million to $5 million and the median sales price set a new record.
Average Sales Price increased 0.2% to $2,095,000
Median Sales Price jumped 10.5% to $1,215,000
Since then, on the negative side, federal sales reform limiting deductibility of state and local taxes, and the new New York State mansion and transfer taxes went into effect. In addition, the booming economy has shown recent signs of slowing. On the positive side, the Fed cut interest rates 0.25%, the first time in over a decade, which makes it easier to borrow as loans are made at lower rates. That brings more buyers into the market, and more buyers means increased demand. Read the Elliman Q2 2019 Report.
So what is my advice if you are selling and/or buying today?
Buyers are well educated and aware of market value today. In this market they are looking for real value.
Sales are being transacted by buyers who need to buy and sellers who need to sell. A well priced apartment will sell relatively quickly. Proper pricing is important in all markets but essential in this market. Property will only generate interest if it is priced competitively. Scrutinize comparable properties in contract in order to understand the market.
Presentation is everything. Beautiful apartments sell for higher prices. Top notch staging can reduce the time an apartment is on the market and fetch a higher price for sellers.
Any flaw, including an apartment’s location within the building, lack of views or light, the floor, even the type of air conditioning, will affect the desirability and sales price, especially in more expensive apartments where better amenities are expected.
It may work to your advantage to buy an apartment and sell yours at the same time because the reduced prices on the “buy side” can often make up for the lower prices on the “sale side.”
It is a buyer’s market. Buyers have more negotiating power now than they have had in years—take advantage of it while rates and prices are lower. This holds true for resales and new developments alike.
Astute buyers understand that now is the time to move forward as the market has reset and prices will not continue to correct.
There is less competition in the current off-peak market. Smart sellers understand that today’s market necessitates serious negotiations.
Apartments in need of renovation present terrific deals. Try to see through the mess.
The market will not continue to go down forever. Leverage your options and buy before the market begins to go up.
Michelle has had a storied career life. She has studied painting and conservation, was director of development at Scientific American Magazine, and an advertising manager at NASA Tech Briefs, She is now a licensed associate broker and Top 8% agent at Douglas Elliman in NYC where she specializes in relocation.