Real estate in today’s market often seems like the “whack-a-mole” game. When one issue seems resolved, another pops up and we have little control over many of them. This often bewilders buyers and sellers who enter the maze of New York real estate facing numerous decisions as they try to understand the myriad current forces and then project what will happen in the future.
Overriding everything today is the chaotic world economy and political picture. Europe is flummoxed with governments and economists dueling over how to save the Euro and keep several nations from defaulting. Politically, the voter revolution against incumbent governments is increasing instability.
In the U.S., our economy is slowly recovering, though many Americans are jobless or in lower paying jobs. New York is experiencing a transformation as technology companies are coming to the forefront of our growth, outstripping the two historic drivers of the economy: Wall Street and real estate.
My team has been very busy in recent weeks, handling more than 20 transactions either in contract or closed. These range from a $750,000 unit to a $7-million luxury apartment. In this wide range, do I see any trends? Interestingly, no. Almost every transaction is driven by the personal needs and wants of the individual buyer or seller. But, we can see where the economy is having an impact.
With interest rates near zero and the worldwide chaos causing insecurity in the equities market, people are looking for somewhere to park their money and get a return over time. The road is leading back to real estate, both as a home to live in and investment. Contrary to most reports, I am not seeing a surge in the rental market, but a drive to buy condos or co-ops rather than rent.
Prices are down a bit, but even here there are mixed signals. In addition to the lowered prices, mortgage rates are at historic lows and probably are near bottom. Though both buyers and sellers believe it is a buyers’ market, this is not necessarily so. While new development is slowly trickling back onto the market, much of it is in the higher end. There is no mass exodus by those who need to sell their units for financial reasons, as we are seeing in much of the country. There is some trading up, yet many residents are skittish about their jobs and the economy, not receiving much investment income and staying put.
The result is little good product on the market. This goes counter to what is perceived as a buyers’ market. In recent weeks, I have priced units above the prevailing prices and the sellers have done very well. On the other hand, I represented a buyer, who bought a condo for $5.9 million, when the original asking price was $7 million. The final price was in line with previous per/sf sales in the building.
What to make of all this? As I have said in the past, fear is a motivating factor and it is quite prevalent now. It’s difficult to generalize about this market, with strength on the one hand in super-luxury apartments and also on the extreme in studio and one-bedrooms, which had languished for a couple of years.
The best advice for those contemplating buying, or selling, is to look at your individual needs and finances and make a determination based on those, rather than trying to play the market. The ultimate goal in real estate is to find home within your budget where you and your family are happy.