It’s been another interesting week in the New York City real estate market, so let’s get to it and get caught up on the latest news...
Let’s get into this further.
For most of the past year, sellers have held a lot of power when it came to the real estate game. This has been shifting. As you have heard, mortgage rates are climbing at a fast rate in a short amount of time, it’s been hard to keep up with all the news. Currently, rates have risen to 7.08% since the summer, and increases may be coming soon. The big question is how much leverage has really shifted to the buyer because of this change. I had a client this week who received an offer on our listing for 13% below asking. The buyer thought that the seller would have to negotiate with them because of the changing market. However, my client took a different approach and decided to wait and see what other offers were going to be put forth on the property. Fortunately, we ended up with a higher offer 48 hours later. My client also came to the realization that if rates are higher, mortgage expenses are higher, and buyers who made the first offer may no longer meet the necessary qualifications to be considered for purchases. It is true that we are officially in a buyer's market, but it’s important to understand that it’s just marginally.
Listings Are Dipping
It’s typical that the number of listings on the market can take a downward turn as we approach the holiday season. This past week we saw only 330 properties come onto the market which is a bit of a dip, but what makes this interesting is how 16%-20% of sellers have taken their properties off the market. Again, this is normal for this time of year, but it shows that sellers are not in panic mode and listing their properties in droves. If a buyer is shopping at the moment, they may have more leverage in the negotiation process, but fewer potential properties to fall in love with.
The more major news when it comes to signed contracts is the 21% decrease this past week with only 167 contracts signed. We were hopeful last week when the number of purchases had increased dramatically, but were brought back to the sobering reality that the market is going through a slower phase as we all adjust to the economic and interest rate factors. It’s important to understand that it is typical at this time of year for us to see a decrease in the number of transactions. However, this decreases larger than usual.
According to the National Association of Realtors, home sales are down 1.5% as of the last week of September with an 11% drop in the number of single-family homes sold, which is a 17.6% drop from this time last year. Overall, the current active inventory of homes on the market will take 9.2 months to sell. That is a number that has not been seen since 2008. When you put that all together with higher rates, higher expenses, and buyers’ qualifications being affected, things look bleak for U.S. real estate. But what about NYC itself?
NYC had already seen a 12% decrease in pricing since 2016. While the rest of the country has been living in a hyperinflationary real estate market, with room for more downward pressure on pricing, New York City is on the opposite side of the spectrum. Our market is slowing down, and prices are dropping slightly, but we don’t expect to have meter price depreciation as you may see in other markets. As a matter of fact, we have more properties in contract now than we did in 2019.
The Bottom Line
If you are a buyer, now is still a great time to invest in a new property. NYC real estate is a supportive community, and if my decades of experience have taught me anything, the market always comes back, so invest today and reap the benefits down the line.
If you would like to know more about buying or if you are thinking about selling soon or in the new year, please feel free to reach out and ask me any burning questions you may have. If you would like to receive these updates every week, please let us know that as well.
Have a great week, and let’s see what the market can do as we enter November.
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