Transaction levels have been low lately. Thirty percent fewer purchases were made in the New York City real estate market during the end of 2008 than 2007, according to the Corcoran Group’s latest report. While the numbers from this quarter won’t be any better – and inventory will likely continue to grow – some realtors have reported an uptick in bargain hunting buyers entering the market, snatching up New York apartments with depressed values.
This has been particularly true for the borderline neighborhoods: those that had been gentrifying but have seen a steep drop off in value in the past six to nine months. There, it seems the psychological effect of property values below $500,000 have spurred some buyers to set aside their concerns and buy while values are somewhat close to their lows.
The Brooklyn market has become particularly attractive for many buyers. There, the convenient commute to Manhattan, the lower property values, and the early start to the decline in home values – in comparison to Manhattan – have combined to make the borough hugely attractive right now, especially to younger buyers.
What applies to the entire city these days, though, are the low mortgage rates: often a 4.75% rate for a fifteen-year mortgage.
More than any of these supply-side variables, though, is the change in demand. While demand has experienced a steep fall in the past while the concomitant decline in prices has resulted in changed perspectives for many buyers.
In many neighborhoods, one bedroom apartments are nowadays the same price as New York studio apartments were a couple of years ago.
It’s a reality of the market these days: Those renting with leases that were written up during boom times are realizing that they can afford to move out of their studios into a one bedroom apartment. Similarly, couples that have put up with cramming all of their stuff into a one bedroom are finally find it possible to purchase a two bedroom with a sizable living room.
The Times recently wrote, for instance, about apartments in Nos. 63 through 67, West 107th Street. There, in the heart of Manhattan, apartments currently range from $395,000 to $440,000.
It seems that recent “predatory offers” by aggressive buyers have continued to move the market: Reports have been surfacing of buyers agreeing to more than twenty-five percent off the asking price.
Whatever the specific details of the current moment, though, the reality is that purchasing an apartment doesn’t happen overnight. There are few analysts who would say that 2009 is not the time to buy New York City apartments. When the exact bottom is, that is up for more debate. But so long as buyers make their purchasers near that time, they will find themselves with properties worth far more than what they paid in several years time.
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