Real estate prices have rebounded strongly since the bottom of the housing crisis in 2007-2008, with prices gaining over 50% in many places even with the current market weakness. However, prices cannot keep going up forever, and we have observed that the overall New York City real estate has plateaued. Buying real estate in New York City requires an understanding of the macro trends driving the city so that you purchase the right property for the long term.
With price cuts continuing and inventory tapering off. The current market weakness is due to over-regulation, tariffs, sanctions, strong US dollar, and global economic weakness. It is essential to know what to look for when buying real estate to buy the right property for the right price to outperform.
Forced sellers are discounting until the price finds a buyer however many sellers are not selling, and resale inventory remains limited due to the unwillingness to sell at a discount or loss as well as fewer desirable upgrade options for sellers to make a move. Additionally, many developers have adopted a more cautious stance due to the rising costs to acquire land in New York City and the increase in associated construction costs.
Our comprehensive approach for investors and homebuyers on what to look for when buying real estate can help sustain long-term gains for those with patience, even as the market is struggling.
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A Changing Marketplace
Buyers in the broader market are now taking their time, waiting for the right property. Granted, this should always be the case, as we counsel our clients. Nonetheless, there are times when irrational exuberance gets in the way.
The ultra-luxury market, defined as properties in the $10+ million range, has felt the pinch. For instance, billionaire’s row on 57th street has seen prices down as much as 30%. Developers of the Midtown West Supertowers have had to rethink their offerings, pricing, and marketing strategies. In this section of the market, parking garages for cash are no longer needed for now. Still, the privileged will always need a larger home, and different market dynamics affect this market.
First-time homebuyers have become a little more tepid due to uncertainties surrounding U.S. policies. However, we recommend they stay actively involved in the market, especially in this ultra-low interest rate environment. With economic growth poised to remain subdued interest rates are likely to remain low according to the Federal Reserve.
Second home or investment property tastes change based on risk and capital preservation assessments.
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A Better Way
Previously, markets largely moved in tandem. However, times have significantly changed. Whether a first-time homebuyer or a seasoned investor, we have come up with the Elika Macro Formula that we think you should apply going forward.
As an exclusive buyer’s broker for the past two decades, We have proudly represented people from all stations of life to find a suitable home or investment property in New York City. Through this experience, We have learned to understand the type of housing that will outperform and underperform, regardless of the price point or market sentiment.
Although we diligently read and follow both national and regional housing data trends, these are lagging indicators. We have refined our approach, and do not pay as much attention to the broader market as in the past. Now, we apply the Elika Macro Formula.
We realize we might get a lot, of backlash but we are going to refine the old and simplistic real estate theory of location, location, and location to neighborhood, street, building, apartment.
What is the Elika Macro Market Formula?
City
Desirability, economics and future potential of the city
Neighborhood Infrastructure
Walkability, accessibility, amenities, restaurants, schools, proximity to parks.
Streetscape
Is the street tree-lined and quiet? Or is it a major thruway with a bottleneck of traffic and buses?
Curb Appeal
Corner buildings are favorites, when possible. Otherwise, architectural detail and street presence are key.
Buildings Unit Mix
Pay attention to the composition of the building. For instance, there is no point in buying a three bedroom in a building that is one or two bedrooms heavy.
Lifestyle
When buying into a specific building you are buying into the lifestyle. Consider if it is the lifestyle you want.
Quality
The building’s construction quality counts. This quality should flow through the lobby, hallways, and into the apartment.
Maintenance
Condo/co-op boards and management companies are responsible for the cleanliness and upkeep of the building.
Services & Staff
You will likely interact with the staff regularly, particularly in a doorman building. Are they pleasant and attentive?
Apartment
Now that you found the ideal building, consider what the apartment offers. Does it have high ceilings? Does the floor plan flow or is there a larger amount of loss factor (unusable space). Is the apartment well-lit? Are the room proportions well balanced or is the master bedroom too small? Is there enough closet space?
New Development Considerations
In the case of new development, there are additional considerations. There is nothing worse than buying a new build that is poorly built.
Developer
Do they have a good reputation? Use the web to research their history. Were their last developments notable or lemons? Do they have a history of completing projects on time, or are there consistent delays? Do they use a quality contractor? Are residents in previous buildings happy? A little more digging may be required, but you need to know if they are well-funded.
Architect
Do you like the design of previous works? Do they have a reputation for designing buildings that have outperformed?
Interior Designer
Do you like the aesthetic of previous works? Timeless, comfortable, elegance usually is the right mix.
Sales Team
There are plenty of good agents, but there a select number of great agents. This can make all the difference on whether the building will sell through with pricing amendments or will underperform.
Buildings Finish
The development can have a star-studded team, but if the finished product falls short of on quality, you have a problem.
Building Services and projected monthly costs
Does the building have too many useless amenities, which costs you money? Nobody likes high monthly common charges unless it is worthwhile.
% End User vs. Investor ownership (condo)
There is nothing worse than buying a building that is investor heavy. In cases of distress, investors usually will fire sale their assets, and you are left holding your unit in a building full of lower comps. Also, tenants generally don’t treat buildings like owners, resulting in excess wear and tear.
Apartment flow/ floorplan
Are there too many columns in the apartment? Is the floorplan user-friendly? Are the ceilings high enough? Is the apartment bright, dark, etc.? Does the condo have exposure or face a wall?
Unique features
Look for what defines the development and the overall appeal.
How to Think About The Location
Location still plays a role in any real estate decision. There are speculative neighborhoods, like Bushwick, based on gentrification. Established neighborhoods, such as the West Village or Upper East Side, are geared towards those that are more risk-averse.
For example, if you come from New York’s elite hierarchy, the Upper East Side may be the place you should call your home. However, if you like a more laid-back lifestyle with many restaurants and amenities, perhaps the West Village or Noho is the right choice.
Still, not all streets within these neighborhoods are equal, much like not all square feet are created equal. Streets are just as important as the neighborhood.
Elika Can Help Buying Real Estate In New York City
Without the representation of a seasoned exclusive buyer’s broker, the chances of purchasing the right property, even diminished. Understanding and applying the Elika Macro Formula does not mean you should go without representation.
Real estate data trends are lagging indicators, and most real estate agents will not provide you with an unbiased market analysis. Remember, their job is to sell you the property at the highest price. There is no one better to have on your team than a real estate advisor that represents your interests and lives and breathes real estate 24/7, 365 days a year. Reading real estate news is a backward indicator or can be biased since the sources are often developers seller’s brokers and agents. Granted, there are quality publications such as the New York Times and the Wall Street Journal, but the writers are not brokers/agents on the frontline.
Our track record
As a buyer’s broker, my interest has always been identifying homes for risk-averse buyers and residential investment opportunities. We are focused on finding and securing unique properties for my clients with a profile and cache built to outperform.
Buildings that we have previously recommended include 25 Bond Street, 400 West 12th Street, 15 Central Park West, 500 West 21st Street, 70 Vestry, 160 Charles Street, 160 Leroy Street, and most recently the yet-to-launch 40 Bleecker, to name just a few. This has created a proven track record of representing clients, exceeding expectations in rental yields, capital appreciation, and resale value. Even 160 Leroy, which hasn’t closed yet, and 40 Bleecker have the makings of real estate greatness, fitting into the Elika Macro Market Club. We only consider properties for clients that we believe New Yorkers would want to live in.
It is also not easy to gain access to Schedule A (First –Amendment) family & friends pricing in new construction, but a seasoned broker/agent can. Working with a seasoned broker with industry relationships will often yield the most significant return. When purchasing in the right new construction, those with the foresight in buying the right unit off the plan can potentially see upwards of a 20%+ in paper gains before the development is finished.
Final thoughts
The attributes of the Elika Macro Formula is the foundation for a smart purchase, whether you are a home buyer or investor. It is not a get rich scheme, however. Patience is the key to long-term gains. It may take you weeks, months, even years, to find the right property. However, remember the market is biased upward over the longer-term, even if that means eschewing short-term gains.
Granted, this may mean holding through a difficult economic period. The process will help you identify quality properties that should appreciate in the long-term. While it took tremendous courage to buy New York City real estate in the distressed days a decade ago, if you trust our process and have the finances, you can build substantial wealth.
For instance, the going rate at 15 Central Park West in 2007 was $2,000 per square foot, compared to the current $7,500.
Know what to look for when Buying Real Estate In New York City.
