There are many investment strategies when buying stocks: some investors research the quarterly and yearly statements of companies, others buy stocks that are everyone talks about and have a volatile day to day movement.
And yet there are others that look at the unusually large purchases of stocks or options that represent them. These investors believe that they’re willing to make large purchases of a company and they ride along with those large investors.
This last strategy I would like to talk about and apply it to New York City real estate and why right now it’s giving us a buy signal for first-time buyers.
As you walk the streets of New York, you see construction everywhere. As of matter of fact, spending on new developments will surpass the record set just before a financial crisis.
There are a couple of factors driving this.
First, New York is experiencing an all-time high in city jobs, and that drives strong demand for new housing and office space. The New York Building Congress forecast construction spending will reach $43.1 billion this year, which represents 26% increase from 2015 and it is the first time the city eclipsed the $40 billion mark. The same association projects construction spending to reach $42.1 billion in 2017 and $42.3 billion in 2018, making it the largest building boom since the 1980’s.
Second, the steady pace of city employment remains high. Up 18% since 2009, this is the strongest pace in decades according to the New York Department of Labor.
Third, millennials. A new demographic force in real estate, they seek to live, work, and play in urban settings and as such contribute to a strong private sector job increase in New York, up 2.3% since September 2015. This is 21% higher than a national average.
Finally, this year spending on residential and commercial buildings is 47% greater than a previous peak of $31.1 billion in 2007 on the inflation-adjusted basis.
As mentioned above, a significant investment technique is to ride the wave and follow the widely-used stock market strategy of buying following where the smart money flows.
Developers are making large bets on New York City’s future using low-cost capital. Many of them possess decades of experience, comprehensive data, and a thorough understanding of market trends. They’re not afraid to enter New York market like the Toll Brothers did in 2007. All areas of the city experience the renaissance. Developers are hungry for new sites and opportunities, and it’s increasingly challenging and expensive to find locations to develop or structures to renovate.
It is not easy to borrow and spend billions of dollars and stay in business. Your decision and understanding of the current market must be good to do so.
For first-time home buyers, especially those looking for apartments under $1 million, the substantial benefits driving the development boom in New York right now are also applicable to them. The increasing demand that’s driving development suggests that property values will increase over the longer term, and with the low rates available right now, first-time buyers can look to achieve a positive ROI for their home sooner rather than later.
Opportunities come to the ones who are not only brave but are also retrospective of the market.
New York City real estate offers superior and safer returns on invested capital and provides an asset you can live in as it appreciates. For first time buyers, now is a perfect time to start building a nest egg that will serve you and your family for generations to come.
‘As the saying goes: “You have to be in it to win it!’