It’s been over a decade since the 2008 financial crash and NYC has shown good recovery. Still, there’s no doubt that 2018 was a year of ups and downs for NYC real estate. Things started off with sky-high home prices, historically low mortgage rates and a clear advantage to sellers. But now with 2018 gone and the new one year upon us, it’s very clear that things have changed drastically. The asking prices on luxury homes have fallen, mortgage rates have reached new heights and buyers are definitely holding the high ground in negotiations. Can these trends be expected to continue? Here’s what the word on the street is.
The buyer’s market is here to stay
The past year saw a steady increase in homes listed for sale which hit an all-time high in the last quarter. However, the recorded number of sales throughout the city has fallen. According to the Q4 Rebny Report for Manhattan, the co-op and condo market has seen its fifth consecutive decline year-over-year. However, the scale of the decline has lessened and co-ops outperformed condos on price and sales. Homeowners who try to sell in 2019 will be entering a market that is already saturated. As such, they’ll want to take extra measures to attract buyers. The average number of days on the market has also gone up for all property types. The days of multiple offers and bidding wars seem to be over for now.
For those looking to buy this is a golden opportunity as the initiative now lies with them. Even with average prices down and sellers being more open to negotiations NYC still remains an expensive market to get into. Savvy buyers should do their research and consult a buyer’s agent to find the best approach. Prices and negotiating power will still be dependent on the local market and the homeowner’s motivations for selling.
Buy the dip
All indications are that the dip in the real estate market will persist until the 2020 presidential election. Those sellers who can afford to wait would be better off doing so. Despite the rise in mortgage rates, buyers who can aim to buy during this dip. Whether you’re looking to buy a home or an investment property, this is a golden opportunity to get a great deal.
Rising interest rates and demand for rentals
Despite the cuts in asking prices, homeownership will still remain out of reach for many New Yorkers. This is due to rising mortgage rates and uncertainty about the effects of changes to federal tax laws. Investors with rental properties can expect an increase in rental as the demand for rental units increases. Competition for rental units can be expected to really heat up this summer. Especially in the cities priciest and most chic neighborhoods.
Tech employees won’t buy condos
Last November saw two big pieces of news with both Google and Amazon announcing huge hiring plans for the city. This influx of highly paid professionals was expected to raise the cost of housing just as it has previously in Seattle and San Francisco. But any sellers that are hoping to score big by passing on their condo investments may be in for a disappointment.
The average salary of a new Amazon HQ2 employee is $150,000. A number that’s well above the average for NYC but still not enough to make purchasing a multimillion-dollar condo a viable option. With housing prices so high compared to those seen near the Seattle headquarters for Amazon, these tech workers are more likely to choose a rental. This could mean more properties landing on an already oversaturated market which pushes inventory to new heights. All this is good news for real estate investors of rental properties at least.
It’s make-or-break time for megaprojects
Large-scale building projects have always been ubiquitous on the NYC skyline but 2019 may be the make-or-break year for some of them. How well they do may determine the fate of future megaprojects. This year will see the debut of 15 Hudson Yards, the Vessel and the Shed in the coming months. In addition, the announcement of Amazon’s second headquarters will no doubt give a boost to developments in Court Square and Hunter’s Point. However, the weak sales market could mean problems for large developments elsewhere in the city. These include the Two Bridges area along the east river where One Manhattan Square is set to open early this year. This will be the first of three large residential buildings planned for the area. Other areas include Pacific Park in Brooklyn here 11 new buildings are due through 2035. How well these projects perform could determine the fate of other megaprojects such as Waterline Square and Bronx Point.