Perhaps the most critical variable, mortgage rates have dropped dramatically from their highs several months back. With still-President Bush requesting the second half of the TARP funds, credit markets should continue to thaw over the rest of the year. Average rates for thirty-year mortgages in Manhattan apartments are currently below six percent – 5.875%, to be exact.
Furthermore, interest rates are likely to get lower for at least the first half of the year. Everyone knows the fed is going to be keeping the interest rate effectively at zero percent for the foreseeable future. That means that for both the long and short term, interest rates are going to be as low as buyers can reasonably expect.
While high inventory rates may be bad for the market as a whole, that means it’s terrible for speculators who are stuck with properties whose values are currently falling. For those thinking about buying an apartment, it says that the New York Apartment market is beginning to resemble a healthy real estate market, with a fair share of right apartments for reasonable prices. With the tumult of the past several months, it’s likely that some exceptional deals exist out there, as sellers have begun to fear being trapped with their properties for years to come.
The fourth quarter numbers showed that the value of resold units took the biggest hits. For most buyers, these units are the apartments they are looking at anyway. So, while the price of new units may be coming down for most of 2009, older units have already seen the right amount of depreciation.
That’s not to say median resale prices won’t fall further. It does mean, however, that resales have seen more of their fall than the market as a whole.
Incentives and Contract Details
– As we’ve mentioned sometimes on this page, the incentives and contract details that have been reported recently show buyers easily taking advantage of the current conditions. It’s simple to understand: Buying a home right now is much, much more comfortable than it was a year ago. The myriad details that would have hung up a deal a year ago are now just another part of the agreement that sellers are willing to cave on after the slightest bit of pressure from the buyer.
It Takes Time to Find a Home
While prices will fall for a while longer, the goal of a buyer vis-a-vis the market as a whole is, ideally, to buy when the market is at its bottom. Buyers that begin exploring their options and thinking about their choices now and begin shopping around in the next quarter or two will likely find that bottom.