Buyers should be out looking for properties now. The combination of low interest rates and softer real estate prices should be quite alluring!! The best opportunity in perhaps a GENERATION. Yet there are many buyers who are sitting on the sidelines.
I don’t know that they are contentedly sitting on the sidelines, but they are. We have entered week two of Phase 2- when we can show properties again, and theoretically deals have become much more easy to move along. Good news! We don’t know yet if there is a lack of deal making, but we know that there is already plenty of activity. Any lack of actual deals would be based on a combination of:
- Comfortable beach chair, otherwise known as “Name your (reasonable) excuse”
- 100+ days of being utterly out of normal life
- Lack of proper “price discovery” in the market
It is summer and many buyers are seemingly not immune to the pull of the beach, the pool, the distractions of kids at home with no camp to send them to- name your excuse. It seems very reasonable, but likely means that you, the buyer, is not that motivated to be in a new home yet. This post is for you….
Are You Out Of Sorts?
The second reason is more insidious, harder to nail down, and quite understandable. Everyone is out of sorts. Life is taking a long time to even move in the direction of normal. Tons of news that would scare the hell out of anyone susceptible of being scared. We could add to this the noise of the TV, the news, the pull of twitter, the ongoing and growing protest movements around the US, the spectre of a second wave. Many are either putting or keeping their heads in the sand. Many are taking a wait and see approach. I get it. But I’m writing here to see if we can shake you both out of your rut, and open your eyes to some positives.
Add to these two items a reason which is more of a result of number two above- which is what we could call a lack of “price discovery.” In the stock market, there are trades happening all the time, so price discovery- a fancy way of just saying “knowing the value of an asset,” is easier to come by.
If we look at less frequently traded assets like houses, or even securities which are less liquid (aka harder to sell), and then add in a GLOBAL PANDEMIC, one can see why the market would have some gunk in the gears.
I will tell you that this is an amazing time to buy- and the evidence is quite obvious. When prices are down as much as 25% from their high in 2016 or so, some of you will agree. And…many more are simply wondering if there’s more room to fall.
So what opens up the market? ANSWER: August and September, when the closing prices start to appear on coops. At that point, the veil of price discovery will start to lift. We are already seeing some surprisingly sale prices, lower than I would have expected to see. And we’re only 4 weeks (ish) away from August.
That’s when everyone will jump in. But why wait for competition with everyone? Why not get a leg up? You’ve got a month.
And let’s look at what we’re seeing now. Again, the notion is that we’re all looking to have a better sense of where the market is right now- in a measured, thoughtful way. I had two conversations worth sharing here.
First, while I don’t get into social media rants for the most part, and do not aim to ever get into discussions on these platforms for too long, I did have a quick back-and-forth with the well-considered words of Noah Rosenblatt at Urban Digs, whom I like very much. His recent writing about sale prices, very much a part of this price discovery, were included. What I called clickbait written by Brick Underground seemed to imply that prices were down 15% since the beginning of the pandemic.
I called this inflammatory, and frankly, for someone like Noah who is so focused on accurate data, seemed like a misstep on his part. There were so few deals over the last 100+ days that a few outlier numbers didn’t add up to a market analysis.
Right before this – again, we’re talking about last week, mid-to-late June, I had a comments-section discussion with Jonathan Miller, who is all about fun and facts, in that order- Jonathan is the king of appraiser data, and was taking MAJOR issue with the decision to count the ENTIRETY of shelter-in-place regulations (March 16-June 22) as ONE DAY in the listing systems we use for counting Days on the Market.
The discussion was about how these decisions skew data. While Miller isn’t wrong, I am always thinking about how buyers inherently want to believe that prices should be lower, and sellers the opposite. This “days on market” data point, if simply let to be the full amount of time on the market, would create a psychological barrier between buyers and sellers. I didn’t dispute that counting the Days on Market stat as one day was its own skewing- but the impact would be far less impactful than choosing the other direction.
I think both Noah and Jonathan felt that my comments were given with love- and the intention of restarting our markets, in a thoughtful way- and added positively to the conversation. So yay for me.
Don’t Miss Out
The variables are sale price and mortgage rates, along with monthly fees which vary from building to building, property to property. If you believe in the future of New York, as I do; if you believe in the future the United States, admittedly harder for some right now- but fairly easy to imagine our country being the land of the free and brave for the forseeable future- and you plan to live in your apartment for more than three years, you are going to have a very hard time screwing this up, with an advisor at your side. Add to this- lenders WANT to lend in New York City. We are amongst the most qualified buyers out there in the US. Banks need to lend, need to make money, and NYC buyers are a great pool of potential “yield.”
AND We are seeing prices that are in many cases below their 2005 levels. I know the last three months feels like a decade, but it bears reminding that 2005 was FIFTEEN YEARS AGO. We have gotten through a gauntlet after which even many coop boards will be open to accepting lower price levels in their building. The planets could not line up better for you.
I cannot tell you how to time the market perfectly, but right now you’re going to either trust that it’s “good enough information” or you’ll wait. And as many have said- “Perfect is the enemy of the good.” We don’t have perfect information. And the sad truth is that we never will.
You won’t know that your deal is great until well after you’ve closed.
If you’re living anywhere on Earth, and have access to a computer, you are able to be a player in the NYC housing market right now. Robust Technology, plenty of access to apartment information, and eager sellers.
This buyer’s market could hardly be better. Don’t be greedy, my friends. What are you waiting for?