Finally we’re seeing lovely Fall weather!
As of this week, the jobs report seems to indicate that employment growth has sputtered somewhat.
Mortgage brokers I’m speaking to seem to feel that rates will flatten out or drop a touch, and not necessarily go anywhere for a little while longer.
This is sure to help continue the surge in real estate acquisitions here in NYC.
I’m not certain how long rates can stay on before the Fed has to devalue the dollar, but I’ve been waiting for inflation for quite some time now- maybe 3 years!
In the meantime, I’ve been seeing nearly every new development that comes to market, and there is no question that nearly every project is being pushed to market as quickly as possible, to strike while the iron is hot, etc.
The result is this maddening you-must-buy-from-floorplan pressure sell by a sales office.
I have bought in this fashion for investment in the past, but when the prices were in the $600-700 per square foot range.
Does one’s attitude change when the pricing is twice as high?
My advice would of course vary from project to project.
If one is buying a low-floor apartment without a view, then seeing the actual apartment is less important.
Quality of developer is hugely important.
I would say that the developers are coming to projects with stronger balance sheets, generally speaking.
The higher per square foot pricing doesn’t necessarily mean the project finishes are better, but we are tending to see a more quality finish that we were seeing in 2006.
Of course, I am still seeing plenty of B and B+ finish, but mostly where it makes sense to deliver that and keep prices a bit lower.
In large apartments in prime areas, buyers demand more – and are paying for it.
Some thoughts and statistics about the market for this month:
1) Inventory may not be up by much if at all, but at least we are seeing things come to market.
We see very well-priced properties, and then some really over-priced.
I’m not seeing that much in between.
The NY Times does a pretty good job of talking about
this at the very high end.
Some of this pricing pattern is manifesting itself in the 2-3 bedrooms market uptown or downtown- and demand is certainly there.
I would say that demand hasn’t cooled yet, but it’s not the same as it was uptown earlier in the year.
I expected some “Buyer Fatigue,” and we’re seeing a little bit of that.
Downtown, it’s still very strong.
2) Condo market snapshot:
|Size (ft²)||median $ per ft²||median Price|
This pricing seems accurate based on what I’m seeing.
Remarkable at the valuations, especially for 4+ bedrooms.
What is making the market hum right now?
Is it bonuses?
Is it simply mortgage rates?
A strengthening job market in New York for high-skill, high-salary jobs is helping drive the market.
But what are the jobs now, and what will they be over the next 5-10 years?
The argument goes that New York City has always moved as these jobs moved.
But recently, there seems to be a shift, where Tech jobs are starting to drive the employment picture in New York City.
Technology is without question disrupting different industries, where new tech companies are seeking ways to make these various industries more efficient.
I could see tech jobs, whether administrative, sales or otherwise, providing more employment than finance in 10 years here.
Wall Street as a place will undoubtedly morph into a less finance-oriented location.
Investment opportunity for residential real estate?
Will these disruptions provide more or less money to buy real estate? Will this enable people to move into other markets than New York City, such as Denver, Austin, Portland, etc and still do the same business?
This is all with a thought on the primary home buyer.
It’s highly unlikely that New York City as a mecca for international ownership will change.
Simply put, it’s what people want.
The 9-5 workday seems to have disappeared from New York City.
The suburbs become less attractive to many as the quality of life in the city improves for families as well as those who always remained in the city.
All of these trends bode well for the Far West Side, Brooklyn, anywhere where people can live and work within walking/biking distance.
Those worker bees in their 20’s and 30’s now, the buyers of tomorrow, want quality of life, and work/life balance.
Certainly companies that offer this balance will win over these employees.
I’m certain this supply will not satisfy demand, of course- back in the 60’s, there were 20-30,000 housing units being built every year across all boroughs.
Development now doesn’t touch those numbers.
I would like to see areas like Long Island City get more focused commercial development which would in turn drive a more thoughtful residential development- there are so many areas which remain underserved as residential neighborhoods.
This a logical way to get some reasonably priced properties to market, along with the gorgeous and expensive Manhattan offerings.
With new burgeoning neighborhoods to boot!
See you next month! -Scott