One of my favorite phrases to come out of finance- and there are plenty of them, given that my works puts me in contact with many men and women in finance- is the notion of “talking your own book.”
What this means is that someone is essentially something in their own interest, or book of business in the case of the phrase itself.
Whether hyping a stock you just bought, or promoting a new development you are selling, or getting excited about an apartment you’ve listed- The cynic in many people could accuse that person of said book-talking.
There is no question that an apartment owner will want to tell you why their apartment is incredible and the best, and why its sale price should outperform the overall market.
The active buyer can, on the other hand, tell you why the market is horrible, the sky is falling, and why prices are probably going to drop another (insert arbitrary number) percent.
This is the nature of business.
This is the nature of sales. Of course salespeople talk their own book.
But that makes it harder to write these posts every month, if that is the expectation of my readers.
Every month’s newsletter should then be some pap about how great the market is and how it will never go down.
And if you read these regularly, I would argue I’m a bit less than one-dimensional about the market.
Further, I don’t see anyone arguing that the market is amazing and will go up forever.
I have fun ignoring the expectations and just writing about what I see.
The question, on the heels of the Election, is this:
Has Trump changed the housing market?
His name is coming off apartment buildings.
My firm has told its agents to be ready for phone calls from reporters about our opinions on this.
His presence in his own apartment could create a permanent police state in the heart of Midtown on Fifth Avenue.
Could we see lawsuits from retailers as a result?
Will people buy in Trump Buildings again?
You’ll be delighted to know that I think that, like Hurricane Sandy post 2012, that there will probably be some short-term pain in Trump buildings, hotels, etc. – but in the end, the product itself should be integrated back into what is a pretty efficient housing market.
Those buildings are attractive, well-run, and well-built.
People will get over it, just like buyers got over the fact that Tribeca lobbies and basements
Anyone who tells you they aren’t buying in a Trump building- let’s see if
that holds true if they find that their dream apartment or screaming deal was located in that building.
I don’t see people moving to Canada, even when they said they would.
I can’t see people acting against their own self-interests when there remains a shortage of good apartments.
Of course, if buildings have an opportunity to take Trump’s name off the side of the building, I would imagine that would happen post-haste.
I can think of a few people who were happy to get rid of their maiden names when they got married, for length, difficulty in pronunciation, or perhaps stigma.
All that said, and zooming out, back to the bigger question about Trump and the direction of housing that does not have his name on it.
Most don’t see Trump as having much of a direct impact at all, except to the upside.
Mortgage rates have shot up 0.5% in a week and a half.
That’s 15% higher.
So, if your mortgage was going to be $5000 per month 2 weeks ago, now it’s $5750.
That’s $9000-10000 per year extra.
I think it may be hard to save $10k by cutting out Starbucks.
So yes, conversations are being had between buyers and sellers, I would gather.
But I don’t think you’re going to save $50,000 on the purchase price just because you didn’t lock your mortgage early enough this month.
Mortgage brokers are telling me “it’s a bloodbath.”
Telling me that rates may claw back half of the rate rise (that is, down 0.25%), perhaps by beginning of 2017.
Are you willing to wait?
Are you willing to run the risk?
When the Fed just indicated that they are likely to raise rates- so there’s competition to see who can bring rates up more- a strengthening dollar, possible inflation, or the Fed.
Like with most things, I’m not convinced yet that rates are up to stay, just as I’m not convinced that the stock market will go up forever like this, as I’m not convinced that we won’t see a more extended soft landing in the housing market.
The benefit of strengthening US dollar and pull out from emerging markets etc as a result of the election is that we (the US) continue to look safe.
This should help the NYC housing market at least on the condo side, and will keep foreign money coming in for investment big and small.
Hard assets will continue to see interest, real estate being an important asset.
If we see inflation, that could help the rental market stabilize as well.
Though I’m less sure of that in the short-term.
What I am pretty sure about:
Mortgage rates have begun their inevitable rise from artificially low levels.
Though I’ve been saying this for two years, and have been pretty wrong.
Also, we’ll continue to see flashy salespeople excited about the latest project, whether it merits the excitement or not.
Nothing much to see here,
people, not yet.
It’s all volume-11 hysteria still.
We have a new president-elect, and need some time for buyers to decide they’ve had enough distraction for the year- then we can go about the business of helping them find apartments to buy.
Until then, I expect a pretty slow end to the year, followed (finally) by some price reductions and some action right out of the gate in 2017.
Did I save the good scoop to the very end?
More clarity in December, let’s hope. Until then, I remain your faithful skeptic. -Scott