A buyer comment yesterday:
“I have some concerns that the market is going to stay soft for the next 2-3 years.
I’m considering just renting and seeing what happens.”
I’ve heard some flavor of this from way, way too many buyers.
Another way to put this question is, “So when is the market going to rebound?”
So many buyers are communicating like this that, in fact, I’m actually excited.
What do I mean?
Well, let’s unpack that question.
unpacking the question
It’s got to be buyer confidence. That’s what is lacking the most right now.
If someone is thinking that the market is heading down, they’re already thinking that they want to time the bottom of the market.
They want to know that their property will never lose value while they own it.
Sensible.
And buyers are simply not confident that they can time the market.
So they ask the question to see if I have some magic sense of whether we have reached the bottom.
Buyers have been too focused on what’s perceived of as bad news- high end real estate down, tanking etc. that they forget that they are likely in a segment of the market that has legitimate sales data- most of which is showing that there is real sales volume.
Knowing that we will never, never, never know where the bottom is until we have passed it, I have to say that we can simply look around and note that a herd mentality has set in and that whatever we believe is true right now, is true.
So if everyone thinks the market is down and going down, then that’s true.
Mortgage rates are down again, and we’ll have to see if the fed decides to raise the borrowing rate or not.
I don’t see mortgage rates creating a push or a panic.
And buyers don’t feel urgency because of bouncing mortgage rates.
Year over year, the prices are down.
And inventory is up.
So buyers don’t feel urgency because there are no signals that the market is moving back up.
That is, until we’ve passed the bottom.
Buyers should be happy that pricing is down, but they just want to time the bottom and so they’re anxious and afraid.
Sellers, on the other hand, are feeling some pain.
There are a lot of defeated wanna-be sellers out there.
And they’re afraid to lower their price to signal any desperation.
And they are pretending to be confident: “I’m under no pressure to sell,” or “There’s no rush.”
If you haven’t heard it before, I am telling you here- make an offer. Make a ridiculously low offer. Get a conversation started.
There is no downside.
And note this: If you’re afraid of losing an apartment, it’s possible that there is real value in the asking price.
Maybe, just maybe, a particular seller has priced their apartment to the current market…
What we have is a psychological standoff: We have
Real Anxiety
(buyers) vs Fake Confidence (sellers).
A tough combination to get deals done.
Buyers are scared to make offers, sellers are scared to lower prices.
Someone has to take the first step.
I am not saying there is blood in the streets of New York, metaphorically, but I am saying that sellers are open.
I know, more than most, how much work goes into finding a new home. It’s stressful, it’s requires shlepping around town, digging into floor plans, maintenance levels, and more. And that can be exhausting. And yet there’s never been an easier time to find an apartment.
Imagine 20 years ago, 1998, when the internet was just getting going. dial up, no smart phones, trying to find an apartment then.
All of the shlepping! All of the protected information. Everything is so transparent now.
Buyers can see what sellers paid for their units.
And when buyers see that at the very least, they are not buying anywhere near a market top.
The Listings Database of 1990
So why be excited about buying into this market?
Could I be excited simply because everyone else isn’t?
I am excited for buyers because too many buyers are scared, and too many sellers’ false confidence is shining through.
2019 is going to be a great time to buy.
It is definitely not obvious to most right now, but let’s look at this market in 2-3 years’ time and I bet it will look pretty amazing.