Almost all the
latest indicators point to a strengthening local economy.
- Lower mortgage rates, averaging 4.28%, down a few basis points –
a year ago, rates were averaging 3.52%
- Over 91,000 jobs added in NYC over the last year
- A push for less Federal involvement in mortgages, which should
make mortgages easier to get!
- Unemployment At Five-Year Low In NYC, down to 7.8% in January, the lowest since 2009!
Last year this number
was 8.9%
Additionally, the apartment inventory’s latest absorption report, while ticking up as
is
normal in spring, still shows
a lack of inventory.
The news is constantly shifting, and we can predict with near certainty that mortgage rates will begin a near inevitable climb at the end of the year, if not a little sooner.
What does that mean?
Well, we expect prices to level off a little bit in 2015.
As rates go up, certainly purchasing power will be diminished, coupled with
reduced inventory.
Then, likely, we’ll see an increase in inventory, whether from
properties’ slightly more reasonable time frame on the market, or simply from sellers who finally determine to sell.
However, will that mean better “deals” for buyers in 2015?
I wouldn’t
think so, necessarily.
First, I’m considering what
the market will mean for buyers and sellers in the near term.
I continue to see a crush of buyers
scrambling for property under $5mm.
Sold in 3 days
To share a few anecdotes, from working on the buyer and seller side over the last few weeks:
1) South Harlem – A 1300sf unit I represented went into contract in three days,
at
just under $1000 per square foot.
This will break all building records and was a shock, even
as I expected lots of interest.
All cash deal.
2) Upper West Side – Every 3-bedroom property we have bid on in the last four weeks has gone through a
“best and final” bidding process.
3) Even a small downtown studio we just got into contract had 30 visitors
at its first open house, and a full asking price deal.
4) And a
downtown condo resale we represented just went into contract at
over $2150 per square foot – again, shattering an old record.
Buyers will try to take advantage of lower rates for as long as they can.
Then, as rates climb, the sellers will push pricing barriers,
but as we may see absorption rate ticking up,
prices
may
flatten out.
Naturally.
Still, in no way does it look like a hard landing.
The market certainly
remains red hot across the city and, in
my view, simply
is returning to a more “normal” environment.
The very high end of the market may not have enough buyers who qualify for high-end cooperatives along either side of Central Park, and we already see this process unfolding to a small degree.
For those buyers waiting for the other shoe to drop – it does not appear to be happening soon.
Rather, the other shoe is on vacation, avoiding this red hot market during this awfully cold winter.
Happy Spring.