2019 Update: Is Right Now a Good Time to Buy an Apartment in NYC?
If you're coming across this article, chances are you're wondering to yourself whether right now is a good time to take your hard-earned money and buy into New York City real estate. Given the economics of buying property in NYC, this is an absolutely reasonable question. The main value you will get out of this read is understanding more about how you react with uncertainty, as opposed to receiving a clear cut answer. Similarly to receiving investment advice, every person has a different tolerance to the risk-reward relationship. The key is to understand what your objectives are when it comes to buying a condo or co-op in NYC in the current market and then finding the right fit.
Current Market Conditions - 2019
The New York City real estate market is currently in the midst of a buyer's market. We documented the start of this trend in 2018 and have provided details on the benefits of a buyer's market for clients looking to purchase apartments in the city.
What is a Buyer's Market?
To recap, a buyer's market is when there is more inventory (more apartments) available than can be absorbed by buyers. This means that apartments generally stay on the market longer and sell for lower, negotiated prices.
Here is a screenshot from the Q1 2019 Streeteasy Market Report
Manhattan Price Drops: Sales prices in Manhattan dropped by 5% according to just about $1,105,000 on the average property transaction.
Brooklyn Sales Prices Increase (slightly): Brooklyn has been holding steady, increasing to $712,000 on the average property transaction. However, sellers have been cutting their asking prices, coming back to reality.
Queens Prices Increase: Sales prices in Queens are up 3% year over year, averaging out at $522,000. What a year for Queens!
Leading up to 2018, prices in New York City, inclusive of Manhattan, Brooklyn and Queens had been reaching record highs. Who was the happiest about this? Sellers! Who wouldn't want to cash out and make a sizable capital gain on the sale of their apartment. Personally, we've had this success several times over, having started buying during an economic downturn in 2019.
But who is most nervous when prices keep running away and up? Buyers! Up until 2018, bidding wars were the norm for many apartments, condos and co-ops included. Many buyers felt that they were being forced to overpay or risk walking away from their dream of buying a slice of NYC. Lose out on one bidding war and jump right into the next was the attitude.
So now we are in a buyer's market. The complete opposite of a seller's market. Sellers are pricing more realistically, willing to negotiate prices down, reduce closing costs and throw in the kitchen sink...Just kidding, the kitchen sink was always going to be included.
So how are buyer's reacting to the buyer's market?
Everyone is reacting differently, but here are some varying and trending themes:
Persona 1: The buyer's market is an opportunity to buy an apartment at a lower price than I could last year. Now is the time to find something I want, at the price I can afford and be patient with my selection.
Persona 2: The buyer's market makes me nervous. Why is there so much inventory? Why is everyone slashing their prices? Can it go lower? I'm hesitant about moving forward but still curious to see what's out there.
Transactions are still happening every day of the week. Buyers are buying and sellers are selling. At Blooming Sky, we work with our clients to help them identify their objectives and then match them with a strategy that helps them meet these said objectives. Our job is NEVER to convince you to buy. That realization must fall on you, the client. We provide you with the guidance, the numbers, the negotiation, the acquisition strategy and white-glove service through the entire transaction. However, the decision of whether you are interested and ready to buy in a buyer's market is going to be closely aligned to how you feel about your core objective of actually purchasing an apartment.
Reasons you may want to Buy an Apartment in New York City
There are many reasons that buying may be the right choice for you. Likewise, there are likely equally as many reasons why it's not.
Let's focus on the pros:
NYC real estate is a good investment with decades of long-term appreciation
Condos and co-ops are highly sought after by both local and international buyers
Properties are liquid and can easily be bought, sold or rented
Buying beats renting, when it comes to having your money work for you
Build equity in the property
Tax deductions (mortgage interest, real estate taxes)
Perks of Buying a Condo or Co-op Right Now
So let's get down to the brass tacks (or tax?). What are the benefits of buying an apartment right now, given today's market conditions?
More Inventory: The market is your oyster. Whether you're looking in Manhattan, Brooklyn or Queens. Condos, co-ops, new developments, resales...You have your pick.
Long Listing Time: Properties are staying on the market longer. This means you can be more patient about your selection. Want to check out a few more apartments? Want to scope out a different neighborhood. You can do it without the risk of losing out on your dream apartment.
Price Negotiation: Ready to make a deal? So are sellers. Many listing prices are already baking in a discount, but imagine being able to shave some more off the top. Yea, we can help do that for you.
Transfer Taxes / Flip Taxes: For new development, many sponsors are now willing to cover transfer taxes, which can range anywhere from 1.40% to 2.075% for NYC and NY State taxes, depending on the cost of the property. Additionally, many co-ops have flip taxes for resales. Sellers may be willing to eat these costs (based on effective negotiations).
Interest Rates: Currently, the interest rate environment is still quite favorable. Whether you're looking to lock in a 30-year fixed mortgage or a 5-1ARM, with rates still relatively low, you will be able to lock in your cost of living.
The Grand Finale
We're not big into writing conclusive statements about what you should or shouldn't do with all this information. Clearly you're here, and you've made it to the bottom of this read and you should feel good about the fact that you have taken the time to continue informing yourself about such an important decision.
Whether you're just starting to think about buying, have mulled over it for the past year or are not sure at all...those are all worthy emotions to have right now. Is right now the best time to buy? That's going to be dependent on you, your outlook and your financial situation. Where do you see yourself today vs. next year? Where do you want to be? Owning, renting, investing? Now is a good time to buy into the market, but that doesn't mean it's the right time for you. It could also be the perfect time for you!
Decisions. Decisions. Good thing you don't need to decide anything on the spot, but we are always happy to help. If you liked the tone of this read and would like to chat more about strategy, options and real estate opportunities, don't hesitate to drop us a message below. We'll personally get back to you.