The Biggest Threats to the Buyer's Market |
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That was some first quarter. Closings were up 66% from the lows of the Q3 2020 and it was the busiest March in 14 years. Favorable metrics (low interest rates, low prices and high inventory) and an overwhelming improved sentiment have been the driving factors of Manhattan’s return. New Yorkers have always been believers, dreamers and doers…and this city is being willed back, it’s a Renaissance which will define a new New York. It will be different; it will be better. With renewed certainty provided by vaccines and improved sentiment, increasing numbers of people are grabbing their seats (homes) in this game of musical chairs. They realize that today’s opportunity will not be here for long. |
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If you fear you've already missed out, that is far from true. Although some neighborhoods like the Upper West Side are now leaning in the seller’s favor, the majority of Manhattan is still in a buyer’s market. Yes, as we discussed last month, inventory is drying up (from 9,500 to 7,000), interest rates are rising (1/2 point with some lending institutions in just 7-8 weeks) and prices have begun to reflect that demand; however, consider where the market will be several years from now. You may have missed the absolute bottom, which was several months ago, but you will still be buying in "the bottom". Those who purchase in 2021 will likely feel they purchased at the best time.
Prices will not spike, but they are moving in a different direction and favor the seller. However, it's not prices that will be the killer for the buyer, it is interest rates...and they are rising. See recent movement in the chart below.
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Courtesy: Wells Fargo
Interest rate hikes are no joke. Check this out….
$1M borrowed @2.75% = $4,082/month
$1M borrowed @3.25% = $4,352/month
That .5% increase in your rate costs you an extra $270/month; that’s $3,240/year extra for the same loan.
In other words:
Where $4,082 would have afforded you $1M 6-7 weeks ago; today you could only borrow $938K. That is a 3.8% erosion of your purchasing power in just 6-7 weeks.
Note: rates are fluctuating daily, so this is simply a snapshot to demonstrate the importance of rate moves.
Sellers must also pay attention to this, as a sustained increase in rates will put mounting downward pressure on their prospective buyers’ purchasing power. Imagine if rates go up to 4.65%? I choose this arbitrary number, because this is where rates were not but 2 ½ years ago in the Fall of 2018. That would be 20% less purchasing power.
Also note: although rates have come off of their lows (of approx. 2.65%)…in relative terms, rates are still very low. See the historical chart below for perspective.
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Courtesy: Wells Fargo
The explosion of deal volume in the first quarter will continue to methodically raise prices. What will counter balance any spike will be increasing interest rates, restricting what buyers are actually able to offer. So if you’re a buyer, harnessing your strong purchasing power today, coupled with fair pricing, spells opportunity…a dynamic which will have vanished in the coming years. Predictably, fear of missing out will intensify as more neighborhoods turn in the seller’s favor; it will only be then that buyers will realize the opportunities that existed now. Prices will not spike, but again purchasing power, coupled with leaner inventory and increasing competition will make it more and more difficult to secure the value that exists now. And oh…did I mention competition? Wait until everyone wants to get back in; it will be like trying to secure a vaccine appointment now that virtually everyone is eligible.
Issues still TBD: NYC taxes, fiscal policy out of Albany, the Mayor’s race, the city council seats…
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Please join me on Thursday’s at 4pm EST as I co-host a weekly zoom program called “Boroughs & Burbs” with my colleague John Engel. We talk about innumerable real estate issues and topics in New York and its suburbs which include CT, The Hamptons, NJ…we’ve recently even tapped into to see what’s been going on in Palm Beach, Miami and L.A.
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Prepare Your Property for Market with BHS's new program |
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Curate provides you with the ability to prepare your home for sale
with no up-front costs,100% payable at closing.
Services include Cleaning/Decluttering, Renovation, Staging & Design
and more. Contact me and/or click here to learn more.
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JUST RELEASED - Knight Frank's Annual Wealth Report
Click here to read key findings from Liam Bailey, Knight Frank’s Global Head of Research, as he journeys through The Wealth Report 2021 to offer his top takeaways.
In the middle of a global pandemic and the related economic crisis, why should we be interested in the wealthy? Simply put, if we are to understand market and asset performance then they form a central part of the story. Read more.
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Click the button above to see the latest edition of our post-lockdown deals report, as of 3/30/21. Be sure to see the different Tabs (Manhattan , Brooklyn, Queens etc.) at the bottom of the document. The purpose of the report is to give you verified pricing data on deals negotiated after the NYS lockdown began on March 22, 2020. This is not meant to be a count of deals signed since the lockdown, as many of those haven’t closed yet.
To be included, a sale must meet all the following criteria:
1) Listed through the RLS, by all firms.
2) Have a contract signed after March 22, 2020
3) Closed and recorded on ACRIS
The spreadsheet, accessible through the above link, is a running total we add to each week. Keep in mind some sales may drop off if we find out the contract signed date was incorrect. Be sure to click on the respective tabs for each borough at the bottom of the document.
Below is a comparison of the data in this report to the same period last year:
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These are great local resources, especially at times like these. Here are some of the best and most comprehensive neighborhood blogs that are helping to keep us informed. Click on each. |
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With Patch you can choose New York City; however, they also have more concentrated areas categorized as follows: Central Park, Upper West Side, Upper East Side, Midtown-Hell's Kitchen, Harlem, Astoria-Long Island City, Chelsea, Gramercy-Murray Hill, West Village and East Village.
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Connecticut you Ask?
Let's Ask John Engel and his Team
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* MORTGAGE & INTEREST RATES * |
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Rates are at near historic lows |
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Courtesy: Wells Fargo as of 4/6/2021 @ 12:25pm EST
Example of Purchasing Power
Interest Rates:
Example below reflects today's 30 year fixed rate of 2.750% vs. 4.625%, just couple years ago.
$1M borrowed at 2.750% = $4,082/month
$1M borrowed at 4.625% = $5,141/month
That is a difference of $1,059/month or $12,708/year.
Alternatively, we could look at it this way:
At 2.750%, $4,082/month will afford you a $1M mortgage.
At 4.625%, $4,082/month only afforded you a $794,000 mortgage.
That is 20% more purchasing power than 2.5 years ago, just because of interest rates.
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* Most Recent MARKET REPORTS * |
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The Latest Market Reports - Sales:
Hamptons' & North Fork Year End (2020): click here
Interactive Rent vs. Buy Calculator:
Other Markets:
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This mid-career survey of Julie Mehretu (b. 1970, Addis Ababa, Ethiopia) covers more than two decades of the artist’s examination of painting, history, geopolitics, and displacement. Including approximately thirty paintings and forty works on paper dating from 1996 to today, the exhibition presents the most comprehensive overview to date of Mehretu’s practice and her explorations of abstraction, architecture, landscape, scale, and, most recently, figuration.
Julie Mehretu is organized by the Whitney Museum of American Art, New York, and the Los Angeles County Museum of Art. The exhibition is curated by Christine Y. Kim, curator of contemporary art at LACMA, with Rujeko Hockley, assistant curator at the Whitney.
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By Eater Staff
Nearly a year into the pandemic, many restaurants are juggling cold-weather outdoor dining efforts alongside limited-capacity indoor dining. As New York City works to contain the spread of COVID-19, many more restaurateurs are feeling emboldened to move forward with openings.
Dozens of new restaurants have opened in recent months, a remarkable change from earlier during the pandemic when many businesses pushed back their launches indefinitely. As New York City settles into this new reality, Eater is highlighting new restaurants in Manhattan — and a few old favorites — offering a mix of outdoor seating, indoor dining, delivery, and takeout, that have opened in the last few months.
New to the list in April: Sona (an upscale Indian restaurant in Flatiron with backing from global superstar Priyanka Chopra Jonas), Hay Hay Roasted (a new roasted meats destination in Chinatown), and Kjun (a delivery and takeout-only Korean-Cajun fusion spot on the Upper East Side).
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The New York Times recently wrote about the maestro of spices, Lior Lev Sercarz. Here is Rob's conversation with him in Episode #103 of his ALL YOU CAN EAT podcast.
As a follow-up, Rob will be hosting his own class at 92Y.
The Delicious Dozen: Herbs and Spices That Will Change Your Life
Tired of the same old dinners? Bored with your everyday meals? Well it’s time for that to change…and it’s simple. Learn from a master how to use easy to access herbs and spices from the world over to transform and elevate your cooking to new culinary heights ... without leaving the comfort of your own home. Tue, Apr 13, 2021, 6:30 pm - 8 pm ET
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The Food Humorist©, is a Manhattan born man-about- town who writes, produces and hosts programs about food. I highly recommend his new book for Dads like myself. There is a new kind of dad, and he's doing far more domestic duty than at any time in history, including cooking. Although it's written with a sense of humor, this book is a serious resource for dads and anyone else interested in upping their game to make great tasting foo d bat home, even if they have never used a chef's knife or a roasting pan before.
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PRIVATE ONLINE COOKING CLASSES:
Ask Rob about his privates…by which he means that he offers customized cooking lessons to individuals and to groups. You learn, you laugh, and you eat well.
Now that ALL of us need to pitch in when it comes to feeding the family, I suggest picking up some serious tips from Rob. As he says, he went to cooking school so you don't have to. These sessions are fun and literally provide prized skills for upping your game. Enjoy. See Rob's intro here.
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* G R A F F I T I - Cooking @ Home * |
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New York City * The Hamptons * Palm Beach * Miami |
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With Partnering Worldwide, Brown Harris Stevens continues to leverage its very productive relationships with top brokerages nationally and internationally by inviting partners to high- light key properties in their respective markets on BrownHarrisStevens.com, and to feature our important properties on their sites. Learn more.
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With Partnering Worldwide, Brown Harris Stevens continues to leverage its very productive relationships with top brokerages nationally and internationally by inviting partners to high- light key properties in their respective markets on BrownHarrisStevens.com, and to feature our important properties on their sites. Learn more. |
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- Recognized by New York Magazine & Five Star Professional as one of the "most accomplished real estate professionals in New York City."
- Ranked nationally by REAL Trends as one of "America's Best Real Estate Agents" for avg. sales price of $4.350M.
- Recognized member of the 2016 "TOWN Elite" class
- Sold a single family Townhouse faster than any other on the Upper West Side over $10M to date. (StreetEasy)
- Certified Negotiation Expert (CNE)
- Trivia: Won the 2015 New York Times NCAA Basketball Pool.
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Roberto Cabrera
Licensed Associate Real Estate Broker
New York City * The Hamptons * Palm Beach * Miami
rcabrera@bhsusa.com
o: 212-906-0554
m: 917-701-3907
Clubhouse: @cabrera_roberto
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Brown Harris Stevens
130 Fifth Avenue, 2nd Floor,
New York, NY 10011
(917) 701 3907
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