October Market Update 2019
The days are getting shorter, the weather is becoming brisk, and tree-lined blocks are ablaze with the colors of changing leaves – surefire signs that we are fully immersed in Autumn here in New York City. The fall season is typically our second most active season in New York City real estate, as business tends to heat up right before the seasonal slowdown associated with the holidays and frigid temperatures.
As we have been speaking to for several months, we are in what amounts to a buyer’s market, in general, with various micro-markets and asset types experiencing deferring specific trends. Co-ops are faring better than condos, and lower price points are outperforming higher price points.
Reporting on our market has recently painted an unpromising picture of freefall, after the steep decline we witnessed in Q3. Price and sales volume were much lower than Q2. The majority of this was a result of the new mansion and transfer tax implications, which caused buyers to push to close on properties before the changes took effect on July 1st; this amounted to a frontloading of closings that would have normally occurred in Q3. Many of the deals (where buyers rushed to close) were higher-priced properties, thus further skewing the metrics.
New rent regulations have caused hesitation for many would-be investors. While there is always fear associated with change, volatility and dynamic conditions create opportunity in which well-informed buyers can take advantage. Multi-family vacancies are at an all-time low in NYC. Since the new rent regulations have kicked in, the value of multi-family investment properties has subsequently fallen by approximately 20%. Rents have not gone down. This has led to an incredible opportunity with increased return on investment (ROI).
Rather than throw the baby out with the bath water (so to speak), this is a time to analyze, examine, and understand value as it pertains to a specific end-user. We have been speaking with clients about the potential opportunity of bulk purchases in new construction. With weakness and over-supply in the new construction market, we are starting to see groups of our buyers looking to pool their resources to get deeper discounts than they could alone. We also have well-informed clients looking to sell lower priced co-ops, and then purchase higher priced condo units to take advantage of the aggregate of market conditions.
Looking at the big picture, one can ascertain that the fundamentals of our economy are strong. Additionally, there is little chance we will see an escalation of the trade war in an election year. We are in an unrivaled borrowing environment, and in this dynamic market opportunity truly abounds for those who have the guidance and willingness to take a closer look.
As always, please reach out with any questions about how you can take advantage of these current trends, or how to protect your real estate assets. Our team can also offer a wealth of knowledge regarding specific segments of the market. The LevinKong Team is available to serve all your New York City real estate needs, and those of your friends, family, and colleagues. Please let us know how we can assist!