The July 4th holiday is right around the corner, and summer in the city is in full swing! New Yorkers happily welcome higher temperatures, more frequent jaunts to weekend getaway locales, and rooftop happy hours. On the heels of an active Spring real estate market, we look back to examine what transpired, as well as study the current trends, in order to gauge potentials areas in which to take advantage.
While the NYC real estate market still has some hurdles to overcome, the second quarter saw more deals and buyer activity than the previous three quarters. Low interest rates, improved buyer confidence, and sellers coming to terms with the reality of pricing, all contributed to this rebound. As always, New York’s real estate market is not a one-size-fits-all market and there were clear differences in performance in varying market segments. With proper pricing and well informed marketing, all segments of the market saw activity.
Mortgage rates hit a 31-month low this week on the heels of the Fed’s meeting last week. These historically low interest rates have pushed many would-be buyers back into the market. This trend is not coming to an end any time soon. The 30-year fixed interest rate dropped on average to 3.73%, while the 15-year fixed rate dropped on average to 3.16%.
Mortgage rates hit their lowest levels since November 2016 on the heels of the Federal Reserve meeting last week.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average fell to 3.73 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount and are in addition to the interest rate.) It was 3.84 percent a week ago and 4.55 percent a year ago. The 30-year fixed rate has fallen in seven of the last nine weeks.
The activity brought on by low interest rates and a renewed confidence in the real estate market has been felt most profoundly in the co-op market. Anecdotally, our team listed four new co-op properties in one week in mid-June, and each had an accepted offer within one week on the market – three of them at least at asking price! Currently 54% of actively listed co-op properties in Manhattan are in contract and there is an approximate 5.5-month level of coop inventory; both of these metrics are very positive indicators. No longer willing to wait on the sidelines, these full-time New Yorkers are seeing an opportunity and aren’t willing to miss out on the confluence of favorable buying conditions. Here we are seeing the reestablishment of a relatively normal market.
As we’ve been pointing out, the real buying opportunity is currently most pronounced in the new-development condo market. These days, new development condos are the most vulnerable part of the market. Because there's so much inventory, developers are – for the most part – very willing to negotiate and offer concessions. Only 30% of available new-construction inventory is in contract. This is a drop of nearly 18% from this time last year. This does not even account for the shadow inventory that developers are holding off the market. We have been helping our investor clients get discounts and levels of concessions that are not going to last forever. Multiple bedrooms, higher floors with views, and buildings with more amenities, should be every investor’s goals. Prime units in top buildings located in blue-chip neighborhoods will be the ones to see the most appreciation once the market turns around.
As always, please reach out with any questions on how you can take advantage of these current trends, or how to protect your real estate assets. We can also offer a wealth of knowledge regarding specific trends or 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 you! We wish you a wonderful and safe July Fourth!