Rise and shine buyers!For the past seven years or so, buyers have been pretty much continually lamenting the high price of Manhattan real estate. Heck, I don't blame them. Year after year prices went in one direction; up, up, up.
The situation is quite different now, and I have exciting news: Prices are down, and it's a great time to buy!
So why aren't buyers buying?
There are two very legitimate reasons. First, some buyers aren't buying because their jobs are in very real danger of going away. Second, some buyers aren't moving forward because their cash reserves have diminished in value so much as to materially affect their ability to purchase. These are two very real problems, and they have a palpable effect on the buying decision. If you fall into one or both of these categories, I completely understand your reticence in moving forward.
What about the rest of the fully qualified buyers out there? Why are they on the fence, and should they act now or later?
I think that most people who are fully qualified to buy who aren't purchasing right now are waiting for the "bottom of the market". No one knows in advance when a "bottom" will actually occur, or how low it will be. By definition the "bottom" is only realized after it has occurred! There's no doubt whatsoever that the less you pay for a given property on a given date, the better off you are, but there are some very compelling reasons to suggest that now is the best time to move ahead with a purchase.
1. Interest rates are at record lows. There is normally an inverse relationship with real estate prices and interest rates. The lower the interest rate the higher the home prices, and vice versa; the higher the interest rate, the lower the home prices. This relationship exists because normally what people can afford to buy is based on their monthly payment. If they have to pay more for interest, they can afford less for the price of the home. We are in the midst of an anomaly where prices are low and interest rates are low. This can't last forever, and with inflation fears, it is very likely that interest rates will rise sharply in the near future.
2. There is no competition. Contrary to what many people would like to think, most people take great comfort in being part of the herd; doing what everyone else does, rather than acting decisively. When bidding wars were common, people lined up out the door to hurl their money at sellers all the while cursing the competition. You have your wish. The competition is gone. Prices are down. If you're the only buyer in town you name your own price. This dovetails in with reason number 3:
3. The bottom may not have yet been hit. That's right, prices may drop further -- I don't know that they won't -- but I don't know that they will either. As I pointed out above, by definition, there's no bottom until prices start to rise. What do you think will happen when the media reports that prices are on the rise and New York real estate is "back"? Do you think that you will be able to mosey into an empty open house and present a "take it or leave it" offer to the desperate seller? Do you think that you're the only one out there smart enough to ride this thing to the bottom, and then pluck up the cherry property at its nadir?
When the bottom has been declared and publicized by the media, the most likely scenario is a rapid return to normality for New York real estate, namely high prices that result from the "scarcity of resources" that has characterized this city for 200 years! It's an island, and people want to live here. Sellers whose property lost 30% or more of its value will be quick to embrace the upturn from the bottom, and price accordingly. Remember; sellers act in their own interest, and when all the buyers start knocking on their doors again, you'll be one of the herd again, and out of luck.
Here's the bottom line. If you buy now, you have an unprecedented selection of discounted inventory pretty much all to yourself. If you're not happy with the price, you can bid lower and still be taken seriously. (Just one year ago, if you didn't bid close to asking price or even above, you wouldn't even be considered -- see how quickly the worm can turn?) Buying 6 months from now for $50,000 less may seem like the thing to do, but if interest rates rise even a little bit, your $50,000 "savings" is negated; and there's absolutely no guarantee that it will be $50,000 lower 6 months from now to begin with!
I'm happy to answer all your questions and discuss the particulars of your situation. Beat the herd!
Reach me at: michael.sussilleaux@gmail.com
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