The New York City market has been in a bit of a flux in 2018. While for nearly a decade sales prices escalated, a gradual – and expected – slowdown occurred this year.
2019 will likely be a bit of a reality check for New Yorkers. We believe that buyers are going to be able to get better deals, while sellers will finally accept that their properties are worth less than they had anticipated and hoped for.
Sellers and brokers will need to sharpen their skills to price properties correctly at the initial moment of bringing the listing to market. This is important, because the notion that reductions in pricing, as a property sits on the market will be helpful, are completely misguided. We had seen years of sellers deciding on extravagant numbers for their properties, in order to ‘test’ the market. 2019 will not take to this trend favorably. Sellers beware!
Brokers need to brace for 2019. With market conditions not being ideal, those looking to get rich quickly and without enough training and dedication may find the year challenging. At Ideal Properties Group, we provide an extensive training program for our brokers, providing them with the tools to succeed during difficult market conditions.
The year will likely still be gainful for sellers, given the fact that most current sellers of residences have owned their homes for over five years, which means that they will see a profit margin on the sale well over 50 percent. This is still a significant increase.
Mortgage rates have gone up further and we expect the trend to continue. However, this did not have a major impact on the market, since the rates remain well below the levels they held at during the last recession.
We are seeing momentum with millennials entering the market and continuing to show interest. 2019 will see an even larger presence of this generation purchasing homes, regardless of the rising mortgage rates. Millennials will also be looking to specific types of homes, focusing on flexibility, re-configurability and ease of living.
The luxury market in New York City took a hit in 2018 and much of the inventory was very slow to move. However, developers continue to construct new buildings, in anticipation that the population will maintain its expansion. They also see a need for more housing in cities, where a large portion of the population prefers to reside.
With so much inventory, investors will likely be able to secure better deals, as projects are slow to complete and properties sit on the market longer. This means more favorable pricing than in years past. Investors have been staying cash-rich while waiting for the right deal, and have been taking advantage of a market without much fluctuations. Meanwhile, construction in the condo and rental apartment space will rise, and buyers will see favorable prices, with any increase being minimal to slow, with so much competition in the market.
And finally, banks will continue to make loans, perhaps at higher rates, but still at historically low numbers. With fewer transactions, they will also be increasingly eager to provide loans. Private money is also expected to be ample as many in the industry look for diversified opportunities to obtain high return on their investments.
This is a fluctuating, unique time for the New York City real estate industry. At Ideal, we have weathered downturns and market storms and welcome the opportunity to adjust to an ever-changing market.
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