By Colin R. O'Leary February 18th, 2022 It's been nearly two years since the start of the coronavirus pandemic, which resulted in an exodus of New Yorkers fleeing to the suburbs. The strict lockdowns wreaked havoc on the city's economy. It brought the Manhattan residential market to a near standstill, while simultaneously sparking demand for homes in nearby suburban markets like New Jersey, Westchester, Connecticut, and Long Island. Now two years later, the tide is beginning to shift. People are returning to the city, and the Manhattan real estate market is starting to roar back to life. Last year was a record-breaking year for the Manhattan residential market, fueled by pent-up demand caused by the pandemic lockdowns of 2020. There are still a lot of great deals to be found for buyers who are active in the market. However, the residential market in Manhattan is starting to shift in favor of sellers. For example, the number of homes on the market in Manhattan has decreased significantly year over year. According to real estate data company Urban Digs, the number of active listings on the market in Manhattan has declined by -28% compared to February 2021. There are currently about 5,170 homes available on the market in Manhattan. This number includes all active condo, co-op, and townhouse listings. There continues to be an uptick in signed contracts as well. The number of pending sales in Manhattan increased by nearly 17% compared to February 2021. The total number of pending home sales in Manhattan is currently hovering around 4,050, according to Urban Digs. The condo market in Manhattan is favoring sellers right now. The condo market has been fueled by the luxury market, or homes selling for above $4 million. For example, the median sale price in January was $1,783,750, a sizable increase of 21% year over year. The supply of condos available for purchase has decreased significantly year over year. The number of condos available on the market as of February 2022 is currently hovering around 2,450, a significant decrease of -29% year over year. It's a similar story with the co-op market in Manhattan right now. The median sale price for a co-op was $822,500 in January, according to Urban Digs. That's an increase of 8% compared to the same time last year. The supply of co-ops available for purchase in Manhattan also declined by -27% year over year. There are currently about 2,500 co-ops on the market right now in Manhattan. Interests rates are on the rise, up by almost a percent since the fall. Mortgage rates for a 30-year fixed-rate loan are currently hovering around 4%. The Fed is expected to raise rates further this year in an attempt to offset rising inflation. What kind of impact will this have on the Manhattan market? Only time will tell how much of an impact it will have in a city where many buyers pay in all-cash. The Manhattan rental market has been on a tear as well. Manhattan rents surged by 23% in January compared to the same month last year according to The NY Post. The median price for a rental in Manhattan was $3,467 last month, just short of the record set in April 2020, when the median rental price was $3,540. There's been a significant decrease in rental inventory. In January 2021, there were 25,883 apartments in Manhattan available for rent. Last month, that number plummeted to just 4,316 available rentals — a whopping 83.3% drop in inventory levels. The numbers are looking strong for the Manhattan residential market. The market is returning to its cyclical nature. Inventory levels are down and pending home sales are up. February is typically one of the slower months of the year activity-wise because of the colder weather. The market should continue to favor sellers in Manhattan heading into the warmer months of the year. The springtime is typically the most active time of the year for the real estate market in NYC, with an increase in buyer activity coupled with an uptick in new listing inventory hitting the market. The combination of these factors should lead to a continued increase in pending home sales in Manhattan this spring. Thanks for reading. Let us know where you think the Manhattan market is heading in the comment section below!
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We’re pleased to present the Berkshire Hathaway HomeServices 2022 Real Estate Report. In this report, we look at buyers’ changing priorities and tastes, inventory and material supply issues, and we explore which parts of the world are showing lots of growth – from Dallas to Dubai and almost everywhere in between. ✈️🌎 See the report here By Colin R. O'Leary January 11th, 2022 The cost of borrowing money for a home is on the rise in 2022. Last week was not a great one for the mortgage industry. Seemingly overnight, the narrative has changed as mortgage rates are spiking to levels not seen in two years. By the end of the week ending on January 7th, most lenders were roughly a quarter of a point higher on a conventional 30-year fixed mortgage. Several factors including the omicron variant, inflation, fed tapering, and weakness in the bond market are putting pressure on rising interest rates. Rates have been slowly ticking upwards since August of 2021 when they were still near all-time lows. For example, rates were as low as 2.83% for a 30-year Fixed-Rate mortgage back on August 2nd, according to the site Mortgage News Daily. Mortgage rates were still at historically low levels by the end of the year, however, gradually rising above 3%. Now less than two weeks into the New Year and we're seeing rates rise to the highest levels in 2 years. The interest rate for a 30-year fixed-rate mortgage is currently hovering around 3.64%, as of January 11th, 2022. Many experts in the real estate industry are predicting that rates will rise above 4% in 2022. If rates continue to rise at this level, it won't be long before that happens. How will rising mortgage rates affect real estate prices? It could be bad for sellers in some markets. Higher mortgage rates mean fewer buyers in the market. Fewer buyers in the market mean fewer offers being made. This could put a damper on fast-rising real estate prices around the country, especially in markets with higher inventory levels. Markets with lower levels of inventory should continue to favor sellers in 2022 even with rising mortgage rates. Rising mortgage rates are not necessarily bad for all home buyers and investors though. If home prices decrease in 2022, it could potentially offset rising mortgage costs compared to paying for a home at current home values. How do you think rising mortgage rates affect the real estate prices in 2022? Let us know your thoughts in the comments below. By Colin O'Leary January 4th, 2022 The Manhattan real estate market just had its best year ever in 2021. The news comes as a surprise to many as the city continues to deal with major issues such as the covid pandemic, population loss, and rising crime. The residential market rebounded quicker than most expected in 2021, with a record $30 billion in sales, according to a report from CNBC. Over 16,000 contracts were signed to purchase real estate in Manhattan in 2021, also a record. The comeback has been driven largely by the luxury market. Apartments priced above $10 million are selling the fastest. Ultra-wealthy buyers are snapping up penthouses and large full-floor units in new buildings. Many purchasers are snapping up second homes as pied-a-terres or investment property. A large percentage of the sales recorded were all-cash deals. New development inventory is finally shrinking in the borough after years of surplus inventory from overdevelopment. Prices are returning to pre-pandemic levels. The market is not showing any signs of slowing down at the moment. An impressive $6.7 billion in sales were recorded in the final quarter of 2021. The average price for an apartment in Manhattan is now $1.95 million, according to the report. The median price of a home in Manhattan jumped 11% year-over-year in the fourth quarter. With rising inflation, supply chain issues, and likely interest rate hikes on the horizon, it will be interesting to see how the residential market plays out in 2022. By Colin R. O'Leary December 27th, 2021 When it comes to selling real estate, most sellers expect the same things. They expect great customer service. They expect honesty & integrity from the professionals they hire. They expect the home selling process to run efficiently without any drama. They expect their home to sell fast and for top dollar. These are all reasonable things. Selling real estate is not exactly rocket science but it can be complicated though, especially if it's your first time trying to sell a home. Selling a home is not the same as buying a home. Selling real estate is a high stakes game. It's often one of the most important financial decisions that a person makes in life. There are certain things you should know before you list your home to help you avoid mishaps and maximize your results. The key is to educate yourself as much as possible before you begin the process. If you do this it can help you save valuable time, money, and energy. It can help you make informed decisions in the home selling process. Real estate transactions are not all the same. They are all similar though. It's not always about what to do, but also about what not to do. If you make the wrong decisions it can end up costing you. On the other hand, if you make the right decisions it can help you maximize your results. I've put together a list of a few things you need to know before selling your home. Hiring The Right Professionals Hiring the right agent to help you sell your home is a critical step in the home selling process. This is important because if you hire the wrong agent it can make the process more difficult than it has to be. The truth is that not all real estate professionals are equal. The barrier to entry is relatively low in the real estate industry. Anyone can obtain a real estate license within a short period of time. The costs of getting in the business are relatively low. The scale of experience in the industry varies greatly for these reasons. There are a lot of amateurs in the real estate business. If you hire the wrong agent it can cost you big time. Not just with money, but also with your precious time. The good thing is that there are a lot of experienced agents in every market. These agents are highly competent & professional in the way they do business. They know exactly what they are doing and can make the home selling process seem easy for you. Most importantly, they know how to get your home sold fast and for top dollar. Hiring the right agent is a critical step in the home selling process. There are a few basic questions that you want to ask the agents you are interviewing to sell your home. Find out how long they have been in the real estate business and how many homes they have sold. Ask them to provide you with reviews from their past seller clients. When it comes time to sell your home you will also need to hire additional professionals. In some states you will be required to hire a real estate attorney to help you handle the contract. Like choosing the right real estate agent, choosing the right real estate attorney is an important step in the process. Your attorney will be there to help answer the important legal questions you have about selling your home. It's always a good idea to speak with a few attorneys before you choose one. Make sure to choose an attorney that specializes in real estate law and not something else. It's important to choose an attorney with great customer service. There are other professionals you may need to hire when selling your home. For example, you will likely need to hire a moving company. You may need to hire a handyman to help you prepare the home to be sold. Choosing the right professionals when selling your home can save you a lot of time and energy. Make sure that the professionals you hire have great customer service at the minimum. You will be working closely together for weeks or months or until your home is sold. Marketing Your Home Marketing your home the right way is critical in order to maximize the results when selling your home. The way you market your home for sale can mean the difference between a sale and an expired listing. When it comes to marketing your home, more is always better. Why do I say this? Because more marketing means more buyers. And more buyers means more offers. And more offers means a higher selling price. And a higher selling price means more money in your pocket at the closing. Get the point? The agent you choose to sell your home with should have a comprehensive marketing strategy. The marketing should be of high quality or you shouldn't hire them. Ask your agent to provide you with marketing examples of homes they have currently listed or have sold in the past. Do the listings look professional? How is the copy or description? Are the images professional? Or were they shot lazily with an iPhone camera? Does the firm provide a floor plan for their listings? Does the firm provide video marketing? What about showing brochures and just listed postcards? What kind of internet & social media presence does the agent and firm have? One of the worst things you can do is hire a real estate agent with poor marketing skills. If you expect to receive the highest price possible, you will need to have the highest quality marketing available in your marketplace. Don't settle for average. Poor marketing can cause buyers to overlook your home. Poor marketing can result in fewer offers. Fewer offers can result in a lower sales price for your home. Pricing Strategy The most important part of the home selling process is the pricing strategy. It's important to note that home prices are always fluctuating. Your agent will help you get a sense of where the market is when you are ready to list your home. They will do this by giving you a comparative market analysis. The comparative market analysis will show you all the recent activity in the market surrounding your home. It will show you comparable homes on the market that have gone into contract recently. It will show you homes that were listed and sold recently, usually within the past six months or less. The more recent the data the better when it comes to pricing your home correctly. The first thing you want to consider as a seller is whether it's currently a buyer or seller's market. If it's a seller's market, you will have more leeway on the price because of the limited number of homes available. You should not have any issues if you price the home at fair market value or slightly above. You don't want to price the home too far above the current market value though because buyers are savvier than ever. They may avoid viewing your home altogether if it's overpriced even in a seller's market. If it's a buyers market, you will need to get the price right or your home may languish on the market for months or years. If you are in a hurry to sell, you want to avoid overpricing your home in a buyer's market. If you overprice your home in a buyer's market, it may sit on the market for months or years without any action, forcing to do price reductions to get it sold. If it's a buyer's market, it's best to price at fair market value or slightly below. The price you choose should depend upon your timetable. If you need to get the home sold ASAP in a buyers market, then go for slightly below market value. If you are not in a rush to sell then you can test the market out for the highest possible price. Closing Costs When you sell your home it's important to consider all the costs involved. Most homeowners are aware of typical fees like broker and attorney fees. Broker fees are typically the largest closing cost involved in selling a home. There are also other fees involved in the sale of a home that you should be aware of though such as transfer taxes and title insurance fees. The All of these fees must be paid at the closing. Another large cost you should be aware of is the capital gains tax. Although not a closing cost, it's another fee that you will be on the hook for when selling your property. It's best to speak with an accountant to find out how much you will owe the government in capital gains tax after selling your home. If you are planning to purchase another home, its possible to defer the capital gains by doing a "1031 Exchange" or property swap. This is a great way to defer taxes by years or even decades. By Colin O'Leary December 21st, 2021 Americans are on the move. More and more people are working remotely. It's a trend that will only continue. This trend has led to an exodus in some markets and a boom in others. Realtor.com has released its projections for the hottest housing markets in the U.S. in 2022. Below are the top 10 areas positioned for the most growth according to the site. The real estate site reported that the top markets on the list all have strong local economies, vibrant cultures, and opportunities for outdoor recreation. The combination of these factors are attracting remote workers to these communities from all across the country. Home values are on these rise in these markets where competition for homes has become fierce. Salt Lake City in Utah topped the list for the housing market positioned for the highest growth in 2022. Realtor.com projects homes to rise 8.5% in value. Salt Lake City is a small city known for its low crime and great outdoor recreation opportunities. The top three housing markets were in the west. Boise City in Idaho came in at number two followed by Spokane-Spokane Valley in Washington state. See the full report here By Colin R. O'Leary November 16th, 2021 Buying real estate in NYC for the first time can be a complicated process. It can be a frustrating one too. After all, you don't know what you don't know. It's a major financial decision that should not be taken lightly. The decisions you make will have long-lasting impacts on your future. Buying real estate doesn't have to be complicated or stressful though. The key is to educate yourself before starting the home buying process. If you do this you can save yourself precious time, money, and peace of mind. The real estate market in NYC is always competitive in one way or another. There's a good chance you will be competing with more than one buyer for the same home. You will be competing with sellers & listing agents too, who will be trying to get the upper hand on you. This is why it's so important to educate yourself on the home buying process before you get started. Knowledge is power. I've put together a list of a few things that you want to know before starting your home search in NYC. The Neighborhood The first point here is obvious. You need to know where you want to live. A lot of buyers start the process without thinking this over though. They waste their time looking in neighborhoods that are not a good fit. It's best to figure what neighborhood you want to live in before you start your search. If you can't do this, at least try to narrow it down. This can help you save a lot of time. It's a big city after all. There are a lot of great boroughs in this city to consider. There are lot of great neighborhoods so it's not always easy settling on one. Make sure you choose wisely though. The neighborhood you choose will define you. You have to figure out which neighborhood is best for you. There are a lot of awesome neighborhoods in this city to consider. You can get easily get distracted by the plethora of options available to you. There's always a new development somewhere luring people to different parts of the city. The neighborhood is more important than the building though. You want to live in a neighborhood that fits your lifestyle. Here's a simple suggestion to help you narrow down your home search - start by writing down a list of your top 10 neighborhoods. Then narrow your list down to the top three. Once you figure out what your top three neighborhoods are begin from there. You can always add one or two neighborhoods to the search later on. Here's another suggestion. Think about the pros and cons of each neighborhood on your list. Write the pros and cons down on a piece of paper. This will help crystalize your thinking. Property Type The type of property that you purchase is also something that you want to consider before you begin the home buying process. There are a lot of different types of homes here in NYC. There are single-family homes and there are multi-family homes. Some of these homes are fully attached. Some of these homes are fully detached or semi-detached. There are mixed-use buildings (retail on ground level & apartments above). There are high rise condo and co-op buildings. There are low rise condo and co-op buildings. There are prewar and postwar buildings. There's lots of brand new construction. Believe it or not, there are even houseboats in the city. The city also has income-restricted buildings that you might not be familiar with. For example, there are HDFC Cooperatives (which are income-restricted co-ops). There are Mitchell-Lama buildings (both income-restricted rentals & co-ops). The Mitchell-Lama program was a program created by the city decades ago to make homeownership affordable for the working class (teachers, firemen, police officers, etc). The Mitchell-Lama buildings are also income-restricted. The main difference between the HDFC Cooperatives and the Mitchell-Lama buildings is that the Mitchell-Lama units can't be resold. There are a lot of choices when it comes to different property types in NYC. Take some time to think this over before you start the search. There may be more options than you realize. Financing Options It's best to speak with a qualified lender before you start the home buying process. This way you can figure out what your budget is. Also how much you are pre-approved for in terms of the loan amount. Getting pre-approved only takes a few days. Your lender will ask you to complete an application and also for some basic financial information. Your lender will determine the loan amount you qualify for based on things like your personal assets and income. They will also help you figure out how much money you will need to put aside for the closing costs. Also keep in mind interests rates are always changing. Generally speaking, when interest rates rise, the purchasing power of a buyer decreases. On the other hand, when interests rates decrease, the purchasing power of a buyer increases. A lot of banks will allow you to lock in a rate for a few months so that your rate will be protected if rates rise. The lender you choose to work with will play an instrumental role in the home buying process so make sure to choose wisely. They will be there to help with the important financing aspects of your home search from start to finish. For this reason, you want to hire a lender with excellent customer service skills. It's important to speak to a lender before you start the home buying process. You don't want to waste your time looking at homes you can't afford. On the flip side, you might be surprised by the amount you qualify for. There are also a lot of programs available for first-time homebuyers you may not be aware of. There are all kinds of loans, grants, and programs available so it's worth looking into. Make sure to speak with a qualified lender before you start the home buying process. This way you will be prepared to take action on the home you fall in love with. Negotiating After you identify a home that you love, now it's time to start the negotiation process. This is a critical stage of the home buying process. Your actions here can result in either securing the home of your dreams or losing it to a more prepared buyer. The first thing to consider is the current state of the market. Is it a buyers market? If so you will have less competition for inventory. Is it a hot seller's market? If so you will likely be competing with multiple buyers over limited inventory. Sometimes the market is more neutral. Whatever the current situation is, you want to be prepared either way. If it's a buyer's market, you will typically have more leverage over the seller in the negotiating process. In a buyers market, there is less competition and more inventory. When considering an offer in a buyer's market, it's important to look at recent sales of comparable homes in the area. Make sure the sales you are looking at are recent. If it's past six months the data is no longer relevant. The more recent the sale the better (and more accurate). Make sure you are looking at sales of similar homes too. Don't try to compare condo sales to co-op sales. Don't try to compare single-family home sales to multi-family home sales. Don't try to compare new construction sales to prewar sales. The recent comparable sales will help you make an informed decision when it comes time to make an offer. You will know exactly how much similar homes are selling for in the area so it will take out the guesswork when it comes time to make an offer. You never want to overpay for a home in a buyer's market where there is lots of inventory. You want to secure the home at the best possible price. On the other hand, if it's a hot seller's market, you will have less leverage over the negotiating process. There will be more competition and less inventory to choose from. If it's a seller's market, in addition to recent sales of comparable homes, you want to look at in-contract listings. This will give you a better idea of how to bid. You may have to contact listing agents to find out this information because the sale price won't be made public until after the closing. In a hot seller's market, it's not uncommon for homes to sell above the asking price. Make sure to consider that when it comes time to submit an offer. No one likes to pay above the asking price for a home, however, in a seller's market, it may be the only way to secure a home. Just make sure that it's something you are comfortable with financially. If not then it might be better to wait until market conditions favor buyers more. The Contract Now that you secured a deal for that dream home, it's time to get to work on the contract process. It's a good idea to start familiarizing yourself with the contract process before you start the home buying process. There are certain terms you want to start familiarizing yourself with - such as contract contingencies, inspections, surveys, and appraisals. In New York State, both the buyer & seller are required to hire an attorney in the sale of a home. When you are ready to buy a home it's important to hire an attorney who specializes in real estate law. The seller's attorney typically drafts the purchase agreement. The buyer's attorney helps the purchaser review the contract and make any necessary changes. Once the contract has been reviewed and approved by the purchaser, the purchaser will sign the contract and submit it to the seller's attorney along with the contract deposit. The contract deposit will be held in an escrow account by the seller's attorney. Once the seller signs the contract, you will have what we call a "fully executed contract." This means the listing is no longer active on the market because is "in-contract." This also means the seller can no longer entertain offers for the home, even if the offer is at a higher price than what you offered. For this reason, once you find a home you should move quickly to have the contract fully executed. Closing Costs When buying a home it's important to consider all the costs involved before getting started. This way there will be no surprises. Buying a home is one of the largest purchases that a person ever makes. There are a lot of fees you may not be aware of. The biggest closing cost involved in purchasing a home is typically the down payment. The down payment can be anywhere from 0-50 %, or more. The VA loan is currently the only loan available with no down payment. There are some loans available with a down payment of less than 5%, such as the FHA loans. A conventional loan typically requires a down payment of 10% or more. If you are getting a loan for an investment property, your probably going to need to come up with closer to 20-30% of the purchase price for the down payment. The contract deposit, or the money a buyer puts down to secure the contract, is part of the down payment. You typically don't need to put down the entire down payment at contract signing. For example, if your total down payment was 30%, you can put down 10% at contract signing, and pay the remaining 20% at the closing. Other closing costs to consider are attorney and lender fees. Attorneys typically charge a flat-rate fee. Lenders often charge application fees, origination fees, and a fee known as "points" which is a fee calculated on the loan amount. There may be fees from the title company as well. Real estate agents are typically paid by the seller so it's not a typical closing cost for a buyer. However, in some situations, buyers do pay brokerage fees. Also, if you are buying a home in NYC worth over $1 million, there is an additional tax at closing known as a "mansion tax." The mansion tax is a percentage of the sale price. For example, the mansion tax for a home purchased between $1,000,000 to $1,999,000 is 1%. The mansion tax for a home purchased between $2,000,000 to $2,999,000 is 1.25%. Make sure you are prepared in advance for all the closing costs so there is nothing unexpected. By Colin R. O'Leary November 2nd, 2021 432 Park Avenue is a luxury high-rise on Billionaire's Row in Manhattan. It's a skyscraper that was constructed for the ultra-wealthy. Units in the building sell for tens of millions of dollars, some for even more. Construction started on the building in 2011. It was completed in 2015, at a cost of $1.25 billion dollars. Today the skyscraper looms over the city skyline at 1,396 FT tall. It's currently the third tallest residential building in the entire world. The skyscraper's construction has not gone without fanfare. The condo board recently sued the developer for design flaws, according to the NY Post. Architecturally wise, 432 Park Avenue is arguably one of the most criticized buildings in all of NYC, maybe even the world. It has certainly made an impression on the NYC skyline, one way or another, where it can be seen from far away distances in New Jersey, Upstate, and even Connecticut. There seems to be a common theme when people are discussing the building. They either love it or hate it. The Big City Team shot an up-close video of the building that we shared on our YouTube channel. We would love to hear your thoughts in the comment section. By Colin R. O'Leary October 29th, 2021 The real estate market hasn't been too kind to Zillow lately. The company recently put a freeze on its new home-flipping program. Zillow first began its home-flipping program, known as Zillow Offers, back in 2018. It was expected to be a big source of revenue for the company, but has yet to turn a profit. After years of rising home prices, Zillow is finding it more difficult to find a return on investment in the home flipping space. Now they are starting to scale back operations for the program because its costing them money. Zillow’s aggressive approach to home-flipping hasn't been a total failure, though not in the way they wanted or expected. According to Bloomberg, Zillow's home-flipping program has been good for some sellers, like Abidemi Bolatiwa who lives in Phoenix, Arizona. Bolatiwa recently sold his four-bedroom home in Phoenix to Zillow for $531,300 back in September. He said that Zillow charged him a fee for the sale, but it was less than what a traditional real estate agent commission would have costed. Bolatiwa said he received another offer from Opendoor Technologies Inc., another home-flipping company and Zillow's top competitor. Opendoor Technologies Inc. offered him a lower price at $504,000. Zillows aggressive approach to pricing is not paying off. Just ten days after Zillow bought the home from Bolatiwa, the company listed the home for $505,900. Weeks later, Zillow cut the price by another $11,000 to $494,900. According to Bloomberg, Zillow’s has roughly 250 active listings in the Phoenix market. The homes are currently priced at 6% less, on average, than what they paid for the homes. Zillow announced on October 18th that it would stop making new offers to buy homes, while it works through the backlog of its existing inventory. The news sent shares of the company tumbling down by nearly 10%. The stock has since rebounded though. Interests rates are on the rise. Inflation is on the rise too. Supply chain issues are making it more costly to acquire materials. This begs the question, after years of rising home prices on the national level, are we finally in for a market correction? Is there something that Zillow knows that the rest of the market doesn't know about? Or is Zillow just putting a freeze on operations so they can unload their existing inventory? Only time will tell. Let us know your thoughts in the comments. |
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