Multiple uncertainties have kept many buyers away from the market today. In today’s market, however, multiple uncertainties have removed many buyers to the sidelines.
Today, our Manhattan properties are selling for about what they did in 2005, or in 2012. Brooklyn is a completely different story. It’s where Gen Xers and the next generation want to live. We in the real estate business joke around that Upper East Side co ops are now a good value! The value trend has been up since 1950, despite some dips. In today’s market, however, multiple uncertainties have removed many buyers to the sidelines.
The Fed rate is at a 20-year high, thus increasing mortgage prices — which not so long ago rested below 3% — to more than 7%. This creates a double-whammy for home buyers: not only is their mortgage more expensive than it was a few short years ago, they also have very little to purchase, as homeowners with a mortgage of 2.75% are more likely than those without to remodel rather than move, and thus double their financing costs. Climate change is a serious threat to coastal cities such as New York. The political landscape has become highly polarized, and everyone knows it. Home ownership is still a key component of the American Dream, even though anxious people are not likely to be buyers. Since 9/11, however, there has been little progress in extending the American Dream to more Americans. While the Supreme Court is limiting affirmative action, abortion rights, and other opportunities for people of color and the poor, the New York City buyer population remains overwhelmingly white. Real estate agents continue to discriminate against people of color (although this is rare in New York City), and the agents, who are a majority female, continue to be sexually harassed by managers and trade association officials. While 9/11 was a time of foreign import for terrorism, recent events have brought it closer to home in Buffalo, Pittsburgh, Orlando and even the Capitol.