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.
getty[for NYC real estate]Today is September 11, 2023.Twenty-two years ago today, I watched with astonishment as planes plowed into the World Trade Center. After closing my office so that everyone could leave, I walked down Madison Avenue without seeing a single car to get back to my apartment. We could see smoke rising even from East 78th Street. Our buyers abandoned their deals and fled the city. In January 2002, the market exploded, and it continued to rise aggressively every year until 2008, when our failure to learn economic lessons from the past sank our economy. And, in January of 2002, the market caught fire, rising aggressively every subsequent year until 2008, when, once again, our failure to learn economic lessons from the past tanked our economy.[+]
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.