Markets are driven by two main factors. Consumer confidence and momentum. If people feel good about the economy, politics, job security and personal safety, they buy real estate. If they see homes selling, they get on the bandwagon and buy the home they’ve been looking at. As we’ve seen, the FOMO factor plays a huge role in the movements of markets. GameStop. Dogecoin. AMC.
For the past 24 months, unlike most of the country, the New York City real estate market has been very slow-moving due to the fact that no one was interested in buying and almost everyone was interested in selling. Without buyers, a seller can’t sell, or they have to drastically reduce their asking price to meet the market. There was a point in the midst of the pandemic where it felt that no matter how low a seller reduced their price – there were no buyers. Some sellers were stubborn, and in the fortunate position of being able to hold – so their homes sat on the market. Then, a few months ago, and almost on a dime, the market turned and smart buyers came back into the market to take advantage of lower prices. There were deals to be had, and some historic deals were recorded. Kudos to those with big balls – or foresight.
The pendulum has now swung in the other direction, passed the middle inflection point at the bottom, and is starting to swing up.
Of course, this was very predictable (read my blog entry from a year ago) and like every other cycle I’ve lived through, only a few people took advantage. It’s always easier said than done.
Now that the market is back, people who own real estate are starting to believe that prices are back to unrealistic levels. We often look at contracts as a barometer of the health of the market, but this past week I’ve looked to the future. I’ve paid close attention to the asking prices. I’ve noticed that a huge number of properties that have been sitting on the market for more than a year have actually started raising their prices. WTF, you may ask? This is possibly a baseless knee-jerk reaction by the owners of these apartments believing that suddenly now that the market has returned, their property is worth more. Note to sellers – if your property didn’t sell for that price pre-COVID-19, it probably won’t right now. It could also be a knee-jerk reaction by the real estate agent trying to win a listing by promising a seller an inflated price. Note to agents – this almost never works out in your favor, (but more about that in a future entry).
I have rarely met a seller who didn’t think their home was worth more than the market would bear. It’s human nature. Your home is your haven and your emotional connection to it adds value – no matter how cluttered or flawed it may be. Your real estate agent can tell you the countless stories they’ve heard from sellers about how “Their home is better than the rest because (fill in the blanks) blah blah blah...
Success in every market comes from a buyer and seller meeting. Sometimes it’s closer to the seller’s side of the table and sometimes it’s closer to the buyer’s. I’ve found that it’s much easier to get a deal done when both sides are pragmatic, less emotional, and of course, trust their agent to keep her finger on the pulse.
As the pendulum moves, the next six months will get very interesting...
Let’s do this.
-Shaun