The Shifting NYC Real Estate Market Place
By now, everyone has heard about the reigning seller’s market. These days we’re bombarded ad nauseam with opinions, recommendations, and statistics referencing the infallibility of the seller’s primed position.
For the last few years, that’s been predominantly true: ever-rising prices have been competitively setting and breaking records. The sales side of the market became so strong that sellers and buyers alike developed the unanimous expectation that everything was going to sell within the first week, with multiple offers, no matter what the asking price was. Those anticipations from buyers, sellers, and brokers, coupled with a lack of inventory, created a marketplace rife with buyer anxiety and seller confidence.
But, as the saying goes, all good things must come to an end. Despite what you might be hearing from the media (or other sources), to some extent that it already has: the market has started to shift back to an equilibrium between buyers and sellers. Buyers have gotten fed up, and the ultra-luxury market has left a bad taste in peoples’ mouths: a $3,000 per square foot doesn't resonate with every customer. This sentiment, in conjunction with an uptick in inventory, has resulted in a market that is undeniably starting to cool off and balance itself out.
A perfect example of the adjusting market can be evidenced by my outing a few weekends ago: I attended six open houses in Park Slope, a neighborhood that for the last few years has been considered the poster child for strong markets. Most of the homes I saw were great apartments, but each open house only had about five or six parties attending. Had I gone around nine months ago, it's almost guaranteed there would have been forty to fifty people milling about, with a tower of shoes blocking the entrance!
This trend is consistent in other neighborhoods as well: there's been around an 60% decrease in open house interest. As a seasoned broker, I believe this to be a clear market indicator. We’ve plateaued at the ultra-luxury price point and are settling into something more reasonable. This shouldn't be alarming-- in fact, it’s healthy for the market to correct itself, and will allow for a return to fair and decent transacting.
However, there is a challenge ahead of us. It’s been a subtle transition back to a balanced market. Consequently, the media is still talking about bidding wars and writing articles on how to win best and finals, as if that’s where the market currently lives. We are still being inundated with advice that would have been pertinent months ago, but is no longer applicable. The result is a discrepancy between todays buyers and the sellers who are being incorrectly told they can still command unprecedented prices.
Today, a buyer will visit an apartment that has remained on the market for a week or two, where the broker has still priced it for a strong seller’s market at an aggressive price, and is still believing they will receive multiple offers, which don’t materialize. The buyer will wonder, “Why hasn’t this sold in the first week? There must be something wrong with it.” And the seller will anxiously ask the same because both have been fed outdated market information.
To rectify these erroneous expectations, there are many sensitive conversations to be had between brokers and their customers. Sellers and buyers alike need to fully understand that the market has shifted, is continuing to shift, and we must all adjust. It's a broker's job, as the gatekeeper of the transaction, to properly inform our clients and consumers of this shift, then to properly reflect it in the way we are doing business today.