Growth in a Down Market
The Dow has dropped almost 20% in the past 90 days, and many buyers are calling this the start of a major market correction. We have seen what this means over the past quarter for residential real estate in New York City for 2019.
As we consider the market overall, the forecasts seem very good, amazing compared to 2018. The current Dow carnage is causing the Fed to hold back further interest rate hikes, and we may even see rates drop a smidge. Also, for the first time in a long time, we are seeing individual investors come back to the city. With the stock market being volatile and investment buyers finding four-cap returns with major tax advantages, investment real estate is no longer allocated to home flippers. We have investment buyers once again from all over the U.S. looking to out a portion of their portfolio into NYC real estate.
We are also seeing a long-dormant buying sector return to the market. This pool in the past made up the largest sector of buyers in NYC for several generations, and they will ultimately revive the home market, this of course are Primary Homeowners. Over the past decade, Manhattan has been labeled an unlivable city; but this may no longer be the pervasive sentiment. With prices down 10-30% in different market sectors over the past two years, values are in range for this buying group.
The long-ago approved Trump Tax bill has now shown to hurt suburban homeowners more than city dwellers, as the cost of non-urban living has grown in the past year. Young buyers want to avoid migrating to the suburbs, and baby boomers look to the next stage of their lives without the burdens of suburban property maintenance and costs. We will continue to see these buyers wedge their way into NYC real estate and take advantage of current market opportunities.
When property owners make the property their primary home and live in their neighborhood, it promotes retail, gives greater attention to the upkeep of a building and neighborhood and spurs overall development of public works. Over the past decade we have seen a major influx of overseas buyers, investors, corporations and second home owners. It is best for our city, property values and overall quality of life when these sectors of ownership are balanced. It takes a resident to help form a city, monitor it and care for it. This next wave of growth for our city will not only bring back the overall market but it will energize the city in a way we haven’t seen in 15 years.
We wish you a very Happy New Year and look forward to hearing from you in 2019!