The Market is Marching Along
We have seen an increase of buyers into the 2018 marketplace. Buyers are out in force in most sectors. We have experienced an increase in inquiries to show many properties and have been hosting open houses with double-digit attendance. We have also been engaged with buyers and sellers across various sectors in contested bidding situations with sellers considering multiple offers on the table.
In most cases, buyers are shopping more and taking more time than in heated markets, but they’re out there and bidding. The city saw 750 signed contracts in February, up from 699 in January. Results were still down from February of 2017, which saw 995 signed contracts.
We think one of the most interesting dynamics of this strengthened activity is that nobody is discussing the new tax law. The reform seemed to be a much bigger issue before it went into effect. Now that it’s in place, buyers seem to have noticed that the sky didn’t fall. Also some buyers are seeing a net tax savings after discussing with their accountants and considering advantages of new tax rates outside of real estate holdings. Despite the skepticism and concern, the new tax plan seems to have done no harm to consumer mentality in our market.
What we have seen is our stock market make mad dashes in both directions the first two months of this year. After the latest stock correction or crash depending on your view, some buyers have been more reserved in buying new luxury homes. This is not due to a loss of liquidity, rather that some buyers feel the stock market drop is the start of much worse in the works. If anything, some stock investors are starting to look to diversify into the residential real estate market and NYC has consistently been a favored market. If anything, the correction showed us that the stock market may have hit or is near a value ceiling.
The market is leaning toward normalcy, buyers are out and contracts are being signed. But this is only after a two year down cycle and prices coming off an average of 10% from 2015. Sellers need to now understand that while properties are selling, there is a new value line out there. If this current valuation rises quickly and we return to 2015 figures or if prices rise only slowly or remain flat is yet to be seen.