Buyer’s Market. Seller’s Market. This is always changing. But today, buyers are at an advantage when it comes to NYC Real Estate, according to Paul Johansen, a Licensed Associate Real Estate Broker at Douglas Elliman. We sat down with him to find out why now is the best time to buy in NYC.
Resident: Why is this first quarter of 2020 proving to be a good time to buy in NYC?
Paul Johansen: In Manhattan, Deal Count is down 5% from 2018 and 17% from 2017, with $PSFT also down 5% and 10% respectively. Also, with mortgage rates at historic lows, banks are clamoring to write loans. Combine this with current sellers averaging 7 ½ months on the market above $8M and 5 months on the market below $8M. You have every part of the market pointing in the buyer’s direction.
Resident: Does this mean everyone will get a good deal if they buy now?
PJ: The numbers don’t lie. The market has slowed, but many buyers are confusing a slow market as being a bad time to buy. Every day there are price reductions, so this means sellers are ready to make deals. It doesn’t ensure the deal of the century, but odds are people who buy now will be gloating, while those who don’t will look back and say, ‘I wish I had bought in 2020.’”
Resident: What is the first step NYC buyers should know when looking to buy?
PJ: The first step is understanding your hold period, which is the length of time you hold onto your real estate purchase. Buyers need to judge their risk by their hold period: the longer the hold period, the less risk. The average hold is now 13 years and historically, no other real estate market has endured an economic downturn better than NYC. Just look at how NYC came back after 9/11.
Resident: We often hear buying and selling is all about timing. How do we know now truly is the right time to buy?
PJ: I hear from buyers all the time who say: “It’s not the bottom of the market.” And often, my response is, “So what.” Buyers need to understand if they are basing their purchase on timing the market they do so at their own peril. Thinking you are good enough to purchase at the bottom has lost buyers millions. Think about the number of New York real estate stories that start with, “If I’d only bought…” Being smart and not buying into an overvalued market is one thing but buying into our current market where we have already pulled back for multiple years signals another. It might not be the bottom, but its close.
Resident: How important are life events when it comes to buying or selling?
PJ: Unfortunately, the “market” does not care about your life. It continues on no matter what. We get married, we have kids, people pass-away, we have to relocate, we want to move to the suburbs. These life events happen, and people will need to sell their homes. In today’s market, odds are that sellers are not going to get what they want. Think of it this way, every time a seller DOES NOT get what they want, a buyer DOES.
Resident: In NYC, so many people live in apartments, so does buying really make sense, even in a buyer’s market?
PJ: Yes! So many buyers look at their return on a home as “selling price minus purchase price,” but what they forget is the utility of the home and the savings homeownership can provide over renting. Remember, if you are renting, there is no chance to make money on your home. Your rent is basically the same as flushing the money down the toilet. However, buying gives you a chance to build wealth while enjoying the utility of your home.
Resident: For a final though, what are the top things people should know if they are serious about buying in today’s market?
PJ: The first thing to do is get your finances in order. Second, do your market homework. Next, define success. Do you want to live in a doorman building, live close to the subway, have storage and parking? Write down what is important to you. Lastly, don’t force it – but don’t overanalyze either. You’ll know when you have found the right place. It might be the first place you see, or it may take months. But when the feeling hits you and it checks all of the unemotional boxes, don’t overanalyze. Just know it’s time to buy!