How’s the Market and Is Now A Good Time to Buy?

The Weekly Recap

Good morning! US job numbers exceeded expectations with 275k jobs added last month as unemployment ticked up slightly to 3.9%, Bitcoin surged to a new record, Jerome Powell said the Fed was not ready to make rate cuts but made banks happy when he spoke in front of Congress and said regulators will make ‘broad and material’ changes to plans requiring large banks to hold more capital. New York Community Bank was in hot water until Steve Mnuchin swooped in leading fundraising that totaled a $1 billion rescue capital package. Whole Foods is entering the bodega market in NYC, the Biden v. Trump rematch for the presidency is set after Super Tuesday and NYS is deploying the National Guard to NYC to help fight crime on subways.

If you missed last weeks newsletter on How to Prepare As a Buyer Entering the Real Estate Market, you can read that here.

How’s the Market and Is Now A Good Time to Buy?

The headline of this section encompasses the two most commonly asked questions I get from clients. Transacting in this space everyday allows me to see several leading indicators that will determine market movements before they become press stories 30-60 days after we’ve started to experience those shifts on the ground in the market. They are also the most common sense questions that anyone can ask. Someone who rents may transact once every 2-3 years, if they buy or sell, once every 5-7 years, and A LOT can change in that period of time.

Is Now A Good Time to Buy?

Let’s start with the second question first. Instead of asking “is now a good time to buy”, I would ask, is now a bad time to own? And the answer to that is unequivocally, no. Looking at rates and how they move is short term thinking and trading while owning real estate is a long term hold and investment. Your ROI in Real Estate is determined not by timing the market but by time spent IN the market. That is a principal that all long term real estate investors hold close. Short term asset swaps, or selling your home within 3 years of purchasing may have you break even or experience a nominal loss after closing costs. Long term approaches to investment yield much better results.

How’s the Market?

How the market is depends on which side of the transaction you’re on. If you’re in the rental market, after seeing several months of softening prices, the rental market has seen an uptick over the last 4-6 weeks in pricing as inventory remains tight. With tight inventory carries less incentive opportunities such as free months or landlords paying brokers fees on behalf of the tenant. Competition is high for quality apartments.

If you’re looking to purchase, the market has become more vibrant since the beginning of the year with buyers feeling confident and optimistic. Since the Fed has come out and stated that it is no longer raising rates, buyers are seeing the opportunity to get into the market early before rates really start to drop. It will be more advantageous buying in a higher rate environment with lower pricing than a low rate environment with higher pricing. As rates drop you will see more buyers enter the market while inventory remains flat. Mortgage applications are up 9% week over week this week.

If you’re in the market to sell your home, units that are coming to market and priced correctly are going into contract within 7-10 days of going online which has been unheard of over the past few years in NYC. There are some varying factors such as location that might create longer on market times but with the dynamism of the buyer mentality currently, it is always worth a conversation to see if selling now or waiting to sell is best for you.

Market Performance

Here are how some other indexes and asset classes have performed as of this mornings opening bell.

NYC Market Update

Here is a view of new inventory that has come onto the NYC market over the past month as well as newly signed contracts in Manhattan.

Mortgage Rate Update

Evidence that purchase demand remains sensitive to interest rate changes was on display this week as applications rose for the first time in six weeks in response to lower rates. Mortgage rates vary between lenders and between different product types so exploring different products while shopping around is highly effective.

News You Can Use

• Jerome Powell Says Fed on Track to Cut Rates this Year Wall Street Journal

• Fed is ‘Not Far’ From Confidence Needed for Rate Cuts Bloomberg

• Fed’s Kashkari Sees Two Rate Cuts in 2024 Bloomberg

• Here’s Why Regional Banks Have So Much Commercial Real Estate Exposure CNN Business

• Americans Now Pay as Much Interest on Other Debt as on Mortgages Bloomberg

• Rate Cuts Likely at ‘Some Point’ This Year Yahoo Finance

• Bitcoin Rises to Record Above $69,000, the Quickly Tumble 8% CNBC

• NYCB Raises More than $1 Billion in Equity Led by Steve Mnuchin’s Firm Bloomberg

• Private Deals Powering US Corporate M&A Activity Axios

• A Hidden Crisis in US Housing: Insurance Bloomberg

• Millennials Stand to Become the Richest Generation in History After $90 Trillion Wealth Transfer CNN Business

The Deep Insight

Contact Me

Feel free to reach out to discuss more in-depth about your real estate goals, share your thoughts about my newsletter, or to share what you're experiencing in this market. Looking forward to hearing from you!