What Do Low Inventory Rates Mean For Your Real Estate Goals?

The Weekly Recap

Who doesn't like 90 degree weather in April? Fed March meeting minutes reveal staff forecast of a mild recession, Millennial homeowners now outnumber renters, the median apartment rent in NYC reaches a new all-time high at $4,175 a month while rent inflation elsewhere is cooling, US CPI fell to 5% YoY in March indicating cooling inflation data, public debt is growing quite fast, the Fed expects to see its balance sheet contract through 2025, Bitcoin climbed to over $30k, Warren Buffet is bullish on Asia, Wall Street banks are bracing for lower earnings, AI is getting scary so the US is studying how to regulate it, cars are getting cheaper and are you ready for Fyre Festival II?

What Do Low Inventory Rates Mean For Your Real Estate Goals?

As we move forward into the Spring selling season where cyclically, activity picks up tremendously, we usually see a massive swing of new buyers entering the space before sellers begin to put their homes on the market. It seems that sellers understand the rate environment, that which may be a barrier for some buyers, leading them to see these buyers enter the market before listing. Inventory rates differ from neighborhood to neighborhood throughout NYC as each one creates its own demand level and desire.

From the buy-side of the equation, here is what it means for you if you're looking to buy in a neighborhood with low inventory.

Limited choices: It seems obvious, but with low inventory, home buyers in NYC will have fewer options to choose from when looking for a property. This means you may have to compromise on some of your must-haves or settle for a less desirable location or property type.

Increased competition: With fewer homes available for sale, there is more competition amongst home buyers, which drive up prices and make it more challenging to secure a property.

Faster pace: In a low-inventory market, properties may sell quickly, and home buyers will need to act fast to make an offer or risk losing out on their preferred property. Units priced correctly can still sell in under 30 days.

Higher prices: Low supply and increased demand, drive up prices. Home buyers in NYC may need to pay more than they originally budgeted to secure a property.

Not all is doom and gloom in low inventory environments for buyers, here are some things you can do to navigate a challenging situation such as this. Be prepared and flexible, act quickly if you see something you like, whether your budget is $500k or $5 million, no one finds a home that meets 10 out of 10 wish list items. Be patient, its okay to wait for things to come on if nothing is screaming 'home' to you currently. Finally work with an agent that can help you navigate the market and identify behaviors of listing agents that can stop you from being transacted or having your offer get leveraged for a better offer from someone else.

From the sell-side of the equation here is what low inventory means for you if you're looking to sell your home in a neighborhood with limited inventory.

Increased demand: With fewer homes, more demand means more interest in your property and potentially multiple offers, which could drive up the sale price. Like seeing all those pandemic era videos of lines of people trying to get into open houses in every other market but NYC.

Faster sales: In a low-inventory market, your property will sell faster than in a market with higher inventory where your home is competing for space in a crowded marketplace.

Competitive advantage: The one thing you need in any negotiation to be successful is leverage. Being listed during times of low inventory allows you to exude that leverage and be more selective about the offers you accept. Negotiating from a position of strength lends to the ability to maximize your ROI.

Price Appreciation: Low inventory, through the competitive advantage leads to higher sale prices for properties. This means that as a seller you may be able to get a higher price for your property than you would in a market with more inventory.

Low real estate inventory can be a positive thing for home sellers in NYC as it can lead to faster sales, higher prices, and a competitive advantage. However, that does not give a seller carte blanche to list for any number they want. They number one reason why a home doesn't sell is because of price. It's important to work with an experienced real estate agent who can help navigate the market and price the property correctly to take advantage of the current market conditions.

Market Performance

Here is how other asset classes performed as of this morning's opening bell.

NYC Market Update

Here is a view of new inventory that has come onto the NYC market as well as newly signed contracts that have taken place over the last week.

Mortgage Rate Update

Mortgage rates decreased for the fifth consecutive week. Incoming data suggest inflation remains well above the desired level but showing signs of deceleration. These trends, coupled with tight labor markets, are creating increased optimism among prospective homebuyers as the housing market hits its peak in the spring and summer.

News You Can Use

• Millennial Homeowners Outnumber Renters For the First Time Axios

• US Inflation Eased to 5% in March WSJ

• Wall Street Bank Earnings Under Pressure After Crisis Reuters

• What to Watch for in March Inflation Report Axios

• US Economy's 'Two Cycles' Put Fed in a Pickle WSJ

• Warren Buffet Says We're Not Through With Bank Failures CNBC

• Unpacking the Markets Commercial Real Estate Problem Axios

• Shadow Lenders to Bridge Real Estate Void Left by Banks, Bonds Bloomberg

• Median Rents in NYC Hit An All Time High NY Post

• Manhattan Median Rents Hit Another High in March CNN

• More Signs Point that US Rent Inflation Has Peaked Axios

• Federal Reserve Staff Projects "Mild Recession" After Banking Sector Turmoil Axios

• IMF Says Public Debt is Growing Faster Than Pre-Covid Projections Reuters

• Job Growth Totals 236,000 in March Near Expectations As Hiring Pace Slows CNBC

• Warren Buffet Boosts Stakes in Japanese Trading Houses, May Invest More Reuters

• KPMG Auditors Completely Missed SVB Risk Weeks Before Collapse WSJ

• First Republic Bank to Suspend Dividends on Preferred Stock Reuters

• The State of Venture Capital in Five Charts CB Insights

• Americans Are Working Less Than They Were Before the Pandemic Bloomberg

• NY Fed Report Sees Several More Years of Balance Sheet Contraction Reuters

• New Vehichle Prices Fall Below Sticker Price After Nearly Two Years Reuters

• Billy McFarland, A Year Out of Prison, says 'Fyre Festival II is Finally Happening' Business Insider

The Deep Insight

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