As the Market Improves, Here Is A Guide to Get Ready For Your Home Purchase

The Weekly Recap

Mortgage rates ticked up a tad, the S&P 500 and US debt keep hitting new record highs as the Dow closed above 38,000 for the first time, home sales in 2023 were the lowest in almost 30 years in 2023. US GDP growth came in at 3.3% for Q4 of 2023 exceeding expectations. Prices in the Hamptons have soared year over year for the first time in 10 quarters at a median price of $1.85m and if you’re self conscious about being in your thirties and not a homeowner yet, the new average age for a first time homebuyer is now 37 years old.

As the Market Improves, Here Is a Guide to Get Ready For Your Home Purchase

With rates starting their much welcomed descent into affordability, the market will see an influx of buyers that have been waiting on the sideline. Here is a buyers guide for how you should prepare for the process as a buyer looking to enter the market.

Determine Your Price Point

I always recommend my buyers to have a conversation with an experienced mortgage broker to help them determine what they can afford. Mortgage brokers can quickly tell you based off your level of income and assets what your budget can be. At this point, the mortgage broker will draft a “Pre-approval" letter indicating how much the bank is willing to lend you. This letter is also used when submitting an offer to prove to the seller that you are pre-approved by a bank and able to legitimately buy. Buyers who are not prepared with this step can often times lose out on properties because of delays in getting this letter which is why it is crucial to have this complete early on. This is also a great time to decide who will represent you legally in the transaction. You should always use an experienced Real Estate Transaction Attorney who does consistent business in the market you are purchasing in.

Understand What You Want vs. What You Need

Once you know what you can spend, you will then need to find out what your money can and can’t buy you. Having realistic expectations is very important when searching for your next home, and working with a buyer’s agent can help you manage those expectations by educating you on the current inventory. Is location more important than the size and quality of the finishes? Do you need a doorman and other building amenities? Do you have pets? Will you need to sublet the apartment in the future? Transportation access? These are basic questions that you should be asking yourself as a buyer and future owner, and prioritizing what is most important. Whether your price point is big or small, you will always have to compromise somewhere in the process. 

How to View Homes

Often times, the more apartments you see, the more you learn about the above step. So the more you see, the closer you will get to finding that perfect apartment. Working with a real estate agent who knows the market and is able to show you the best options efficiently will ultimately save you time and lead to that “this is it!” moment. Most buyers see between 8 and 15 apartments/homes before making a decision, and 9 out of 10 transactions in the city are closed with a buyer’s agent. 

Submitting Offers and Negotiating Terms

In a market where inventory is low, there are other major factors that play an important roll in the negotiating process: price, financing amount, contingencies, transfer taxes, flip fees, inclusions, exclusions, closing date, etc. Because the inventory is so tight, most sellers will have the upper hand in most of these factors - especially when there are multiple bidders. But understanding what your leverage is and why you are more qualified to purchase an apartment over another buyer can be the difference between securing your next home, or getting beat out. This is where your agent will advise you on what you need to do in order to get an accepted offer. 

Going Into Contract

Congratulations, you have an accepted offer! Not so fast. You don’t technically or legally ‘have’ anything yet. You still need to put down 10% for escrow and your trusted Real Estate Attorney needs to conduct his due diligence on the transaction. That may include looking at the building financials, the offering plan, and deal specifics. Usually this take about 5 days. Once everything is cleared by your attorney, you are ready to sign the contract and put down your deposit.

Purchase Application (if buying a Condo/CO-OP)

At this point, you will be handed a condo or co-op purchase application. This serves as your application to live in the building and be approved by it’s board members.The condominium application approval process is much easier and quicker than the cooperative approval process by which you have to literally be interviewed in person by it’s board members. But don’t worry, your agent will walk you through each step and make sure that your board package is organized and impressive so that there are no issues getting approved. 

Closing

While you wait for approval from the condo or co-op, your mortgage broker will be getting your loan cleared by the bank. Once you are approved and cleared, the agents, attorneys, bank and property managing agent will schedule a closing by which you will take possession and title of your new home. You will always be granted a “walk-through” before the closing to check that the apartment is in the same condition as when you first decided to purchase it. The keys will be handed over to you at the closing and you are now the owner of your new home!

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 week as well as newly signed contracts in Manhattan.

Mortgage Rate Update

The 30-year fixed-rate has remained with a very narrow range over the last month, setting in at 6.69% this week. Given this stabilization in rates, potential homebuyers with affordability concerns have jumped off the fence back into the market. Despite persistent inventor challenges, we anticipate a busier spring home buying season than 2023, with home prices continuing to increase at a steady pace.

News You Can Use

• Home Sales Were the Lowest in Almost 30 Years in 2023 Wall Street Journal

• US Economy Booms With 3.3% Growth in Final Quarter Axios

• Hamptons Home Prices Jump to a Record High Bloomberg

• Five Charts Showing the S&P 500’s Wild Ride Back to Record Highs Yahoo Finance

• Dow Rises More than 100 Points to Close Above 38,000 for the First Time Ever CNBC

• High-Income Americans Are Feeling Really Great Axios

• World’s Largest Hedge Funds Record Bumper Year of Profits CNBC

• US Debt Hits Record High As Rich Economies Pile on IOUs Axios

The Deep Insight

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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!