How to Prepare As a Buyer Entering the Real Estate Market

The Weekly Recap

Good morning and happy Friday! Busy news week, the Nasdaq closed at an all time high, Nvidia crossed the $2 Trillion market cap mark, rents in NYC keep getting more expensive as housing prices nationwide saw an increase in December. Core PCE rose .4% which will put some stress on rates but the Fed is looking ‘past’ that data as it relates to when cuts will occur. Consumer confidence fell in February for the first time in four months, Bitcoin surged past $60,000 for the first time in more than two years, Wendy’s has decided to add a dynamic pricing model to its menu in 2025, and Apple decided to stick to building tech toys and abandoned its desire to build electric cars.

If you missed last weeks newsletter on Making Sense of the Market Landscape you can check that out here.

How to Prepare As a Buyer Entering the Real Estate Market

Buying a home can be one of the most exciting, rewarding and horrifying experiences of your life. It is the largest and probably most expensive asset that an individual will ever purchase in their lifetime and its important to enter that process with as much confidence and knowledge as possible to be prepared for the road ahead. Here are a couple of points to remember and things to consider.

Market Landscapes- The Four Types of Markets

There are four types of markets. The national, the local (NYC), the neighborhood and the building market (deals happening in the building). Its important to remember that national news and averages do not impact NYC and that there is always high demand for certain neighborhoods (West Village, SoHo etc) even in down markets and that there are buildings in lower performing neighborhoods that outperform everything in the area. Keep in mind that there are micro markets within markets that have varying conditions so be prepared to act accordingly.

Pre-approval

If you are not going all cash and will be financing, the most important document that you can have is your financing pre-approval. It demonstrates your purchase power and gives sellers a peace of mind knowing that you’ve had your finances reviewed and that an institution will lend to you. It also gives you the confidence that you can transact and move on the home immediately that is right for you. Waiting to be pre-approved until you find an apartment can be a death knell for getting that apartment. Time kills all deals and you will lose the apartment to somebody who already has their pre-approval ready.

Understanding the Difference between Condos and CO-OPs

I dived deeply into this topic a few weeks ago and you can read all of that here. But I share it again to stress how important it is in knowing the difference and how it may impact your goals and affordability.

The Contract Process

Before ever entering contract, your attorney will go through due diligence where they will have the opportunity to review the board minutes, building financials, the offering plan, amendments and upcoming assessments. Very rarely do inspections occur in NYC but if they were to happen, this would be the time. Your attorney will discuss their findings with you at length before signing a contract. Once you sign as a buyer and put down your deposit, the seller will then sign. When we have this, we have a Fully Executed Contract which leads us into the next phase of the process.

The Board Package Process

This is the least fun part of the process. In Condos it is super smooth, provide a few documents, maybe a reference letter or two and you’re good to go for approval. With CO-OP’s you will need every bank statement for every account you have, a financial form that matches to the penny what reflects in the statements, anywhere from 4-6 references per applicant between business and personal, AZTECH agreements if you are financing and once you submit, you will still have to go meet in front of the board to be interviewed and if you have a dog, you’ll need to bring them too (seriously).

Closing

Closing is the best part, its when you get to have the keys to the newest chapter of your life! After hand cramps from signing a million documents, you become the owner of the apartment you’ve pursued. Closing timeframe for a condo without financing is 30 days, with financing 45-60 days. COOP closing timeframe without financing is 30-45 days, with financing is 60-90 days with the average financed COOP closing in 88 days in 2023.

Remember: This is an Education Process

I preach to all my clients and agents that I am not here to sell anyone anything. The home buying process is just as much as an education process as it is a purchase. As you go through showings, conversations and value assessments, you start to become more confidant in your decision making process. Approach the process with the mindset of education first, purchase second.

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. The market is HOT and dynamic, things are coming off the market almost as quickly as they come on.

Mortgage Rate Update

Mortgage rates continued to tick up, reaching a two month high and flirting with 7% again which is expected following less than ideal inflation reports. The recent spate of increases has slowed down homebuyer momentum in various parts of the country. Sales of newly built homes continue to trend in a positive direction.

News You Can Use

• Fed Cautious on a Rate Cut Case That Has Yet to be Made Yahoo Finance

• Fed Policy Makers Look Past ‘Bumpy’ Inflation Toward Rate Cuts Reuters

• US Home Prices Hit New All-Time High in December CNN Business

• US Inflation Eases to 2.4% According to Federal Reserves Target Index Financial Times

• US Economy on Firmer Footing Reuters

• New York Rents Are Surging Even As The Rest of the US Sees Relief Bloomberg

• US Consumer Confidence Decreases for the First Time in Four Months Bloomberg

• Yellen Says Global Economy Remains Resilient, Lauds US as Growth Driver Reuters

• Goldman Pushes Back Bet on First Fed Rate Cut to June Yahoo Finance

• Dollar Rides Wave of US Exceptionalism to Reign Supreme Bloomberg

• Bitcoin Scales $60,000 as ETF Demand Puts Record High in Sight Bloomberg

• Why Widespread Tech Layoffs Keep Happening Despite a Strong US Economy CNBC

• Apple to Wind Down Electric Car Effort After Decadelong Odyssey Bloomberg

• The Hottest Housing Markets for the Super Rich in 2024 CNBC

• Crypto Leverage is Roaring Back Bloomberg

• Wendy’s Looking to Test Dynamic Pricing at Restaurants Next Year Associated Press

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!