A confluence of economic factors—including rising mortgage interest ratesinflation and falling stock prices are impacting real estate sales across the United States
But for those who buck the trend and take the plunge and shop now in town, there’s a chance to find a deal for probably the first time in months.When Co-op Brokers say it’s a good deal to keep an eye on, especially for buyers looking for a more bargainable product.
Lisa Lippman, an agent for Brown Harris Stevens in Manhattan, said: “They will hold a better value in the long run and buyers will find the best value for what is on the market right now. increase.”
Despite the smaller pool of buyers and increased competition, buyers should not expect the market to shift entirely in their favour. Supply remains low across New York City, and many homeowners are reluctant to list their properties amid heightened economic uncertainty.
“There’s a huge shortage of inventory right now because people can’t move around that easily,” said Jessica Cohen, a broker for Douglas Elliman in New York. She said, “It just doesn’t make sense when you consider letting go of the homes you may have bought in the last decade and buying them back into the market with higher interest rates and higher prices.”
In fact, some home sellers are opting to temporarily rent and wait to buy until the market cools further and prices drop. According to the New York Times.
However, trying to time the market this way can be difficult, if not impossible.
“Buyers with current purchasing power and long-term thinking will find interesting opportunities in the near future,” said Tara Kingbrown, a Corcoran broker in New York.
New York City Sales Outlook
After an initial decline due to the start of the pandemic in early 2020, both co-operative and co-op sales are condominium In April, co-op total sales increased 10.9% year-on-year, while condominium sales increased 23.1%, according to data from . Realtor.comBuyer demand also pushed up prices.
King-Brown said: “However, with interest rates nearly doubling and portfolio values declining, it is impacting buyers. has become.”
As of June, Manhattan co-op and condo sales were 30% down year-on-yearaccording to Douglas Elliman’s market report. But prices remain high, with Elliman putting the median selling price in the second quarter at $1.25 million, the highest ever for any apartment in Manhattan.
Reduced demand from buyers could soon force sellers to lower their prices.
“April and May were a very strong seller’s market, but things have changed and it’s slowed down a bit,” Cohen said. “Ambition pricing is not working for sellers and brokers are not getting as much attention right now. Buyers are not feeling the pressure and sellers are a little nervous.”
Within the broader co-op and condominium market, some housing types have stayed in the market longer than others, brokers say. Small apartments, especially studios, one-bedrooms, and apartments that are not in turnkey condition, are less popular than spacious apartments that do not require renovation.
“We see buyers wanting to upgrade the size, the views, the outdoor space and the building amenities,” says King-Brown. “There is less desire for studios and one-bedrooms.”
co-op vs condo
Co-ops and condos are not necessarily different from each other in appearance or construction, but there are important differences. Co-op buildings are legal entities, and rather than owning the units themselves, residents own equity in the legal entities and have their own leases that enable them to occupy the units. Condos follow a traditional ownership structure. Co-operatives are often subject to stricter financial requirements than condominiums. However, in both co-ops and condos, residents pay a monthly maintenance fee.
Co-ops account for 75% of New York City’s apartment inventory, but condos tend to be more expensive and are often newer. According to Realtor.com, from January to June 2022, 50.6% of Brooklyn condo sales and 72.9% of Manhattan condo sales exceeded his $1 million mark. Meanwhile, 15.9% of Brooklyn co-ops and 39.4% of Manhattan co-ops sold for $1 million or more during the same period.
In other words, co-ops are generally cheaper to buy and may prove to be a better long-term investment as well.
“When a condo is brand new, it sells at the best price and in the best condition, but you don’t always get a return on investment in five to 10 years,” says Lippmann. “At new condos we buy at their best when everything is fresh and exciting. In five years he will have other new condos in ten years.”
She added that cooperatives have better preserved their value in the long run.
In the co-op market, certain types of apartments are more likely to offer buyers room to negotiate.
“There is an interesting phenomenon right now where buyers are not willing to do the work because of supply chain issues and construction costs,” says King-Brown. “If you are open to renovations and looking for something long-term, you can find really good value in co-ops that need work now.”
However, buyers may run into problems with co-op boards who don’t want the units in their buildings to appear depreciated.
The co-op committee, made up of the building’s elected residents, has many duties related to the building, but perhaps best known are board interviews with prospective residents and Ability to approve or reject potential buyers.
“We’re seeing a lot more co-op board denials than usual,” Cohen said. “The board does not seem to tolerate deals that are too cheap because they want to protect the value of other shareholders. You have to hold your breath for nothing.”
And it’s not out of the question for buyers to find relative deals for condos. Slowdown in sales of newly built condominiums April and May. Brooklyn saw the steepest decline, with sales down his 22% from April to May.
There may be opportunities for negotiations for developments launched in these weak months and under pressure to meet sales thresholds.
“If you’re looking at a development that has multiple units for sale at a similar price point, or if the timing was bad with the start of development being a bit late, there could be a real opportunity there.” said Cohen. “No matter how special a unit is, having five will give you an edge.”