We all want to be geniuses and buy the dip — purchasing an asset after it has dropped in price — but unlike the stock market, the real estate market does not move quickly. By the time a property closes, it is typically three months since the deal was agreed upon so the data is outdated. If you don’t know when prices bottom out in real time, how do you get a great price in NYC real estate? Buy the pause.
It is unnerving to buy when there are very few buyers in the market. A pause in signed contracts can be seasonal but it mostly happens when headlines have buyers believing prices could be declining soon. A natural reaction is to delay purchasing a home. In the current climate, mortgage rates have increased and many buyers are assuming correctly that this will put downward pressure on pricing. In a slow moving market these price decreases do not happen quickly. Depending on your personal situation, waiting for new pricing might not be the best idea. For example, many renters faced huge price hikes this year and are looking to fix their housing costs by purchasing and not renewing their lease at a new high. The smart move for you could be to get into the market when you don’t have so much competition. Buy the pause.
A great example of buying the pause happened during the second half of 2020. New York City looked very different then from what it looks like two years later. People fled during the pandemic and offices were closed. Today the city is bustling and crowded. Many people were nervous about the future of the city, yet 24 months ago anyone who committed to buying property during this uncertain time got a deal! The first quarter report of 2021, which reported on those closed deals inked months earlier, revealed that the average price per square foot dropped by 12% to a seven and a half year low!
Currently we are in another pause because of escalating interest rates. Over the next eight weeks buyers will be distracted by the holidays and put their search on pause. If you are a serious buyer and want a deal, this is the time to be looking at the property. You will not have much competition and motivated sellers may get nervous and become more negotiable when there aren’t many buyer inquiries on their property. If you are concerned about high mortgage rates, I am sharing some insights on how to get a deal on mortgages. If you can’t read that long to get a deal, reach out to me today.