As I’ve said in this video and this blog post, I see the current environment as a generational opportunity to buy in NYC. And yet, there are many buyers very much on the fence right now about buying, even if they have realized, entirely, that it is time for them to move into something new.
Starting a new chapter in your life is scary, and certainly my saying that it’s a generational opportunity may not be enough to motivate you- without a little more inspiration.
Let’s talk about the Top 10 Things that are in the way between Homebuyers and their dream homes.
First, though, let’s talk about the main 3 things NOT in the way:
Pricing
Prices for buying in NYC have not been at this level in years. They have softened over the last 36 months, and in some cases BEFORE Covid, were already down 20-25%. So let’s get price out of the way
Mortgage Rates
Rates have never been this low, ever, to finance a purchase. So that’s not an obstacle, either.
How Low Can Rates or Prices Go?
The Stock Market
The stock market, whether you understand it or not, remains at levels almost the same as before the pandemic struck. So right now, buyers have lots of access to a strong portfolio.
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Okay, we have set the table for the main, most exciting elements that would encourage buyers to make their moves.
Since we are only three weeks into the “restart” of the NYC housing market, some of these items may get OUT OF THE WAY, but for now, these 10 items are very much blocking Homebuyers from their dream homes.
Some are obstacles created by homeowners themselves, most psychological.
The way that I see it, most of the obstacles at any given time are in the minds of buyers and sellers.
WE WILL TACKLE THE OBSTACLES THAT EXIST OUT OF BUYERS’ CONTROL FIRST.
There are really only a handful that I can see right now:
Apartment Access
Some buildings are not permitting access to any outsiders. I have heard that some cooperatives have determined that there will be no access until September. If you want to buy an apartment, and you’re not prepared to buy it without seeing it in person (see my article on the tech available to see apartments from your couch), then this is a real issue.
School Unknowns
Many people are not sure how their kids will attend school in the Fall. This is not something they can control, and this is certainly playing a role for many in their decision process. If a family is waiting to know if school will be taking place, and it’s fully out of their control, this will remain an impediment to buying.
Selling before Buying
If someone needs to sell before they buy, and selling is a more challenging environment, then this could certainly get in the way. But below, we’ll thinking about the more relevant psychological barrier to moving on right now.
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NOW, THE PSYCHOLOGICAL BARRIERS.
It may be easier to look at the biggest barriers first. Any of these can be seen as a barrier that can be overcome with information, education- resulting in more confidence and readiness to move forward.
Losing Money on a Sale
Okay, this is a big one for sellers, and one which is impacting any buyer who needs to sell as we discuss above. The big issue is losing money. It is easy for me to look at it rationally and say that if you sell and lose money and make it up on the purchase side- getting a fabulous deal on the new home, then that’s a no-brainer. And maybe right now it IS a no-brainer, in that buyers who have to sell are not using their brains at all. They are seeing a negative sign on the net from the sale and shutting down their brains. So yes, the sooner that buyers-who-are-sellers-first get over that hump, the more inventory it will open up for homebuyers, and the sooner the market will move.
Lack of Price Discovery
This is another doozie. Every negotiation right now has an elephant in the room, which is “what’s the right price?” There is building evidence of where apartments are “trading,” but not nearly enough to get every buyer and seller, or each side’s agent for that matter, on the same page. I’ll keep coming back to this issue in other posts.
Fear of Going Back to the City- The Zombie Apocalypse
Many of my customers have spent much or all of their time away from the city over the past 4 months. The news is not covering the sleepy Upper West Side. It does not make for interesting television, does it? But what I have dubbed the Fear of the Zombie Apocalyse is not really playing out in New York City. I spent 90% of my time there since March- Things are reopening, responsibly, and people have to realize this to remove this obstacle.
Fear of Missing Out, aka FOMO
I’ve touched on this a bit from different angles. Some buildings aren’t open to outsiders. Ok, I get it.
BUT- The part that is within the control of the agents representing sellers is this- shooting videos, shooting 3D tours, allowing access instead of hanging out, as one would during a regular summer, out of the city. I’ll talk more about this in another post. What I’m getting at is this: A buyer could make the conclusion that they are somehow missing out on that perfect apartment. Put another way- FOMO- Fear of Missing Out. “What if I miss out on an apartment because I can’t see it?”
I have seen more than one man or woman refuse to get married or get into a serious relationship because there is always someone better one swipe away…or so they think. The not-so-secret secret is, of course, that there is more than one perfect apartment for you. You will never make a decision with perfect information, and most people get over this hump of FOMO- but right now, lack of access is an issue.
Reading or Watching Too Much News
Ok. I can’t control anything you do. I get it. But if I gave you a suggestion that made your life at least 10-20% happier, would you take it? Well, drum roll…Stop watching the News. It’s going to drive you insane. Ceaseless noise, designed to take you over the edge. Give up watching the news on TV or from your phone. If you must get an ongoing dose of outrage, read your news. But even that is crazy-making. Right now, those who watch too much news are going to be inclined to crumble into a ball on their bed. That is certainly an obstacle today. You have the choice to ignore the news. The really bad stuff will make its way to you, soon enough.
Will the Stock Market Tank?
This is another “waiting for the other shoe to drop” sort of obstacle. Right now, the planets are unusually aligned, as we describe above. If the stock market reacts negatively in some way, how will that impact real estate prices? More to the point, what are all of the second- or third-order, the “knock-on” impacts? I put it well down the list because I believe people want to expand their lives and if they can purchase today and can pass a cooperative’s board process, they are conservative enough to weather a storm related to the stock market. Yet, it is an obstacle for some. There are ways to sleep better, and stop thinking about the stock market, happy to share with you anytime. I’m glad to be in this business and not having to dole out stock picks…
Getting Preapproved for a Mortgage
Again, this is way down the list. Getting preapproved for a mortgage is an essential step, even more so these days, because listing agents (agents representing sellers) want to know you are serious about the purchase, given that access to apartments is not given willy-nilly anymore. No more public open houses, no more nosy neighbors seeing the apartments in their buildings, and no more buyers who don’t have their acts together. So, buyers need to get their basics handled. We can discuss all of this with you!
Preparing an Apartment For Market
Some sellers simply lack the information about getting their apartment ready for sale. It really isn’t a huge obstacle. I could help solve that information gap in one phone call. But, if sellers do not get that advice, they may simply not have their “ducks in a row” to begin that part of the moving-up (or out, or down) process.
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There you have it. 10 obstacles to getting this reopened Residential Real Estate Market to move, getting some gas in the tank of this Ferrari. If you’d like to learn more, be in touch with me and my team anytime. We look forward to helping you find the home of your dreams! -Scott sharris@bhsusa.com