Inside the Market | Real Estate Madness
March Topics: The Spring Market Playbook
Hi Everyone!
With the end of the 2024’s first quarter fast approaching, and much like the first 12 minutes of a basketball game, the strategy for how the next 36 should be played is beginning to unfold.
So let’s call a quick timeout, draw up some plays and dictate the action for the rest of the game… year!
Look, sometimes we can all feel like Hickory from the movie Hoosiers, outmanned, shorter, slower… and in real estate these feelings have many of us thinking how expensive everything is, how there aren’t enough choices, and why the $*?! what I have to sell isn’t getting bid up like others are???
I’ve felt it, you’ve felt it, we all have.
But here’s the thing, getting discouraged and letting the other team (in this case, the market) dictate how you play is not a winning plan. And just because someone is more financially qualified or has a more prime property to sell doesn’t mean that a better strategy or outworking others won’t win out.
So looking ahead, with three quarters left to play, I wanted to share some trends and perspectives for the rest of the year and beyond to offer you ideas, tips and opportunities to outmaneuver the competition.
It’s madness out there, position yourself wisely!
Craig
Craig DeCecchis
cde@corcoran.com
914-882-5011
The Spring Market Playbook
Below are my notes from the field: anecdotes from conversations with buyers and sellers, development teams, mortgage brokers and other fortune tellers.
Plus my thoughts on how positioning yourself in real estate matters now more than ever because low inventory and a meek pipeline of new construction won’t make the game any easier in the future.
Market Brief
The spring market sounds cliché, but it’s a thing. Houses show better in warmer weather and historically buyers and sellers make their moves around the end of the school year. But you knew that already, so let’s move on…
This year’s spring market is seasonally no different, with the best of what’s newly listed being snatched up above the asking price. Cash is king, there is plenty of it, and those financing have accepted today’s higher rates with dreams of a refi in the next 12-24 months.
Regarding inventory, yes, it’s ticked higher versus this time last year, but is still historically low. As a result, we are seeing buyers who have been sidelined and need to make a move settle for last year’s inventory that’s been on the market for a while. They are buying at a lower price and in many cases, exhausted by the search, are accepting there might not be a better choice in the future.
Fools Gold
But don’t let the story of tight inventory fool you because it’s not the same everywhere you look. There are pockets hiding within the city and suburbs where inventory is rising and prices are flat or even falling.
And if you’re struggling to find what you’re looking for in the market, to find Waldo so to speak, don’t worry I’m here to help! Because to many, the market looks like the picture below. A cluster of action, making it hard to focus and find what’s hiding in plain sight. Madness!
Here’s one example:
Not All Suburban Markets Are Trending Equally
I’m not here to predict price tops in markets, but it’s worth raising a brow at certain suburban markets that are heading in the opposite direction (inventory up / prices down) versus most of the rest.
Buyer beware of towns with extended commutes where Covid transplants are selling to head back into the city. Telltale signs are towns with long train rides, rising inventory and flat to lower prices. Another leading indicator of the same trend is the nearby office market, where one of the top commercial brokers in the area recently told me that firms who relocated from NYC in 2021 are trading in the keys to move back into Manhattan.
Don’t bail out someone else’s problem.
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Here’s the latest market data from one well known town and as you can see year-over-year inventory is rising since June 2023 while median prices are heading lower. Trust me, both of these trends are red-alert exceptions to the broader market!
Hint, it’s not in Westchester, but close… Call me and we’ll talk specifics about where and why.
Real Estate Plays
So if you’re like Hickory and feel like the real estate underdog here are some actionable tips to best position yourself for tomorrow and thereafter.
#1 Trade Out of What’s Lagging and Into What’s Leading
Here’s a really simple example, but an important one. Apply it to your situation accordingly.
The average 10-year price growth rate in Gramercy is about -1% per year, yes, it’s negative!
All else equal, that $1,000,000 apartment in 2014 is worth $900,000 today. And if you factor in price growth elsewhere, neighborhoods like Gramercy performed 20% to 30% worse than the average Manhattan apartment over that span. And if you were in a high-growth neighborhood, it’s like 100% worse.
Talk about opportunity cost, yikes!
So consider almost any other neighborhood… but perhaps take a look at the Upper East Side along the 2nd Avenue corridor, where for a similar price per square foot, real estate prices will continue to benefit from the Q train’s extension.
#2 Trade Up in Size
In today’s market, discounts increase as bedroom count goes up, which isn’t always the case. So trade in your 2 for a 3, sell into the stronger market and buy into the weaker one. And when prices turn higher the 3 will outperform the 2, the 2 will outperform the 1, and so on.
#2 Trade Something Old for Something New
NYC new development inventory was down 70% in 2023 vs 2022. And the pipeline is 50% lower looking out into the next few years versus the past few. So what’s new today will be new for longer than before, meaning the premium for today’s new developments will be more valuable for longer.
#4 Trade Down in Monthly Costs
Monthly costs are going up everywhere and who seriously sees that trend slowing? So in addition to all the other features a piece of real estate might have, lower carrying costs and taxes are luxury that will support higher prices more meaningfully over time.
Noteworthy Opportunities
With all the recent buyer’s agent commission headlines casting a shadow on real estate agents value proposition, it’s more important now than ever for someone like me to demonstrate my value to potential clients like you.
So here are three timely opportunities. Reach out to discuss these and more.
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One Domino Square
Not often do long awaited and transformative new developments hit the market in NYC, but here’s one! And having sold new developments for 20 years I know there are two great times to be a buyer: at the very beginning and at the very end.
So here’s your opportunity to own a piece of prime Williamsburg waterfront at the very beginning!
And when I mean it’s the very beginning, I mean, now is the time to buy before others even know they can.
The Residences at Mandarin Oriental, Miami
Yes, I do a lot of real estate work outside of the NYC area. I haven’t talked about it much here in the past, but will now.
Knowing the development team of The Residences at Mandarin Oriental, Miami very well, I was just able to help a client secure a premium residence at MO’s new US flagship hotel and residences before others even knew it was possible.
450 Washington Street, #217
Even though this has been one of NYC’s top selling buildings for the last 18 months, and just celebrated 100 closings by the way, there are many gems left to discover!
This one bedroom for instance, with a large terrace and charming views, would make for a quintessential Tribeca home or investment property where I’ve rented others in the building for north of $150 per square foot!
#217 is asking $1,465,000 and is a one-of-a-kind offering in the building.
