Q4 Manhattan Market Report analysis

Q4 Manhattan Market Report analysis

  • Javier & Thomas
  • 01/20/22

Transcript:

Okay, in all seriousness Q4: What happened last year? Well, last three months in the real estate market? In Manhattan specifically.

Manhattan specifically the last quarter was freaking bananas. It was crazy we had the busiest quarter, the busiest fourth quarter since 2013. yeah, Which is you know, it's a nice recovery. You know Q4 had a lot of talk about omicron and how that was going to suppress the market but the numbers do not show a suppressed market the numbers show a market that has done very well and the only market that was slightly down was the co-op market which was technically down 5.5% quarter over quarter, but it's still strong and it's up almost a whole percent from year over year. yeah, so co-ops are very nice because they keep very stable even if they're up or down the stability is much more than maybe of a co-op what the co-ops do last quarter in comparison to last year? so, for Q4 they were 760, the average price was 768 000, which is up 9% year over year, so around 700 grand up, I guess? yeah. You know it's very marginal income but part of that is co-ops aren't investment properties, right? They're personal investment but they're not like grow your wealth type of properties where you have tenants moving in and you have multiple units, and in that scenario condos are the biggest jump because you know during covid, condo owners were, the story was: New York City is dead, no one's ever gonna live here again, and so condo owners were selling off their condos at, you know, fire sale prices. yeah. So what we saw was from quarter of a quarter was a 10 increase and from Q4 to Q3 so the average medium price was 1 million 710, in Q3 it was 155 and then year over year is up almost 5 which is you know a direct correlation to covid. yeah, pretty much, so if we talk about the whole real estate market without dividing co-ops condos or townhouses in Manhattan we actually saw the medium price which is really the one that we'd like to use as a model because the average can be skewed by the luxury properties but the median price went up by 11.2 percent, certainly with a lot of help of the townhouses market because we see the co-ops and the condos only 4.9 and 0.9 percent, so we're seeing a strong market in Manhattan now we have something coming up that's going to be very interesting, right? the minutes of the feds came out yesterday which helped kind of like crash the stock market a little bit and the crypto market and the crazy market and it's probably going to mean that interest rates in the shorter term are going to start cripping up for buyers so how does this affect the buyers and the sellers well so interest rates have a lot to do with what your your monthly nut is going to cost you so if a interest rate goes up one point or goes from three percent to four percent you're looking at about a ten percent reduction in your buying power so if you were able to afford a one million dollar property today when it goes up 1 percent you're only going to be able to afford nine hundred thousand because what happens is banks look at your DTI, co-op boards look at your DTI and what they're gonna (DTI is debt to income ratio) yeah, and that gets affected when your monthly mortgage payment is higher so if you're looking at a 10 increase in your monthly mortgage payment that translates into being able to afford 10 less so that's a that affects buyers and sellers right because if you're a seller you need to price your property according to the market now this did not creep up one percent overnight it hasn't gone up yet based on the feds but it seems that they're going to accelerate the increase of their interest rate which is basically the interest rates that the fed paid for money which affects the 10-year yield which affects the stock market effects it creates a downscale effect that will start bringing the interest rates of your mortgage app, well not just your order every so often but it's also going to affect your credit card payments right so absolutely yeah if that rate goes up your credit card interest is going to go up so if you're carrying a lot of debt on your credit cards start paying that off because it's going to be harder to pay that off as these interest rates go up, absolutely absolutely, so when you prep for buying a home make sure you have very little credit card debt understand that the interest rates are creeping up so do it as quick as possible but they say it's going to be a quarter of a percent every quarter uh so that means that in a year it would be a full percent so that might erase that 11.2 percent raise in prices in New York theoretically right like we're not saying that the market's going down we're just kind of like interpreting the facts of the last couple of days and how that can affect you as a buyer or potentially as a seller well the way it's going to affect you as a seller is right now we're seeing a lot of properties going to bidding wars right, yeah, so and part of that is because interest rates are his at historic lows still they've been at historic lows for like three years now it's been all over the news it's not new but now to to use kind of like a scenario right if you have six buyers who are capable of buying the property now when the interest rates go up maybe you only have three buyers that are capable of buying that property at that price so you're not going to see the same push on prices to go up you're not going to see the same amount of bidding going up so you're going to see a less of a discount on sales or less of a push to raise those prices you're also going to see that you know people are going to be scared when they say oh my gosh interest rates are so high they're not they're not even if it goes up to four or five or six percent you have to remember that if you go back to the 80s when our parents were buying homes they were paying interest rates 16, 17, 18 and homes were still selling yeah historically it's still gonna be low like historically i think the average has been seven to eight percent even without counting like the highs of the 70s and 80s so we're still going to be half of what the historical average is so it's still cheap money but it will inevitably affect the way transactions are happening and who can transact right because which should have been going up just a tiny bit not for everybody uh compared to like the quote unquote inflation that well we know everybody's arguable what inflation really is and where it comes from but it is inevitably affecting the way transactions are going to happen this year I think that the savvy buyers are going to be purchasing in the next three to six months I think that the savvy sellers are going to price properly in the next three to six months and we will have to adjust pricing and strategy of buying and selling as the market moves along and we really know what this raising interest rates will do because it could be also that the feds raise the interest rates and the mortgage rates don't necessarily go up it's unlikely but it could be right there's many ways of how bank want to move their money around to profit from whatever system is there sometimes is by yield bonds sometimes is by lending mortgage money we'll see you know this could continue to have an effect on rent prices right because if people can't buy then rent prices more people are going to be renting which means rent prices will go um it also means that landlords are gonna be paying more for money that they borrow to pay for their properties and if you're a borderline buyer right now let's say you know you're an entry-level buyer you maybe you're gonna buy your first studio you need to pull that trigger sooner and stop waiting for the oh well maybe something nicer will come on market later in the year because the the reality is you won't be able to afford it yeah I think I think the interest rates are going to we're talking about this before the video they're going to affect more that lower part of the market the below million dollar property below million dollar buyers because in that case at 10 percent on the on your buying power it's much more than for somebody who's purchasing a three million dollar property which has certainly much more disposable income to put into a luxury property than the person who is buying the first property their first family home or whatever that is i love the fact that you mentioned rentals because we also come from a very very crazy rental year rents in New York went up like in a ridiculous amount year over year and they're not done going up they're not done going up we already catch up recovery and not just like not just the landlords are getting whatever they want like we're getting calls from renters like the minute a property goes on the market and they're putting offers without seeing the property every apartment that I listed in the last 40 days I had an application on that day yeah tenants page 15 broker fee some paid more than that because they were trying to outbid the other people that were applying for the department we are in multiple application situations and it's only going to get worse because all these covid deals are starting to expire so everybody that got an amazing deal that's not rent stabilized is now going to have to deal with the fact that they're going to have to move and where are they going to move you know how are they going to uh figure out how to pay their rent yeah they're going to have to move outside from like the centers a lot of people have moved to like the main areas in Williamsburg they're going to have to move out a lot of people have moved into downtown condos and downtown rentals they're going to have to move out it's just the dynamics of how supply and demand works during covet a lot of apartments available do whatever you want right now we are back to that thing that people say New York housing is insane, New York housing is insane it's it's just what it is yeah we cannot build buildings any faster well and there's not really a lot of space left to build on without taking buildings out so so we talk buyers we talk rental sellers we talk rentals we talk mortgages we talk interest rates what else do you think we're going to have for 2022 I think we're going to continue with the insane buying year yeah um i i've already started like the the fed said what they said yesterday and within three hours of that phone call I had four buyers that were kind of like out of the picture and that are now ready to pull the trigger so I think the first six months of 2022 are gonna be bananas again uh which I enjoy um and i hope to make it enjoyable for you yeah and also one thing that I think it's important to keep in mind too is that we have new international buyers coming in again which we didn't have for a couple years so that is also something that's going to drive the market in New York everybody again wants a little piece of New York it seems like especially the condominiums right like it went through a cleanse through covid and now everybody's like oh we went in again so let's see what happens anyway happy new year guys thank you very much for watching and dealing with uh us.

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