Back HomeThe Reality of the Real Estate Market
There is no doubt that the recent presidential election results will greatly impact the real estate market, especially the New York City real estate market. We have already seen how the election results have favorably affected the stock market, with record highs being hit post-election and wise investors earning loads of money between the 8th and 9th of November. Faith Hope Consolo of Douglas Elliman states in the Wall Street Journal that she is “predicting the best holiday season [she has] seen in five years” (5). Antonia Watson of Corcoran asserted in a recent interview that “with fewer banking regulations, and with tax breaks for high income earners and corporations on the horizon, there is certainly a great chance for the market to repair itself during the next few years. For the first time in eight years, the wealthiest Americans will have more disposable income to invest back into the economy, which ultimately boosts it.”
It is no surprise that the investment sales market has been suffering in New York City and has greatly impacted the overall real estate market. As a result of the decline in investment sales, “New York City’s tax revenues declined about 1 percent in the past few months, reversing a trend of continuous growth since 2012.” (1). Despite trends that the media has portrayed, there have been a decline in sale prices and the market has taken the biggest hit since the housing crisis of 2008. Properties have been sitting on the market unsold for record lengths of time and the mortgage market has become distressed.
In the latest report by The Real Deal, “In the distressed mortgage market, private equity companies and landlords may purchase over-leveraged debt in foreclosure and attempt to finish the foreclosure as a means of taking over the building. While they may have enough capital to purchase the debt, oftentimes these distressed units sit in limbo while the new owner waits for the foreclosure case to conclude or for the market to recover so they can resell the buildings for a profit.” (4). This applies not only to property owners but also investors who have purchased condos and residences in this state of the market.
Konrad Putzier of The Real Deal writes that “New York City’s residential market had the biggest quarter since at least 2006, according to a new Real Estate Board of New York report, with $13.6 billion worth of condominiums, co-ops and one-to-three family homes trading hands between July and September” (3). What the report does not show, is that these properties have been sitting on the market for a long period of time, and the turnover rate reflects a decline in the market, rather than a simple increase in sales.
The reason that prices of condos in all five boroughs are slowly increasing, is because managers are adding amenities to add perceptive value to make up for the decline in the market because they cannot pay their increasing property taxes. The Wall Street Journal writes that “an index that tracked confidence of both commercial and residential brokers fell sharply in 2016 and to its lowest-ever level during the third quarter, according to report compiled by the Real Estate Board of New York, an industry group. The decline corresponded with weakening residential and commercial sales, especially in Manhattan” (5). The sense throughout the industry post-election seems to be one of relief and confidence in the trajectory of the stock market and real estate market.
Written by Kylie Keller
(1) The Real Deal
(2) New York Times
(3) The Real Deal
(4) The Real Deal
(5) Wall Street Journal
