For those of you in New York who have been debating whether or not to purchase a home, 2016 may be the right time to buy. NYC real estate was intense in 2015. Buyers got outbid left and right. It was a challenge to get contingencies written into contracts. And price per square foot records were set. Things seem to be settling down now.
This is a very subjective question. At any given time, it will be a good time for some to buy and a good time for others to stick to renting. It’s all about opportunity cost and your unique situation.
But, from an overall market perspective, let’s see what’s in store for 2016 real estate in New York City.
Lower Price GrowthHome prices are finally falling down. If you have been stuck behind the wave of rising prices, you may finally get the chance to jump in. Prices reached record highs in 2015 in both Manhattan and Brooklyn, but buyers and sellers can expect lower price growth this year, according to new projections from StreetEasy. In Manhattan, the median resale price is projected to grow just 0.8 percent to $1.01 million. That’s way down from the 7.1 percent growth experienced between 2014 and 2015.
Magic Mortgage RatesReal estate hopefuls can breathe a little bit knowing that their buying power has increased in the past 10 years as mortgage rates have dropped. At the end of 2006, mortgage rates were about 6 percent. At the end of 2015, they were about 4 percent. Because of how mortgage rates have dropped, if you could afford a $400,000 home back in December of 2015, today, you can afford a home for $411,000.
Buying Could Be Cheaper Than RentingRental rates are continuing to rise due to the on-going low supply and high demand of rental units. According to Rent.com, in the last 12 months, 88 percent of property managers have raised their rent prices and 68 percent predict their rental rates will rise again at some point this year. Plus, with dropped mortgage rates, it seems like the better deal.
First-Time Home BuyersConsidering all of these predictions, 2016 might be the ideal year for first-time home buyers to take the plunge. This year we will also see an uptick in the number of condos being sold – a great first option for property virgins. We’re seeing more and more of them being built around the Upper West Side and its neighboring communities. Today, most buyers prefer the idea of a condo, and will tend to move in that direction assuming they can afford the price tag.
The Rise & FallMany people hit themselves over the head for not buying 10 years ago, and they should. For the most part, prices have gone up since 2006. A townhouse on the Upper West Side 10 years ago was in the $2.7 million range. Today, the median Manhattan townhouse price hit a record $5.25 million, a jump of more than 94 percent over the 10 years. This same pattern went for co-ops and condos too.
Although the market is not exactly easy to predict, we’ve been hearing a lot about an economic bubble that’s either in progress or on the way. And history would lend the belief that after the highs, comes the lows. New York City real estate is surely it’s own economy, but will the apparent nationwide collapse hit our city? I think it’s safe to say that the market will definitely be a lot less competitive this year.
So, as I said before, if you can swing making the big purchase, go for it. Don’t let history repeat itself and miss out on another great investment opportunity. Who knows where New York City real estate will be in another 10 years…
Zara Amor is a licensed real estate salesperson for Love Where You Live Realty