up to 2% of your purchase price cash back at closing
Happy Summer Everybody! We hope you are all feeling good with the start of warmer weather and enjoying the World Cup! Please enjoy our 2018 Q2 newsletter.
A Tale of Two Markets
We are in an unusual market right now. According to a Streeteasy report, at the end of May, there were 9,720 properties available in Manhattan – a level of inventory not seen since the bottom of the market during the Great Recession. That is wild. But if you look around, things today are quite different from 2010. The stock market continues to hover near record highs, unemployment is low, Wall Street bonuses are high again, and banks are extremely eager to make mortgage loans (at rates still pretty close to historic lows, although they are rising). Nonetheless, sales are slowing, and, according to one prominent industry observer, “we are at the tail end of the great correction that began 18-24 months ago”.
So, what is going on? Demand today is suffering for a number of reasons – the three major ones, in my opinion, being lower foreign investment, the new tax law and the slumping rental market. There is less foreign investment today relative to years past, primarily due to stricter immigration controls (which have affected a few Digs clients) and tighter regulations which make it more difficult to get money out of foreign countries, particularly in India and China.
The new tax law has not obviated the benefits of homeownership (not by a long shot), but it has diminished the more immediate tax benefits long sought by buyers in the high-tax New York City/New York State region, which has led many to sit on the sidelines and take advantage of the slumping rental market. And let’s talk about that rental market. The glut of rental supply has caused a race to the bottom among landlords vying for tenants, and rents have fallen. When rents are low, investors look elsewhere for yield, and, when the stock market continues to outperform and other lower-risk investments generate better returns than the sub-3% cap rates generally seen for NYC condo investments, NYC real estate does not look as attractive as it has in the past.
These conditions make for a very interesting buyer’s market. And it is definitely a buyer’s market in some unit classes, such as new development and large high-end family-sized apartments, for which prices have dropped considerably in some buildings and neighborhoods. But it isn’t as rosy for all buyers. The market for starter apartments (a popular target for many Digs buyers) – 1-2 bedrooms between $1-$2MM – is still extremely underserved, and quality inventory priced properly trades very quickly, often for very good prices. Some Digs clients in super competitive sub-markets like the West Village and Brownstone Brooklyn are still regularly encountering bidding wars.
Digs had its best quarter ever, with 17 contracts signed! We also hit a huge milestone this quarter, with over $2.5 million in rebates and discounts given to our clients since we started this thing a few years ago. We put three of our exclusive sales listings in contract this quarter, but we still have a couple active sales, as well as one new exclusive rental listing, to share with you. Please check them out below and let us know if you or anybody you know is interested!
A BIG THANKS goes out to all of you who continue to support us – we are extremely grateful for all of your referrals! If you know anybody who is interested in potentially buying or selling real estate in NYC, please continue to spread the Digs gospel of high level service at lower prices.
Hope to hear from you all soon!
Mark your calendars! On April 24th, Digs will be participating in the First-Time NYC Homebuyer Panel hosted by the NYC Cornellians alumni group. Registration is available here. If you or anybody you know is interested in potentially buying an apartment in NYC, or has already started looking, this event is an extremely informative introduction to all aspects of the buying process…and you do not need to be a Cornell alum to attend!
Digs Exclusive Listings
Check out our currently available exclusive listings. Please be in touch if you’re interested or forward them along to anyone you know who might be!
Long Island City
4-74 48th Avenue, 29B
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453 West 43rd Street, A
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77 Bleecker Street, #624
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Upper West Side
323 West 83rd Street, 4D
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201 East 28th Street, 5G
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Digs Realty is a full-service residential real estate brokerage company specializing in home purchases and sales in New York City. Clients working with Digs on a purchase are eligible for a rebate of up to 2% of the purchase price, and clients working with Digs on a sale are eligible for commission discounts. For more information…
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