PRE-ELECTION STATE OF AFFAIRS
There are several competing factors influencing the market in advance of November 2016’s election that are, frankly, creating a lot of noise. We thought it would be helpful to look at them individually and their effect on NY Real Estate…
I) NOVEMBER 8, 2016 PRESIDENTIAL ELECTION: While it is normal to experience some hesitancy in the months leading up to an election, the current presidential race has been particularly polarizing and attracted more international attention than any in history.
- WHAT DOES IT MEAN? We have seen a little slowdown in traffic as some individuals wish to see the results before making a major financial or investment decision. That said, decisive buyers are smartly capitalizing on great properties today, while sellers are in some instances actually benefiting by listing now before what will likely be an uptick in competing inventory when many chose to list in November. Interestingly, not all international groups are responding in the same manner. We are experiencing increased interest from certain nationalities while others are temporarily holding off.
II) NEW DEVELOPMENT INVENTORY: There is a large pipeline of current and future new development inventory.
- WHAT DOES IT MEAN? Many developers are choosing to release product in smaller groups so that they do not flood the market. We are seeing a clear disparity in the great success of certain developments while others experience sluggish sales. Buyers are now more focused on new construction that provides a strong location, views, and usable square footage. Projects which offer these attributes are selling very quickly – often even without a model unit. Others which are very expensive but offer huge square footage relative to the number of bedrooms without intrinsically desirable neighborhoods or architecture simply aren’t moving.
III) INTEREST RATES: It is likely that the Fed will begin a gradual increasing of interest rates by the end of the year.
- WHAT DOES IT MEAN? Interest rates are still at historical lows which is a strong driver for buyers who want to lock in a long term low cost of borrowing. This correspondingly benefits sellers who can take advantage of a motivated buyer pool. The anticipation and ultimate reality of gradual interest rate increases should create a greater sense of urgency among buyers as they realize that the unprecedentedly favorable lending environment will not last forever.
We appreciate your continued referrals.
Sybille and Alexander