2013 Mid-Year Market Report


Mid Year Market Report 2013 from Mukul Lalchandani on Vimeo.

We are currently seeing a historically low inventory of properties on the market in New York City due to the slow-down of the economy in the recent past. It will take some time before inventory can catch up with demand as developers scramble to build new properties for sale. A common trend in new developments is converting properties that were slated to be condominiums into luxury rental properties instead. Developers are seeing that renting their properties will give greater returns than selling, thus decreasing the inventory even more.

Due to the lack of inventory in New York City, and the fact that the U.S. economy is doing much better than many other parts of the world, we are seeing an influx of foreign buyers that see New York City as a good place to park their money for a long term investment. Because many Americans have waited for the market to turn around during the recession, there are even more buyers than ever, topped off with a shrinking inventory. This is why we are seeing prices move up steadily, albeit the increase of interest rates.

While the increase of interest rates may deter the average American buyer from financing or purchasing a home, this does not and will not affect the higher end luxury market in New York City! New York City’s high-end luxury market is a competitive micro market on its own, and, with that being said, the higher end market is doing well compared to the lower-end and mid-market real estate across the U.S. Although mortgage rates have jumped from 3.59% to 4.58% from May to June, which might discourage home buyers in the second half of the year to buy a home, this national average does not affect the luxury market for wealthy individuals.

Most NYC buyers pay with cash and sellers are not accepting mortgage contingencies, so the fact that national interest rates are rising will have no impact on the amount of turnover of sale transactions in Manhattan and Brooklyn’s high-end market. The luxury market is quite immune to the changes in mortgage rates in the rest of the country. In turn, what we see is that the rising mortgage rates are causing buyers to be even more anxious to pick up something quickly before prices rise again. I expect to see this trend last at least until the end of next year as developers complete their new developments, which will create an influx of inventory once again. I recommend that, as a seller, this is the best time to sell as you have total control over structuring the deal.