Oh Spring, how we have dreamed of you. With your tulips and daffodils, your warmer days and your nagging reminder that we really ought to get that pedicure. OK, we’re not so in love with your April showers or your March snow storms – thanks for that one, Stella – but we can deal with those in return for the magnolia lined streets and the promise of longer days.
The property market has been waiting for you too. Inventory just hasn’t been the same since you left last year and there’s much riding on your return bringing an uptick in sellers with you.
Alright, enough with my ode to the budding season. Let’s get down to business and take a look at what spring means to the property market, how sellers can prepare and list their homes and what buyers should be prepared for when looking for a new property.
Traditionally, spring has always been the season of choice for sellers to list their properties. It’s typically known for being a faster moving market and an increase in inventory is generally met with a rise in foot traffic at open houses and higher selling prices than in the fall.
This spring there’s an added incentive for sellers and buyers alike to push the button on their property transactions. Although interest rates remain at record lows, March has seen the Fed raise the benchmark lending rate by 0.25% and with two further hikes expected this year, borrowing money to buy a home is will become more expensive, particularly to those buyers looking to finance their purchase.
As we come out of this winter and its dearth of inventory, popular listings, if priced right, will attract a flurry of interest from buyers who may have had to delay their purchase. However, for sellers that overprice, such activity may not be guaranteed. This has played out anecdotally, in the last month or so as the spring market has started to bloom. For properties that have been fairly priced, or strategically under priced to encourage viewings, I’ve seen open houses literally mobbed by interested buyers. There have also been a number of properties in the more desirable coop and condo buildings, especially those priced under the $2 million mark, that have received multiple offers, or have gone to ‘highest and best’ bidding situations.
With a strengthening economy and rising stock market, the Manhattan residential resale market has seen a sharp rebound following a prolonged slow down, with more contracts signed year on year. However, while there is definitely an uptick in resale activity, this has yet to translate fully to the Brooklyn market. There still seems to be a sense of caution with buyers, particularly with properties priced at over $2 million, which have been moving more slowly since last year.
And here’s the thing: as a buyer you should be cautious. None of us, despite how much we may wish it to be the case, have a crystal ball. This early burst in activity may well be due to the strengthening economy, but it may also be down to a case of nerves on the part of buyers who are worrying that there won’t be enough inventory to go around this season or want to beat rising interest rates. If more inventory surges on to the market, the sense of urgency may shift the market and calm buyers, putting them in a position to consider their options. But despite that, as a buyer your first priority must always be buying what you can afford over paying what you think you have to pay.
If you’re financing your purchase, this is more important than ever. With a lower down payment, it’s harder to compete in a bidding war, as ultimately your lender is going to want to know the property appraises to the price you’ve offered for it. If you’re offering all cash, it’s a different situation, as you can literally offer what you want for a property, but always ask yourself this: is the property you’re buying worth what you’re paying? Your answer will be a mix of economics and emotion and will depend on other factors, such as how long you’re planning on keeping it. If you overpay by a few percentage points it will hardly matter 10 years from now, but your bottom line may be seriously affected if you splurge way over ask and have underestimated renovation costs or need to sell in a couple of years.
The message is simple. Don’t get caught up in the feeding frenzy. While you should always make sure you’re ready to jump if the right property comes up and shouldn’t delay if you find the deal you want, your best bet is to be prepared, work with a broker who will advise you on what you should be paying for a property and then decide what’s important to you.
And sellers? My earlier advice always bears repeating. Price. Right. If you price too high, all you’ll achieve is helping similar properties sell, as buyers are always going to look for the best bang for their buck. Work with a broker to price at a level that encourages foot traffic and prepare your home for market. A good broker will help and advise with styling, decluttering and staging your home so it can be photographed and marketed in its best light.
They’ll also use their knowledge and negotiating skills to get you the best price, but that’s most achievable when you remain realistic. Just because Mrs Smith 3 doors down from you got a certain price, that doesn’t mean you will too, despite the spring market’s uptick in buyers. It’s hard to be objective when it’s your much loved home but remember, brokers want your home to sell for the best price it can achieve and they sometimes need to be the bearers of bad news if you’re expecting it to be priced much higher than the market will support.
Ultimately, while spring really is the thing when it comes to buying and selling, remain calm, remain realistic and listen to your broker as much as you listen to your heart.
Hopefully they’ll be telling you the same thing.
For a market appraisal of your neighborhood, or an informal chat about buying or selling your home, get in touch with Lindsay Owen here.