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WHAT IS really going on?

Homebuyers are calling again, and some are ready to move forward with their purchasing goals. Of course, some conjecture about how much prices will come down as a result of NYC’s (soon to loosen) shutdown and the slumbering economy. Although that mindset won’t help them get out of the elevated buildings they were renting during the pandemic or get the backyard that they were missing while cramped in their apartments, they are entitled to their opinion. What will help them achieve their goals is focusing on WHAT IS really going on.

Some homeowners have strong opinions that the market will rebound quickly and that buyers will take advantage of historically low-interest rates. With fewer distractions to spend their money (no restaurant dining for a while folks, no travel vacations for the foreseeable future, no sports venues, Broadway shows, concerts), they believe that the goal of homeownership will be stronger than ever. These homeowners are sure that prices may even surge! If you are a seller with a home you really would like to sell, either to make that important next step in life or to draw equity out of a home you know you no longer need, then dealing with the here and now is more important than ever.

To buyers- here is WHAT IS:

  • BORROWING MONEY NOW IS CHEAP The Federal Reserve lowered interest rates to zero right before the pandemic. With 30 year fixed rate mortgages as low as 3.25% and 15 year fixed rate as low as 2.65%, if your job is secure, you have saved enough for a reasonable down payment and have closing costs in reserves, they’re practically throwing money at you!
  • If you do buy now and need to make some improvements on your next home, there are great contractors out there, and they want your business! They will work with you, are ready to build back their businesses, be reasonable with you, and work to make you a raving fan.
  • Huge Sales on housewares, furniture, everything, abound. These places need your business since retail businesses fell in April by nearly 90 %
  • Home Sales are better now. In stable areas like Northeast Queens, the prices are not robbery better, but they are better than pre-COVID-19. When was the last time you won about $50,000 in less than three months? How cramped have you felt wherever you have been sheltering in place since the shutdown began in March? Do you honestly want to feel that way again? I’m betting the answer is NO, YOU DON’T!

If you are a homeowner, it’s easy to believe that consumer confidence will rebound quickly, that the pent up demand to purchase goods will extend to the American Dream, often the largest and important financial decision in a family’s life. Queens is one of the most stable real estate markets. In 2008, when financial markets were collapsing, areas outside of NYC suffered 10, 20, and in some areas, even 30% reductions in home values. Queens stayed stable and, by 2009, was already seeing escalating prices due to the demand from a multicultural population. While other areas suffered, Queens thrived. By 2012, our area was on an upward spiral, summiting in the Spring of 2019, nearly doubling values in just over six years.

So for sellers, here is WHAT IS:

  • Unemployment is at 14.7% – the highest it has been since the Great Depression. Last week’s statistics showed that 1 in every five adults are now unemployed. Most households have two adults usually working full-time, which means that out of every two families, one of them is either unemployed or under-employed with only one income.
  • One out of every two buyers in Queens is self-employed, often in cash based businesses, or working in restaurants, food service industries, nail salons, and other parts of the service sector. Another large segment of Northeast Queens buyers came from the import-export industry, with hubs running from Maspeth to downtown Flushing. These buyers needed homes in our area to be close to these denser parts of the city. All of these sectors were severely affected, both financially with the severity of the COVID outbreak.
  • Since NYC’s shutdown, there have been three streams of homes coming on the market:
    • New listings were coming on the market.
    • Contracts of sale were canceled due to loss of jobs, death, or reactionary changes in bank qualifying criteria, causing the buyer to lose their loan commitment.
    • Homes on the market pre-COVID were forced to halt their homes’ showing and marketing and are now extending their marketing time and adjusting their prices to resume their selling objectives.
  • The Coronavirus hit Queens hard, particularly Elmhurst, Corona, Maspeth, and Astoria. Statistically, buyers purchase homes within 8 miles of where they live or where their relatives live. Health and safety uncertainties are limiting the number of buyers ready to step back into the market.
  • Interest rates are at an all-time low. Under normal circumstances, this is a huge plus in the seller column, but when people are worried about jobs and health, interest rates are less sexy.

So it all comes back to this – LISTEN TO THE MARKET, it’s talking to you.

Buyers, there are no steals here. Sure, you can “wait,” but mortgages aren’t as easy to get, and they won’t get any easier for the next six months, even with those significant down payments many of you have. Real sellers will listen to the market, and when they do, smart buyers will get those values. In contrast, an overconfident “buyer” will risk another round of what they have just been through in cramped quarters or will remain a renter for the next long cycle of a buyer’s to seller’s market – CaChing for your landlord.

Sellers, if you are getting offers, you’re one of the lucky ones. And you probably have a good realtor, who’s getting out there, spending money to find a buyer in a shallower buyer pool, and navigating a new world of how to do business. If you have multiple offers in the same range, that’s probably what the place is worth. If you’re not getting activity and won’t adjust your price to meet the market, and don’t care whether you lose equity in the next 3-6 months, consider taking your house off the market. Wait for a happier time, when a pandemic is in our collective rearview mirror with no chance of return. Instead, consider renting the house. Rentals are up, since there are plenty of people who can’t or won’t buy now, but may combine one extended family in two apartments for one larger home for more money, with a backyard and room to move after these nearly three months of confinement.

The rules still apply. A successful negotiation requires give and take between parties. If your mindset is I WIN, YOU LOSE, it won’t work, especially in this market. Think WIN/WIN. I win when you win. You will probably get less than your neighbor that sold six months ago. If you’re a buyer, be respectful with your offers, a reasonable seller may reward you with an acceptance rather than gamble the future. Remember, if you want the house, go for it. If you don’t really want it, don’t even make the offer. What for?!