Why & How: Navigating Today’s Housing Market

When the recession hit, people didn’t stop moving to New York City. In fact, many more of them came to our fair city in search of opportunity. One thing that did come to a grinding halt, however, was construction of new housing. Banks tightened their belts and pulled loans on construction sites, builders lost assets, and available inventory eventually got sold and rented.

Now banks are lending again; borrowing money is unbelievably affordable right now and many people are eager to become home-owners. Some people are moving up, to bigger homes, and instead of selling they are re-financing then renting their property (this builds equity AND generates income). The demand for housing is further driven by all-cash buyers from foreign markets who are looking to invest long-term in a historically profitable venture: NYC real estate.

This is all great news for New Yorkers except the construction market hasn’t caught up to demand. According to one developer I spoke with, it takes approximately two years to build just eight units of housing! Once a site is purchased, plans are drawn, construction financing is obtained, and permits must be arranged. Then there is the actual construction period which is largely at the mercy of our volatile weather. Along the way, there are inspections for everything from boilers to meters to stairs, and finally one for the use and occupancy of the building. The imbalance will level out, but at this bureaucratic pace, it won’t happen overnight.

What does all this mean? It means that competition for housing has turned the market into a battlefield. Negotiations are fierce as bidding wars become common place and many properties go above the list price. It means that you must be prepared in advance and be ready to go all-in when you see “The Place.”

RENTERS should have all of their paperwork in order: last three paystubs, last year tax return, recent bank statements, employment letter, valid ID. . . and don’t forget the checkbook. Have a firm price-point, area, and move date; this will help maintain focus and streamline the process.

BUYERS should speak with a lender of their choice and obtain a pre-approval letter as their first step. This will define a price-point, which will assist in determining location and what type of home you can afford. Additionally, this will show that you are capable of obtaining a loan and expedite the negotiation process. Buyers should have a real-estate attorney selected and ready to review contracts.

SELLERS, it’s your market. Employ a real estate agent to list your property and advise on preparing it for sale. When pricing your property remember that it must appraise properly in order for buyers to get a loan. Have an attorney selected and ready to draft a contract. You should also have a plan in place for your move. It will happen and then you will become a renter or buyer yourself!

EVERYONE can benefit from using a real estate professional – not just any licensed person, though. Find one who you like, who communicates well, and has knowledge of your area of interest. Agents often get information first, will manage your expectations, and help a difficult process run smoothly. They will make recommendations on other important professionals such as lawyers and inspectors, and provide important details such as property valuation and historic market data.

Lastly, remember that it takes a fair amount of patience to find the right fit in this market. You may lose a few along the way but with time and diligence, it will work out.

Julia McHugh is a vice president and associate broker at Modern Spaces NYC.

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