Fall is typically a robust time for sales yet in spite of low inventory activity remains slower than usual. A prevailing sense of uncertainty in the markets has sidelined prospective buyers and sellers, causing the market to stagnate.
Unlike the post-pandemic sales boom, during which buyers primarily sought homes with more space to accommodate home offices, outdoor areas, workout spaces, driveways and other such amenities, today’s real estate transactions are often motivated by necessity rather than mere desire. These needs typically arise from significant life changes such as job relocations, impending additions to the family or empty nesters looking to downsize.
Inventory remains low across all market segments. Supply in Brooklyn is down 11% from this time last year. Price reductions are becoming more common as sellers eagerly seek buyers before the seasonal winter slowdown begins. Buyers with substantial liquid assets are less impacted by high rates and more motivated and prepared to make offers, typically hoping for a discounted deal.
Bidding wars do still exist for well-priced homes that are renovated, properly staged and priced competitively.
Inflation peaked at 9.1% in June 2022 and is currently down to 3.7%, while the target rate remains at 2%. The next meeting of the Federal Reserve is scheduled for February 2024. As inflation continues to cool, the Fed is expected to shift its focus towards monetary easing, facilitating greater access to credit. While interest rates are projected to remain elevated throughout 2024, prominent economists at major North American banks suggest that the Federal Reserve has stopped its rate hikes. They anticipate that the Fed will implement a rate reduction in 2024, which will have a cascading effect on other interest rates in the economy, reducing borrowing costs for consumers and making credit more affordable.
According to Fannie Mae’s economic forecast released in August, it is projected that the Fed funds rate will decrease to 4.40% by the end of 2024. This forecast also indicates a corresponding trend for mortgage rates, which are expected to end the year at 6%. Note that rates are not the same for every borrower, and you should consult a trusted lender to determine your specific borrowing power.
Seasonally, fall is a particularly optimal time to market your property. A supply-constrained market bodes well for your sale, provided it is properly priced and well-marketed.
In the current climate, buyers overwhelmingly lean towards properties that are in impeccable, move-in condition. We excel at providing guidance on cost-effective upgrades that will maximize your resale value, and we also provide complimentary home staging services to ensure your property stands out and appeals to potential buyers.
According to a recent StreetEasy report Brooklyn saw its highest level of market activity this past June, with listings garnering 34.2% more buyer inquiries than in June 2019. In contrast, Manhattan homes received a 13.4% uptick in interest compared to four years ago.
The key to a successful sale today is to price property appropriately from the start and highlight its best features to draw in as many buyers as possible as quickly as possible.
Brooklyn has become a prime destination to live and invest. Buyers are increasingly drawn to our beloved borough because it offers more space and amenities for your money, all while fostering a strong sense of community. Its tight-knit neighborhoods and support for local businesses create a genuine sense of belonging. Brooklyn boasts an abundance of green spaces, a family-friendly atmosphere and a more relaxed pace of life. Additionally, its thriving cultural scene rivals that of Manhattan, and with a quick subway ride, you can easily access all that Manhattan has to offer.
While there may still be competition, it is less intense compared to previous markets where cash buyers reigned supreme, and concessions or standard contingencies were rarely considered. In cases where listings have lingered on the market for a while, buyers often have a stronger negotiating position.
A knowledgeable broker can assist buyers in pinpointing opportunities and offer sound advice on optimizing their purchasing potential while negotiating favorably on their behalf.
Despite the increase in interest rates from the exceptionally low levels observed during the peak of the pandemic, they still remain relatively low, typically in the high 6s and low 7s on average. When rates eventually decline, it is likely that more inventory will enter the market, drawing in additional buyers and intensifying both competition and, consequently, home prices. By making a purchase now, during a period of lower competition, you position yourself to take advantage of potential refinancing opportunities when rates decrease in the future.
As always, hiring an experienced Brooklyn real estate broker or agent who can offer hyper-local real-time data can be hugely beneficial to both sellers and buyers.
The rental market is currently highly competitive, and rental prices continue to rise. We’re even seeing rental bidding wars when multiple parties vie for the same property. Your preparedness with documentation to support your rental application can significantly enhance your prospects in this competitive environment.