Every market is predicated on supply and demand and we find ourselves in the midst of one of the most robust real estate markets we’ve seen in over 20 years, in spite of increased interest rates, global uncertainty, emerging Covid variants, a war in Ukraine and rising inflation.
Have Brooklynites adapted to make big moves despite traditional roadblocks caused by geopolitical volatility or is this just a burst of activity as we strive to fulfill heightened pandemic-fueled dreams and desires at any cost?
Inventory is even scarcer than last year and buyers are just as determined to leverage current interest rates before they increase further. The Federal Reserve just raised its target federal funds rate by a half point and indications suggest rates are likely to go up incrementally after each of their next five meetings this year, in an effort to curb inflation. In early May, the average interest rate for a 30-year fixed-rate mortgage hit 5.55%, up two full percentage points from December, and buyers can expect continuing rate increases as the year unfolds.
The rental market is also more competitive than ever, in part because some buyers have been priced out of the sales market and also because there are so few affordable rentals available. Developers have largely focused efforts on maximizing profit, which doesn’t tend to translate to creating affordable housing stock. High-end rentals ($10K+) are in strong demand. We’ve found that property across all sectors of the market is moving quickly, from studios to townhouses. Houses are extremely desirable for the solitude, space, and outdoor accommodations they afford, and are a finite commodity in Brooklyn and Manhattan—whether for rent or for sale they are flying off the market in record time.
Bidding wars are not only common but expected these days. Properties garner multiple offers within a very short amount time, typically a matter of days, generally significantly above the asking price (potentially ~10-15% higher) and often sell to an all-cash or non-contingent buyer or those putting a substantial amount down. In markets like this it is particularly important to retain a seasoned buyer’s agent who can help guide your negotiations, advise on the strongest offer strategy and build a solid team around you to support your purchase.
We remain eager to see when supply will rise to meet demand and whether further regulations will be imposed on real estate transactions. For those of you in the market seeking your dream home, may the force (and a smart, nimble agent) be with you!
As always, we welcome the opportunity to offer you confidential advice and support on your real estate endeavors—contact us for more info.