Brooklyn Real Estate Market Summer 2022
A recalibration is underway. After a protracted and intensely heated seller’s market fueled by bidding wars, recent rate hikes coupled with the stock market taking a significant hit, a standard seasonal summer slowdown and increased sales inventory has put us in the midst of a transitioning market. Historically, current higher rates (5-6% for a 30-year fixed rate) are still considered a bargain, but it’s been years since we’ve seen them this high, and in a shifting market like this many buyers have decided to hit pause.
The truth is opportunity can be found in any market and real estate is hyper localized, so it can be particularly advantageous these days for buyers to seek out a knowledgeable real estate agent’s expertise and insight on specific properties you’re considering.
If a seller is pressed to sell or a property is in any way less desirable and is lingering on the market, it’s possible you could score a deal (say, 5-7% below the asking price) though it’s unlikely an unrealistically low bid would be engaged. Your buyer’s agent can help you seek out a good value without overestimating your position by providing you with a comparative market analysis and offering some historical insights. If you can stomach a renovation, you can likely negotiate. That said, keep in mind the rise in material costs and supply chain issues that may add to your renovation budget.
In a competitive lending environment like this, now is the time to shop rates. Keep in mind higher rates can also bring larger tax deductions, which can help offset some of the higher rates.
Renovated townhomes in the $1-3M range in desirable Brownstone Brooklyn neighborhoods are still generating a fair amount of interest. If you take the long view, quality and availability in a coveted location trump the quest for rock bottom prices, particularly if you plan to occupy a home for at least 5 years to hedge against market volatility with the understanding that many of these homes tend to appreciate in value by 2-3% or more each year.
For sellers, it’s incredibly important to set a realistic price for your home today. Overpriced properties are facing price adjustments over time and a lingering listing indicates a lack of desirability, which tends to keep buyers at bay unless they’re seeking a bargain. Pricing appropriately up front on the cusp of the market, staging effectively to highlight your home’s best features and mitigating any areas of concern, will help to garner as much interest as possible, as quickly as possible.
Your neighbor may have sold a similar or even lesser product above an already aggressive asking price just a few months ago, but the market has shifted. Though still relatively low there is more inventory for buyers to choose from. More importantly, there are fewer buyers ready to take the plunge and the media has perpetuated a “wait and see” mentality making buyers more reluctant to bid and more apprehensive about moving forward unless they feel they are acquiring a decent deal and/or a high-quality product.
Rentals are currently extremely competitive and rental prices keep rising. We’re even seeing rental bidding wars when multiple parties are vying for the same home. The more you can be prepared up front with documentation to support your rental application, the better your chances.
As always, we welcome any opportunity to offer you confidential advice and support on your real estate endeavors—contact us today.
