With 2011 off to a good start, we thought we would put a stake in the ground and make some calls about the trends that NYC is likely to see this year. None are particularly controversial or earth-shattering (we’re not about blowing your hats off) … but definitely some food for thought for you real estate afficionados, we hope.
1. Mom and pop landlords or those of established, larger buildings will have to renovate their inventory to keep up with the market. With the rental market rebounding with gusto, landlords are realizing that they need to have their inventory be fresh and updated enough to warrant charging today’s rising rents. Couple this with the high number of condo-quality rental properties (think $4.5k+ for one bedrooms) and you have a re-setting of renter expectations for what they demand from their rental abode.
2. New development sales will pick up, particularly those with amenities and tax abatements. We all know that new construction permits in the city ground to a halt during the city’s real estate downturn, meaning that brand new supply is not likely to come online for at least 2-3 years. Buyers are going to have to settle for the existing inventory of new developments, many of which are unfreezing as we write this. This means that anyone looking for ready-to-move-in property, the appeal of tax abatements and lots of amenities will need to look to the remaining inventory of new developments to satisfy their appetites.
3. Investors (foreign and domestic) will make up the new wave of buyers due to the strength of the rental market.4. Buyers will once again consider fixer-uppers as viable purchase options. Whereas 2010 was the year of the plug-and-play property, ready to move into on Day 1, we predict that 2011 will see a return to buyers seeking out good bones. This is no surprise, of course, as renovation costs are still attractive versus where they were at the peak of the market. Well-priced properties that have multiple possible layouts available for prospective buyers, that market themselves as value plays, could make a significant dent in the sales volume of this coming year.
4. Buyers will once again consider fixer-uppers as viable purchase options. Whereas 2010 was the year of the plug-and-play property, ready to move into on Day 1, we predict that 2011 will see a return to buyers seeking out good bones. This is no surprise, of course, as renovation costs are still attractive versus where they were at the peak of the market. Well-priced properties that have multiple possible layouts available for prospective buyers, that market themselves as value plays, could make a significant dent in the sales volume of this coming year.
5. Credit markets will continue to thaw for both the conforming and jumbo markets. Yes, we’ve heard it all before, that credit markets are loosening up with each passing month. We expect this trend to not only continue, but get increasingly tangible. We are in a new era of credit worthiness, to be sure, but banks are finally beginning to get serious about writing off their bad debt and putting more money to work. Banks are bolstering their staff and preparing themselves to handle additional loan volume, all of which should be great news for buyers needing to finance their purchase. We further expect this to kick in during a time when rates continue to be attractive by any historical standards.
