The close of the 3rd. Quarter of 2018 has many in the New York City luxury real estate market crying the blues. Buyers have more wealth today than any other time in history and yet market results are less than stellar. The activity is slower, prices are declining and there are fewer sales.
In my opinion, markets are about buyers. I have identified FIVE BUYER PROFILES which may explain why some areas are experiencing a pull back in sales and pricing.
THE EXHAUSTED BUYER: It takes a lot of time, money and effort to move. Many love where they live and are focused on careers; enjoying travel, their families, or their second home. Some are taking the renovation route. The exhausted buyer is shifting their energies to other areas in their life.
THE LOW-INTEREST-RATE-ADDICTED BUYER: Paying more per dollar borrowed is a difficult decision for a buyer and a fact they confront as rates rise and normalize. Giving up a super-low interest rate can be painful making them hesitant to buy now.
THE FEARFUL BUYER: Fear can paralyze. What if prices keep declining? What impact will local tax policies have on my monthly costs? How much will they increase? What is the full impact of the revised tax laws? What if I buy now and cannot sell my existing home? The fear of these unknown answers is causing buyer paralysis.
THE INVESTOR BUYER: They are cycle wary: are we at the tail end of a 10 year economic cycle? Astute investors recognize there is ALWAYS opportunity, even in a market that appears to be in decline. Now is no exception with some incredible opportunities to be had. Investors are getting super-strong returns from equities. Cash investments yield profitable returns as interest rates rise. The softening of home prices in some markets may spark the interest of the investor buyer.
THE INTERNATIONAL BUYER: Many international buyers are in 'wait-and-see' mode as the U.S. defines its trade, immigration and visa policies. Coupled with a strong dollar the international buyer will sit it out even longer.
Activity in the luxury real estate market is slower. Buyers are snapping up exceptional properties at pricing not seen in years. The five profiles described here help explain the softening we experience as we enter the final quarter of 2018. As always, some properties will sell for large premiums and some will adjust to the market demands of their neighborhood. The fact remains; buyers will buy, it just may take a little longer today..