The New York City real estate market is constantly changing. Buyers are glued to quarterly market reports and Internet listing sites like StreetEasy to try to make sense of it all. The problem is that this information is already aged by the time consumers see it.
Manhattan real estate is all about the "now." We officially have a new market that is no longer determined by comps - because comps have nothing to do with what is right now. Closings just don't matter because the buyers could've signed that contract six months ago. Everything is live in real time, because the market is on the move every minute.
Still, there are a few themes that have held steady so far over the first quarter of 2010. So if you are ready to purchase a New York City apartment now, here are my top tips for taking the plunge.
Tip #1
Cash is KING.
Un-stuff your mattress! Right now cash transactions are getting the "deal," if there is a deal to be had at all. Some of the most qualified buyers are being put through the ringer and forced to jump through burning hoops to get financing, and even after they have been "approved," it can take up to 30 days to get a commitment letter. Sellers are only willing to negotiate lower than the asking price of prime Manhattan residences if they don't have to worry about going down this often long and bumpy road with their buyer.
The "cash tactic" can often save the buyer up to 10 percent off the seller's asking price for an A+-quality property. So unless you are earning at least 10 percent in a triple-tax free investment, why not save yourself 10 percent off the top, 5.5 percent in interest, and closing costs/mortgage recording taxes? You will enjoy resale upside potential on the back end if your intention is to buy and hold for at least three to seven years.
Tip #2
No one wants what no one wants.
In New York City, there is a tremendous shortage of three-bedroom apartments. If you are pursuing such inventory, you are not in the driver's seat. Even though it is a buyer's market for a lot of inventory in Manhattan, it will never be a buyer's market for product that everyone wants. Remember that "no one wants what no one wants," so a "good deal" is only to be had if you are buying inventory that no one wants.
However, I would look at why no one wants it. The only reason to buy an apartment that no one wants is condition. An apartment can always be renovated; it can never be moved to another building or neighborhood! New Yorkers - especially in this market - are afraid to buy a "wreck," yet the Golden Rule of real estate is always buy a wreck. Huge upside potential is buried in the renovation! I would also not hesitate to buy in a building whose lobby and amenities are in need of some revving-up. When a building's common areas are a little tired, there is no where to go but up! Just make sure that the building has a strong enough Reserve Fund to finance these renovations, so that they would not have to hit up the owners in the form of assessments or maintenance increases.
Tip #3
NYC is becoming the new Paris.
It is unstoppable. For better or worse, there is no turning back to the gritty New York City of the 70s and 80s. NYC is the international destination. Everyone wants to live here. The young students come here with dreams; the single professionals come here to make it big. Then when they do, they stay here and don't leave. No longer is moving to the McMansion in Greenwich en vogue - being able to afford the five-bedroom in the West Village is.
This shift has left an indelible mark on New York City's demographics. Service workers, artists and civil servants can no longer afford to live in Mahhattan; they are flocking to Brooklyn, Queens and the Bronx. As this shift completes over the next decade, carefully picking where you want to plant your roots is more important than ever. Location now dictates lifestyle. Where do you fit organically? Just know that wherever you pick - your life will be lived in a five block radius, so be true to yourself and your needs.
Tip #4
Always buy a middle apartment.
Yes, the location/neighborhood of the apartment is critical, but what people fail to realize it that the location within the actual building is just as important. Always buy a middle apartment! Make sure that you are flanked by neighbors on both sides. You will want to absorb their apartment in the next three to five years so that you won't have to move again...or better yet, your two neighbors will want to buy your apartment! Since there is a chronic shortage of large apartments, being the middle apartment on the floor makes you the gatekeeper!
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