The Changing Market
So it’s the dog days of summer again, and this makes it a great time to take a brief pause (that’s all the Energized Realty Group has time for in any season!) and talk about how the market is once again, doing what it does best…CHANGING!
The second quarter of 2013 turned out to be a wild ride, reminiscent of the surging market that started in 2005 and didn’t end until late 2008, when the mortgage industry crash landed in to one of the biggest recessions in US history. However the North Queens real estate market recovered and grew better, with bigger prices reflecting consumer optimism, beginning in March, 2013. From March through June, bidding wars were once again the norm, good properties became great ones with sales at or above asking price, and sellers called all the shots. Historically low and still lowering mortgage rates, the Spring Season and relatively low, well priced inventory were the heroes of the season. From January 2013, from a relatively slow start to the new year, to March 1, the market had turned on a dime.
Fast forward to NOW. Mortgage rates took a few turns for the worse in June, but kept buyer motivation high and sales were completed smoothly. Buyers love to know that they got the lowest rate out there, and even a quarter or half a point does not discourage buyers from completing their purchase. However by mid July, the Fed raised the rate with the single highest increase in over 10 years, from approximately 3.6 percent for a 30 year fixed rate in May to 4.61% in mid July. For the first time since the tragedy of 9/11 when buyers were concerned about their overall purchases, buyers were actively re-thinking their purchase decisions, banks were re-evaluating their buyer’s qualifications, and appraisers were low-balling appraisals, to the point where even a few of our lenders were inclined to re-submit these overly conservative appraisals for review.
Luckily, we have not lost a sale to this see-saw insanity, but there have been four close calls where we have had to get creative to keep buyers and sellers together moving toward the closing table. I am personally grateful to the sellers, attorneys, mortgage originators, title companies, and in many cases, the buyers who have worked through the issues with a win/win mindset, and to the best of their ability, kept their cool and treated everyone like ladies and gentlemen. THANK YOU; you know who you are.
On a favorable note, a cape I appraised accurately last November for $550,000 to 580,000 max, just closed for $645,000. Another cape was asking $629,888 and just sold in 13 days in the $650,000’s (and needed all new cosmetics!) We just sold a two family in well maintained but original condition very close to 900,000. Well priced co-ops are moving again, where for a lot of months they were not. Sweet starter homes (attached and semi-detached) in nice condition in Flushing and Bayside will sell like nobody’s business and will get in the mid to high 400’s to 540’s depending on exact condition, number of baths, finished basement, yes or no, and a patch of green. Handsome North Flushing, Bayside and Whitestone homes continue to be in demand, as are any two family home out there. But while asking price was secondary in the second quarter, price is once again key.
So you ask, what does the near future hold in store? No one knows. One thing for sure, you never know you are at the end of a market until it’s gone. Interest rates need to be watched carefully. If they creep up to 5%, it will not help prices increase unless inventory is close to non-existent. Banks are tightening again, and this is truest for any non-conventional, no income verified loans; common instruments in this community. Buyers have the cash, no doubt, but banks will be stingy with funds unless the buyer can prove income and assets. Banks also want to know that the property is worth the price. They care. That appraisal is a fact of life, and if you have sold your house for significantly more than you expected, do not buy until you have heard that the appraisal went well. It usually does; but make sure anyway, because although the buyer has to qualify, but so does the house.
We try to put everything out on the table for our sellers so they can make well informed, intelligent decisions. We also have an obligation to be honest with the buyer about the condition of a home, and any material defects we know about factually. I still know that owning real estate is the best decision a family can make. It’s not just investment in most cases here; it’s a home – places to plant roots, make memories. Rates won’t change that. Selling for a little less than your May neighbors is far from the worst decision a seller can make, especially if new memories are waiting to be made wherever the seller may be moving or new dreams are being built with the money from the sale. We will continue to help sellers and buyers, lawyers and lenders, and families work things out so that while the market is always changing, it continues to do what it does naturally, and that is MOVING.