Brooklyn Market – February 2019

Preparing for Market Correction

All roads lead to change in the months and years to come. As we move through the first quarter of 2019 Brooklyn Real Estate sales are showing signs of potential correction as we top the market on sales price in every neighborhood from Williamsburg to South Brooklyn. Most notable in the price increases are such areas as Cobble Hill as well Fort Green which have been of major interest to investors looking to get in on the game. However, this boom is a roller coaster that is slowly headed to its peak before the drop.  As over supply begins to be a noticeable eye sore many units and homes are sitting ducks for potential buyers who don’t see the value in the price as much as the sellers do. The supply and demand game as understood by basic economics would mean that in order for the market to normalize in the Brooklyn ecosystem we would need inventory to lessen as a way to create interest in demand.  It seems probable that sellers will have to discuss price adjustment sooner than they would like to admit as the days of selling over priced units and homes are starting to come to a painful crawl.   Not to fret or become emotionally distraught with all seasons both ecological and otherwise there comes opportunity If you can spot it. If salespersons head into this change with preparedness the rewards could lead to a consistent business even through the storm. The time is now to plan your work and work your plan. Just remember one sales persons dead listing is another’s closed deal.

To list or not to list is that the question:

As we barrel through winter and sellers still tinker with the thought of waiting for the winter blues to melt away most real estate agents are biting their nails.  Although the groundhog has revealed an early spring many sellers are still frozen about their next move regarding their homes until the flowers bloom. However, there are some things that could help reroute your sellers’ fears.

Let’s break down the 5 myths of winter sales:

1. Buyers are not looking seriously in the winter months: Correction some of the most serious buyers are actually more aggressively looking to purchase in the cold months more than ever. Although the summers and spring mark the beginning of peak season we can’t doubt that buyers with cash on hand are looking for a deal 365!

2.  Interest rates – Since the market has been fluctuating with great vigor due to higher interest rates many buyers are looking to strike while the iron is hot.  Buyers main goal as to maximize on the current rates that will allow them more buying power. Delaying a purchase could mean the difference between affordability and or delayed purchase dreams.  Never under estimate a buyer drive to land a good deal!

3:  Bidding wars: Buyers would rather have their offer as the golden ticket more than anything else.  As the season begins to bring competition and increased supply and demand buyers are always looking for a way to simplify the offer process.   Instead of buyers fighting over final and best offers it would be much more enticing to have a less strenuous purchase process. Investment:  Let’s not forget that some buyers are in the business of home flipping and holding for rental income. Any season is a good season for an investor who has a 1031 exchange and needs to make a move in order to take advantage of the tax break.   Never exclude the possibility of a hungry businessman or woman’s plan to purchase in the winter to ready the property for summer rental

4. Because sales are not seasoned based – Lets be honest no season has ever stopped business even in the coldest month’s buyers will suit up in snow gear just to attend open houses and appointments. A motivated purchaser has a goal in mind and nothing and no one can change that.

Newsflash! Digital real estate is making its big move. As the behemoths such as Zillow and Redfin continue their reign many are being introduced to the concept of I-Buyers. I-Buyers are a cohort of consumers that buy and sell online through major companies like Zillow and Redfin.  Instead of a consumer waiting for their home to be listed locally by an agent they are able to receive a digital offer from the likes of Zillow who also work with local brokers to help facilitate the transactions.  The offers are usually based on repair value and don’t allow the seller in this case to only to refute repair lines on the offer form. If the seller accepts the offer they can close in as little as five days.  For many this sounds like the golden egg that they have been waiting for as most sellers aim is to sell sooner than later. Zillow and Redfin have started these I-Buyer programs in states such as Texas and California where they have already found success! Their aim is to provide a flexible option for sellers who prefer a nontraditional sale method in this digital age. So what does this mean for the sales community at large? Zillow in an effort to integrate the realtor force world wide is also providing an option that if a seller does not want to move forward with their I-Buyer program can also list with a local realtor who will then have free marketing on Zillow in order to move the property quickly off the market. Commissions for I-Buyer homes are usually high than normal throughout most of these online offerings. This forever changes the game on how homes are sold and bought. As major marketing machines with big data are changing the game.

Amazon Deal or No Deal?

Shock waves have been sent through the ecosystem as Amazon has just announced their deal resignation for its plans in Long Island City. As we step into quarter two of 2019 many are wondering what the market is going to look like in 18 months, and with news of Amazon coming to NYC it has sparked a feeding frenzy to further push development in Northwest Queens and beyond.  The monkey wrench that became this announcement has just boomeranged back to Virginia and Washington state lines as Amazon has officially walked away from the deal. In a statement as quoted in The Real Deal “After much thought and deliberation, we’ve decided not to move forward with our plans to build a headquarters for Amazon in Long Island City, Queens,” the company said in a statement. “For Amazon, the commitment to build a new headquarters requires positive, collaborative relationships with state and local elected officials who will be supportive over the long-term”.  Many are concerned that Amazons move to Long Island will create a hyper gentrified loop pushing out residents that have for many years been a part of the Northwest Queens landscape, opposingly there are also a number of politicians that are looking at the financial gain, as it would bring many jobs and opportunities for residents and newcomers alike. This begs the question; What does the real estate community do now? Can we turn this bump in the road to a stepping stone of continued opportunity or should we pack our open house signs and run? Where there is disappoint there is hope and for many this still leaves an opportunity to purchase what might be otherwise overpriced property for both personal and investment use. The future remains uncertain but certainly it is bright.

VICTORIA MARTIN, Assistant Director of Sales, RE/MAX Edge