A recent report by CNBC has pointed out that the New York real estate market hit bottom in the fourth quarter of 2017 while compared to the last six years. Additionally, Manhattan saw real estate prices as well as a number of sales going significantly down during the period with average sales prices going below $2 million. Market analysts confirm that the GOP tax bill gave a big blow to the real estate industry of the city. There is a consensus that the price and sales fall is due to the uncertainty around the tax plan. However, it is good to discuss some of the trends that are expected make changes or shape the industry.
Considering the improvement of the U.S. economy, the Federal Reserve is expected to raise the rates to keep the inflation controlled. Many mortgage analysts and property brokers expect that the rate of mortgage may go up by 0.25% to 0.50% in 2018. Interestingly, the average mortgage rate of last three decades stands at 4%. The gradual increase of rates have not created any major issues to the property buyers, but any unrealistic hike may significantly hit the market as a whole though chances are highly unlikely.
Banks to be more Aggressive
For adding a soothing feeling to the sector, the banks are expected to go for an aggressive sales strategy in the case of montage loans. This would give more loan choices for people who wanted to purchase homes, especially those are planning to make investments in homes. The banks were following tight policies for several years since the 2008 meltdown. They started easing the policies last year and began offering diverse products to the customers.
There are instances like banks turned down the loan application in 2016, and they are knocking the doors of customers in the recent days for the same property to offer them the options of a possible refinance. It is expected that the changed strategy of banks would strengthen the real estate market in 2018.
More Homes into the Market
In New York, more homes are expected to move to the market, and the buyers will get more choices this year. The GOP tax reform has made people of New York embarrassed due to the ceiling of $10,000 in local and state mortgage deductions. Since New York is a high tax state, the decision is going to hit most families of the state.
Steve Hundley, a prominent real estate specialist, has confirmed that the change would add many second homes to the market this year. All the key markets are expected to see more inventory, and this clubbed with increased mortgage rate would produce flat prices. This would create a flood of more affordable homes in the market.
Tech-oriented choices will help the buyers as well as sellers to access bigger markets and better choices. It will also remove one of the biggest actors in the industry – the real estate agents. This is expected to help the parties in the form of agent fees. Listing sites like OpenDoor.com are already providing the agent-free purchase and sales options for people. In 2018, the trend is going to see more integration, and the traditional real estate agents may disappear from the real estate transactions in a couple of years. Interestingly, the average real estate agent fee stands at 5% to 6% of the sales price of the properties – a significant share of the transaction.
Altogether, there is an optimism is visible across the sector considering the regaining economy. If this could translate into business, it would be a great year for New York real estate sector.