The New York Times announces today’s housing market as “A New Normal – It’s a Buyer’s Market.” Bloomberg says, “The Housing Slump Has Arrived.”
Either way, buyers are in the driver’s seat for the first time in years if, and this is a big “if,” they can afford to be in the housing market at all. And developers, sitting with vacant units, are “repurposing their assets” just to tread water.
Let’s look at the buyers first. As we’ve been reporting, buyers have been hit with what Bloomberg calls “a triple whammy” for the past few years…relentless price increases, the federal cap on state and local property tax deductions ($10,000) by the December 2017 tax bill, and by this year’s surge (one full percentage point) in mortgage interest rates.
Of the 10 counties hit the hardest tax-wise, 9 are in New York, New Jersey, and Connecticut, according to ATTOM Data Solutions. Westchester County, NY has the highest tax bill at $17,179. New Jersey’s highest taxed counties, Essex, Bergen, Union and Morris, have tax bills ranging from $12,944 to $10,294. California’s Marin County tax bills made the top ten as well but the real kicker in Marin County is its average home price increase from the post-recession bottom, an extraordinary +112%.
Buyers who can afford to be in the market are being creative about their options. Some are insisting upon “try it before you buy it” deals whereby buyers rent the home for one/two/three months to see if they like the house and the neighborhood. (Buyers also have to put down a deposit on the house that would either go towards the purchase price if it were a yes or would be relinquished to the seller if it were a no.
Developers, in the meantime, are “repurposing” vacant units, living rooms and offices. Some partner with start-ups such as WhyHotels that set up shop in buildings with un-leased/unsold units and create full-service hotels for long stay travelers. Others commission events professionals to bring in “special services and productions” such as wine tastings, cooking classes and/or yoga classes to entice potential buyers/tenants. And other developers compete as sets for movie and television production companies and projects.
And who is in charge of telling sellers that the housing market is different than it was two years ago, a year and a half ago, even six months ago…that the prices they might have gotten then, they can’t get now…that the “new normal” is now a buyers’ market and that “the slump has arrived?” It’s up to you, real estate agents and brokers.