Q: Tell us more about the foreign buyer fallout in New York.
A: Foreign buyers are in a stall. Internationals are on the sidelines due to a multitude of reasons: Geopolitical, tax increases, ROI declines, and other more attractive investment opportunities elsewhere. Foreign investment in U.S. real estate is down 36 percent year over year. In the past, international buyers made up a large part of the real estate market until recently, when several countries implemented new policies making it difficult to invest in the U.S. and driving a decline in market activity.
Q: What does this mean for local buyers in New York?
A: Good news: The local New York buyer is no longer competing with and being outbid by international investors who once came with deep pockets and relentless appetites for all things New York. The results: The foreign buyer disappearance created the new development bloated inventory. International buyers were the fuel that lit the new development surge. Now, scorched-earth negotiating from our local buyers is in full swing, with developers throwing in concessions that severely burn their bottom line in order to unload inventory as quickly as possible. Negotiability is high, pushing 8 to 12 percent on average off of last asking prices.
Q: So what do you recommend sellers do?
A: Sellers have zero leverage today and competition among growing inventory has reined in and eliminated aggressive pricing. Real sellers embrace price incentives and creative terms. They invest in improvements to give their property a “feel new” advantage and have no unreasonable expectations as aspirational pricing no longer gets deals done. We prepare them for the reality of selling at a price far lower than what their home was worth in 2016.
Q: Anything else you’d like to mention?
A: If you are reading this because you want an insider’s view on market forecasts…opportunity is rising! Trade up—the market sweet spot with best bargains is the larger units.