3 Reasons To Buy Now

A: With all the bubble talk I feel it would be a good idea to take the other side of the coin and discuss a few reasons why it would be a good idea to buy now, rather than wait out a cooling housing market.

Reason # 1: Interest Rates Are Rising - The argument could be made that in a rising interest rate environment the housing market will cool off because money is getting more expensive to borrow. But even if you get a property for a bit less in 6 months because of cooling, you will lose that 'savings' due to the higher interest rate that you lock in down the road. If current consensus is now for at least 2 more rate hikes (for a total of 50 basis points), with possibly more, I believe that buyers now have a bit of pressure on them if they happen to find a great deal out there. FACT: Interest rates are going up and no one really knows how far! Recent reports suggest they are going higher than anyone originally thought and Lehman Brothers recently predicted 4 more 1/4 point rate hikes ahead of us. The Skinny: Expect Mortgage Rates To Rise Considerably Over The Next 6-10 Months As The Fed Combats Inflation & A Booming US Economy

Reason # 2: NYC Rents Are Rising: With vacancy rates under 1.0 and housing prices still high, landlords know they can jack up their rents as units turnover. These days, rent hikes of 25% more for non-rent stabilized buildings are not uncommon! The recent article in NY Mag and my post here on UrbanDigs discusses how the landscape has changed for renters in New York City over the past year or so. For any renter who is facing a lease expiration soon and currently has a stable/high-paying job with significant liquid assets saved up, should consider looking at the sales market as they will most likely face much higher renting costs as they renew or sign a diferrent lease. The days of cheaper rent and no fee rentals that we got used to after September 11th are no longer. The Skinny: The Cost of Living in NYC Without Building Equity is Rising! Taking into account tax benefits, equity building, and future appreciation over the long term, it might make sense to buy rather than rent if you are forced into higher renting costs!

Reason # 3: Buyers Have Control & Can Submit A Low-Ball Offer - Sellers are frustrated. Open House activity is not what it used to be and sellers are faced with patient buyers and a longer time on the market before a deal presents itself. In todays market, sellers should expect at least 3-6 months to sell their property. But what about those sellers that have to sell now? The other day I reported on a $210K studio on the Upper East Side. Well thats gone now only 2 days after I reported on it. Not to say my post brought in the buyer, rather that this was a deal where the seller had to sell now. So the broker underpriced and the unit sold very quickly. Somebody got a good deal and for all I know the seller accepted a 180K offer? Who knows? The point is that there are good values out there if you look. And even if you think a property is still overpriced (but you love it), submit a low ball offer! You would be amazed at the response in today's market at an offer that a year ago would have insulted the seller and garnered 'no response'. If a property was asking 700K, was reduced to 650K, and you think its worth 575K, then submit it! Don't wait around for another price reduction. Be proactive and submit your highest bid and leave it in their hands. The Skinny: Buyers Have Power & Sellers Are Frustrated. You never know the level of urgency that a seller is under. Buyers must understand that they have more control in today's market than they had in the past 2-3 years! Take advantage! Submit your low-ball offer and see what happens; after all, you might get an apartment for a price you never thought possible.

These 3 reasons describe the current environment we are in when analyzing NYC real estate. What do we know? We know borrowing costs are rising. We know rental costs are rising. We know we are 9 months into a housing slowdown and deals do pop up here and there. We know that buyers have way more control and negotiating power than they had in the past 2-3 years. We know sellers are frustrated. This is what we know. Put it all together and I can easily make an argument why its a good time to buy. I'm not broker babbling here. I'm simply offering a breath of fresh air while all the other blogs talk about the impending housing crash. But what if it doesn't? No one knows how to perfectly time the real estate market and the decision to buy vs. rent should be made after analyzing your own personal situation. Ask yourself:

1. Do I have enough assets to afford a down payment, closing costs, and still have enough left over to be comfortable both for my own well being and to pass a coop board (should you buy a coop).

4. Do I plan to live in NYC for at least the next 3 years?

If you answer 'YES' to these 4 questions than you should strongly consider buying rather than renewing your more expensive lease to rent. If you have the means, then Buy! Don't be fooled by all the bubble talk and don't try to time the market perfectly. Buying a home in New York City is still to me a fantastic investment as long as you buy within your financial limits. Good Luck!

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