Market Update: Still Active & Low Rates
A: With the stock market selloff recently bringing lower yields on the 10YR Treasury, resulting in mortgage rates ticking lower, the activity at Open House's and in general in the Manhattan real estate world remains active. I would expect March to be like the old saying, 'March comes in like a lion and out like a lamb' in terms of activity.
I went to 5 open houses this past Sunday with buyer clients ranging from $400,000 - $1.3M, a nice representative range. I noticed that activity is still very active with almost ALL the open houses having at least 4-6 people there during the short time we were browsing. So, if a 2 hour open house gets 6-7 buyers (including mine) in a 10 minute time frame, it is probably safe to say that the listing broker got close to 25-30 people throughout the entire open house. Thats fairly active.
I would expect this trend to continue, at least during the next few Sunday's, with plenty of weekday appointments as well for brokers with exclusive listings. As I focus on my 10 buyer clients, I'll continue to provide market reports as best I can based on what I see out there. What this means for buyers out there is less negotiating power and more competition.
One thing I do know is that if history repeats itself, and it usually does, that as we get closer to April this trend of incredible buyer activity will start to die down! It always does during this time of year. As a real estate agent, I have noticed this trend from 2005-2007 with 2005 & 2007 being the most active of the three years; 2006's months of JAN-MARCH was active too, just not as active as the year before or after.
Some of the reasons for the surge in buyer activity and health of the NYC real estate market continue to be:
As the stock market undergoes a healthy correction, and I stress 'healthy' and also notice a nice bounce coming today that hopefully holds (if it doesn't we may be in for a longer term correction as hedge funds and institutional traders re-adjust for more risk and uncertainty), expect a stabilization of lending rates. For the housing market to remain robust we need the economy to continue to be strong and stocks to rebound showing faith by those in the know that all is fundamentally OK with the US economy. Should stocks continue to falter and extend their losses, expect future economic data to come in weaker than expected which will ultimately hurt housing's search for a bottom.
In terms of lending policy changes, I am a bit concerned that what is going on in the sub prime world might spillover to changes in prime lenders standards for loans. I already had one of my buyers have trouble getting a loan commitment as he had to submit much more paperwork than normal to make up for his weak credit history. I can only imagine what other buyers are going through who have weak credit scores. Put simply, if your credit is less than stellar you might have a slightly larger headache when securing your loan! Its the beginning of the changes that could very well lead to prime lenders down the road. Keep your eyes open.
I talk about this stuff because it is forward thinking and can possibly lead to changes in policy that affect real estate investing on a fundamental level. If lending standards are tightened, purchasing power restricts and buyers find it harder to get loans for more than they can afford. I don't need to explain how that might affect housing; read my posts on Credit Crunch & Lenders Starting To Tighten for my take on this changing dynamic.
Here are some links to posts that you should find useful about the sub prime and prime lending world:
A Tantamentary on "Messier Mortgages" (Calculated Risk)
Why Money Left Stocks & Got Picky About Bonds (The Mortgage Reports)
Homeowners Stuck As Lenders Cinch Standards (via The Mortgage Reports; USA Today)
SubPrime Lender Puts Workers on Leave (NY Times)
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