If you've heard or been told that rates will be coming down in the fall and you want to wait until then to transact, be aware that rates are coming down NOW as banks anticipate the upcoming rate cuts in September and likely in December. This means that if and when the Fed actually cuts rates in September, mortgage rates will have already priced in this change and likely will not be affected.
The market volatility in equities along with the upcoming election will serve as a distraction, particularly regarding future tax policies. This uncertainty will slow down buyers who are in 'wait and see' mode and provide an opportunity for those that are aggressively bidding. Similar to rate increases, the effects of rate decreases may take some time to manifest and drive buyers to the market.
Those who choose not to be distracted may be rewarded handsomely. Change is the only constant in real estate and life. The next market shift, whether it happens in weeks or months, is likely to bring lower rates and increased demand. Acting before these changes has always been advantageous.
Mortgage Rates Dip: Mortgage rates declined to their lowest level since early February. Expectations of a Fed rate cut coupled with signs of cooling inflation bode well for the market, but apprehension in consumer confidence may prevent an immediate uptick as affordability challenges remain top of mind. Despite this, a recent moderation in home price growth and increases in housing inventory are a welcoming sign for potential homebuyers. We are seeing buyers in the market get rates in the low 5’s.
Is Now The Time To Buy?: If you're considering buying an apartment in the next few months, you'll be well-positioned for several reasons:
- Stable Home Prices, High Rent: Unlike many markets, New York City didn’t experience extreme home price inflation. However, it did see significant rent increases. Many renters, tired of rising rents, are now looking to buy.
- Rising Building and Repair Costs: The costs of building and labor have surged, along with replacement and repair expenses for aging housing stock. Current asking prices often don’t reflect the true cost of replacing these properties today.
- Limited New Construction: Many projects are on hold or focused on the very high end, leading to fewer new builds at moderate prices.
- Increasing Downsizing: As the population ages, more people will downsize, adding to the inventory. However, many of these homes will need renovations, and move-in-ready or new homes will continue to command a premium.
Luxury Market: Manhattan's luxury real estate market began August with a noticeable dip. According to Olshan Realty’s latest report, only 14 contracts were signed for homes priced at $4 million or more in the first week of the month. This marks a decline from the previous period's 23 contracts, though it aligns with the figures from the same weeks in 2022 and 2023. Brooklyn saw 10 total contracts signed for properties asking $2 million or more between July 29 and August 4, down from 19 the previous week.
Compass Has It’s Best Quarter Compass agents closed 60,390 transactions in Q2 2024 or +11.4% versus last year, while transactions declined 3.3% for the entire real estate market during the same period. Compass also grew it’s national quarterly market by 11% year over year.
COMPASS Luxury’s 2024 Mid-Year Ultra-Luxury Report is now live! Explore this data-driven publication featuring $10 million-plus mid-year sales data over the last 4 years to uncover how the ultra-luxury real estate market in the United States showcased remarkable strength in the first half of 2024. Discover the trends and insights that are driving the future of luxury real estate: luxuryatcompass.com/ultra-luxury
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