So... How's the Market?

Every week the team meeting starts with the same question. "How's the market?" Why is this important? What does this have to do with renting or buying an apartment?

The truth is that the market has an incredibly large affect on what we pay and the type of apartment that we can live in. When I say, "the market", I am referring to several things: The stock market, rate of unemployment, real estate values, etc. But if you come into my office and ask me directly how the market is, I'm going to tell you about the affect that all of this has had on real estate, and here's the answer:

Sales are down, rentals are up. This is my one sentence answer. But for interest's sake, let's break that answer down.

Sales are down for one proper reason. The inability to get a mortgage these days. After the crisis of 2008, the ability to attain a mortgage became incredibly more difficult. Gone were the days where a man who had 25,000 dollars in the bank could buy a 1,000,000 dollar house, and this is a good thing. The reason the market crashed in the first place was because nobody was able to pay the incredibly expensive mortgage they knew they could not afford in the first place. As a result of the crash, criteria for receiving a mortgage became very strict. Credit scores have to be close or near to perfect; your bank account has to look like it is under no threat of defaulting on the massive mortgage for your new home. What has happened is the exact reverse of what happened before 2008. Now no one can get a mortgage.

This is not the answer to the problem either. Because it is so difficult to get a mortgage now, all those who are actually able to pump money back into the economy from where it came are now taking that money and throwing it away on rentals. I am not saying that I advise against renting in the city. What I am saying is that a boost in rentals is not going to save the economy. What helps the economy is when people buy homes, sit on them for years, let them appreciate, and then sell them, making a handsome return, and getting an even bigger house, thus starting the process all over again. The fact is, that if you have made a smart real estate choice, and your property is guaranteed to appreciate, than no one is losing money. In fact, the buyer has only gained as opposed to month by month slowly draining their bank account to pay for the monthly rent.

So, is it smart to buy right now? Absolutely. When the market bottoms out, which it has, there is only one direction that things can go, and that is up. Look at Brooklyn. Just a few years ago, it was the alternative for Manhattanites that wanted a cheap alternative to Manhattan but still wanted to be close to the city. As a result, everyone had this idea right about at the same time and guess what, Brooklyn is now just as expensive as Manhattan. Now, just think about all those people who made the choice to rent in Brooklyn instead of buying. There money is gone, their rent has gone up, and they have nothing to show for it. However, those lucky few who actually bought there homes, made returns that are phenomenal. These people did not have a window into the future. They took a guess and crossed their fingers. Worse comes to worst, they take a loss on their apartment if the property somehow dips in value; however, in my opinion, it's best to gamble with that as opposed to paying 2500 a year for a two bed in Williamsburg over 5 years, only to find that you have nothing to show for it, GUARANTEED! That's 150,000 dollars down the drain. Is your 2 bed that you originally paid 1,000,000 going to lose that much value in 5 years? I doubt it. If it was in Montana I might say yes, but this is the bubble that is New York City. If it was my money, I'd buy and risk the loss I'd be guaranteed to take if I was renting.

So what's a safe investment? I'd think about an area that is relatively under priced now, and then look at what's going on in the neighborhood. Is there going to be a large construction project to revitalize the area? Buy something close! Think about 2nd avenue. That train construction is scaring people so far away from second avenue that the sales prices are really great right now. What's going to happen when that subways finished? Access will be easier, and I bet property values will shoot through the roof. What about Hudson Yards? Maybe you don't want to live in midtown, but this is not about want, this is about being smart and finding a good investment. Buy a condo near 10th or 11th avenue in high 20's or low 30's. It's going to be a steal, not only that. When the mass that is Hudson Yards is completed, it's going to be like a brand new Rockafeller center in the middle of no where. I bet by the end of it, you won't be able to find a decently priced apartment in the entire neighborhood. But you'll be alright, because you were smart and you bought, and now your 1 bed is going to sell for ordinarily 2 bedroom prices.

So is renting really that bad? No it's not. It may not be preferable but it's the best that most of us can do at the moment. But if your coming into my office, and your asking me for a 7000 dollar a month 1 bedroom, maybe you should think about buying.

If it was my money, I'd buy.

Finding the Perfect Agent

Hear we are again. It is about a month before your lease is up and you haven't even started to contemplate looking for apartments. The panic starts to set in. You start to believe that since you waited so long to start looking, that somehow, every vacant apartment in NY has vanished and you have to take the first one you see. It's at the point where you can't do the search yourself anymore, and you're going to need some outside help. "I've got to work with an agent," is the thought that strikes through your brain; however, you're worried. You've heard the horror stories about the agent that showed up an hour late, making the client wait in the rain, eating a slice of pizza when they showed up, talking on the cell phone the whole time, and then proceeded to show the single worst group of apartments you've ever seen in your life. Knowing all these factors, you are hesitant, but let me ease your hesitations...

Let's start very basically. The agent that you have decided to work with is a HUMAN! Yes, believe it or not, real estate agents come from the very same planet and same species that you do. Shocking, but true. They can be empathetic, understanding, and even helpful! A good agent should be all of those things combined; however, the most important characteristic of a good agent, is that they are a good listener. They should hear every requirement and wish for your new dwelling, in detail and catalog each bit of information either mentally, or physically. How can you tell if your agent is a good listener? Within the first 5 minutes of meeting. The agent should be spending most of that first meeting asking questions, and expressing curiosity in you, the client. If the first thing that happens when you walk into your potential new agents office, is they start to give you advice on what you should be looking for, then this is a bad place to start; especially given that the agent doesn't actually know you at all. Now that you've found the agent with the most potential, and seemingly the best listening qualities, it's time to tell your agent what you are looking for.

Am I going to tell you how to be a good client? Maybe. But moreover, I am going to tell you how to get the most out of your agent. First and foremost, your agent may be the best listener in the world, but there is no way they can read your mind. You may not be the most decisive client; in fact, you may have no idea what you want, but you are going to discover what you want the more apartments you look at. As you view each apartment, you are getting a taste for the inventory and what it has to offer. You are realizing what you would like and wouldn't like, and the picture is slowly coming into shape. The difference between finding what you want quickly, or slowly is up to you. How? Did you decide to tell your agent about what you are learning about apartments? Are you letting him know what you like and don't like? If so, excellent! With each apartment, at this point, it should feel like you are getting closer and closer to what you want. Or, have you not told your agent anything about the experiences you've been having? If so, odds are good that you are getting more and more lost as you keep searching, and your agent is feeling the same way.

The more you and your agent communicate, the easier it is going to be. Take the search seriously. Understand that this is not about finding you a phone, a tv, or even a car; this is about finding you a home.

Your agent is your representative in all things real estate. You should be able to trust them and understand that they are there to help and not to harm. Get to know your agent so there is a certain level of comfort. But always keep in mind that agents, especially buyer's agents, are never trying to force you to rent something you won't like. If your agent shows you something you do like, than you are far more inclined to take it.