What I’m excited about for the Year of the Snake 🐍
I believe that the New Year shouldn’t be about committing to unrealistic goals but about taking stock, reflecting, and then taking action!
In my world, that means getting ready to fall in love with your next home. And early in the year is the perfect time to start thinking about it.
Why?
Well, for one, buying a home is a looooong process. The average time it takes is 6 months. (Which is why it’s so important to work with a real estate agent that, you know, you actually like. Because you’ll be talking to them a LOT.)
January 31, 2025
恭喜發財, 新年快樂!
Dear friends,
Happy Year of the Snake! In case you haven’t heard, it’s a year of shedding old skins and transforming into a new self. Sign me up!
For those who celebrated, I hope you had a great meal (if you’re like my family, it was almost four hours long and 3 full meals were served, not 3 courses!). And regardless of whether you celebrated, let’s all use this chance to offer ourselves a fresh start!
A few months ago, I announced that I was going independent. I’m still immensely grateful for all the support you’ve given me—it’s really made the transition feel so right, and I continue to be reminded of why I made this momentous decision in the first place. It’s about the people I’m lucky enough to help, and the journey we’re taking together.
If you are silently judging me for sending out my January newsletter on the last day of the month, go ahead, but hear me out: I’ve recently signed four new stunning sales listings that I’ll be bringing on the market this spring (can’t wait to show you!), and I have been getting new buyers into contracts too.
My clients came first this January, and I am proud of that.
So, to ring in the new year, I just want to say thank you. Truly. Even if I’m not the one who helps you find your next home, I’m just glad to support you in whatever way I can.
➡️ Side note: I hosted a 90-minute webinar for homebuyers at the NYU alumni association on January 14, and over 100 alums showed up! They had some very smart questions, but fortunately I don’t think they stumped me this time. 😊
I have another webinar for NYU alums coming on April 1, titled What Brokers Don’t Want You to Know About the NYC Rental Market – stay tuned for more information!
Click the image to see the highlights!
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Are you dreaming of your next home? Book a free 30-minute consultation with me with no strings attached.
And one way I can support you is by not filling your email inbox with another cliche New Year’s resolutions email! Aren’t they always so stressful?!
I believe that the New Year shouldn’t be about committing to unrealistic goals but about taking stock, reflecting, and then taking action!
In my world, that means getting ready to fall in love with your next home. And early in the year is the perfect time to start thinking about it.
Why?
Well, for one, buying a home is a looooong process. The average time it takes is 6 months. (Which is why it’s so important to work with a real estate agent that, you know, you actually like. Because you’ll be talking to them a LOT.)
And there are also times of the year that are better than others to buy or sell, although it really depends on your specific personal circumstances.
For one, many buyers who have kids like to start shopping in the spring—that way can be all moved and ready to go in time for the start of the school year. This is why statistically, March is the best month for sellers to list their homes.
However, buying at this time doesn’t always make sense for everybody, because there is more competition, and potentially bidding wars.
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So, it’s really great that you’re thinking about this now. Whether you’re buying or selling, you’ll want to use this time to start planning ahead. Maybe that’s kind of a New Year’s resolution after all (oops).
Here’s how to consider the next phase of your housing journey:
Is there really a right time to buy or sell your home?
You can’t really time the market. Looking back at the past two years, interest rates have continued to be unpredictable. Even the Fed kept changing their projections. But the bottom line is that mortgage rates are still hovering around 7%. Home values are also barely budging (except in some Manhattan neighborhoods, where we are seeing great value). From a financial standpoint, the macroeconomic indicators are pretty unhelpful.
What about the time of year? A lot of experts will tell you that this or that season is the best time to buy or sell a home. We do have some data about this (Zillow has some findings). But data can only get you so far.
You’ll need to think about your own situation, like if you’re planning to start a new career that might require you to move, or if you were fortunate enough to get a mortgage when rates were something like 2%. I analyze these scenarios for my clients every day and the math doesn’t always work out to move.
Starting, or adding to, a family is another big one. Love doesn’t wait for the market to shift in your direction! And while timing your move to the school year might mean shopping when there’s high inventory, it could also mean competing with every other new parent in your area. As a buyer, you’ll have to decide if paying extra is worth it for your particular timeline.
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Winter is here
I hear from a lot of clients that they believe they can get a better deal in the winter. And all else being equal, they’re often right!
But here’s the problem: there’s less inventory in the colder months. Moving in the winter is just awful! Sellers know that buyers don’t want to brave snow and icy roads, so they don’t usually list in the winter because they won’t make as much. What does get listed often sells for less than what goes up just before summertime. Which is good news for buyers—unless Santa doesn’t deliver their dream home.
Market forces
Finally, you might be scanning Bloomberg or the Journal for signs of economic health and/or malaise. The new year’s calendar will be rife with important dates! Quarterly earnings calls, Federal Reserve meetings, jobs data, Consumer Price Index releases, blah, blah, blah…
My advice to you is, well… not to ignore it, per se, but also not to make the macroeconomic picture the be-all, end-all of your decision to buy or sell your home. The last year was full of important calendar dates, too!
In the end, the only timeline that matters is yours.
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On the other hand, it’s only the beginning of the Year of the Snake , and I totally forgive you if you’d rather stay in your 除夕 (New Year’s Eve) food coma a bit longer than think about moving.
But hop on a call with me for 20 minutes and I might be able to change your mind!
Let’s talk! (Sign up for your spot here!)
Xo,
Judy
With my dad and husband back on a childhood road in Zhuhai
7 Things to Consider for the Rent vs Buy Conundrum
As you might know, I work on both rentals and sales, and part of my responsibility is figuring out whether renting or buying is the better fit for each of my clients.
When my clients come to me looking for their next home, I’m not just thinking about their budget. I’m thinking about who they are as a person.
Having helped dozens of clients make the right decision for themselves (as they tell me afterwards!), I have crystallized seven things that you should consider when deciding to rent or buy.
November 26, 2024
To buy or not to buy
Dear readers,
Thank you for the overwhelming support and responses I received after I sent out my last newsletter, where I shared that I have struck out on my own as an independent agent and moved to the national headquarters of Douglas Elliman at 575 Madison Ave!!!
Things have been off to a busy start in the past month (yay!). I signed several new exclusives representing sellers, landlords, buyers and tenants!
I look forward to responding to everyone that reached out and hopefully to seeing some of you during the festive season ahead!
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Quick note: My next newsletter will come to your inbox in the new year, as I will take December to connect in person with friends and family, and to reflect, rest, and reset.
I hope you have a happy Thanksgiving, filled with good food, great company, and high spirits! 🦃
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Now let’s get right to the topic du jour: Renting vs buying, or “to buy or not to buy.” (Years of English Literature classes prepared me to come up with this pun.)
I was recently quoted in Investopedia on this age-old question, and I wanted to share my full approach with you all here.
As you might know, I work on both rentals and sales, and part of my responsibility is figuring out whether renting or buying is the better fit for each of my clients.
There are many ways to look at the rent versus buy conundrum.
Katie Gatti Tassin, the personal finance writer behind Money With Katie, has done a great job crunching the numbers to show the potential financial benefits of renting.
Now, I LOVE Money With Katie, but her calculations also don’t apply to everyone.
When my clients come to me looking for their next home, I’m not just thinking about their budget. I’m thinking about who they are as a person.
Having helped dozens of clients make the right decision for themselves (as they tell me afterwards!), I have crystallized seven things that you should consider when deciding to rent or buy.
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Are you dreaming of your next home? Book a free 30-minute consultation with me with no strings attached.
1. How long are you planning to stay in your next home?
If you’re planning to move within five to seven years, it might make more sense for you to rent (the Money With Katie post I linked above helps explain why, financially). Maybe you’re getting ready to start a family but haven’t decided when or where. Or maybe you’re new to an area and are trying to stake out the vibe.
Remember each time you buy or sell a home, there are closing costs and other fees. Nobody likes paying more than they have to, and if you end up selling a home you just bought recently, you’ll be paying these costs twice in a row, making the break-even point higher.
2. How are you feeling about your career?
If you’re settled in your current job, buying a home nearby can be a perfect investment in your stability and quality of life.
But if you’re considering a career move, home ownership could become a pair of golden handcuffs. What happens if you come across a dream job opportunity in a different location just when a market downturn makes it an inopportune time to sell your home? Also, some employment changes can even jeopardize your mortgage if they happen before closing.
3. What are your current living expenses like?
If your current rental costs are low enough, it may be hard to beat what you have, at least financially. For example, if you got a generous pandemic discount on your rent and your landlord has been kind enough not to raise it too much in the post-Covid era.
If your cheap rent could save you thousands over the monthly cost of ownership, that’s almost like a kind of equity. Especially if you save or invest the extra cash. But if your rental costs are starting to build up, it might be time to think more long-term.
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4. How much are your folks going to help?
Not everyone is fortunate enough to have a family with the means to help them buy their next home. But don’t be shy if you do: according to the New York Times, 43% of buyers said that family or friends (some nice friends there!) contributed money toward their down payment in 2023.
Gift money can have long-term effects on your finances. The higher your down payment, the lower your monthly mortgage payment, and a higher down payment can sometimes help you qualify for a lower interest rate. Not only that, but certain buildings in Manhattan actually require a higher down payment.
You can also use the money to buy down the interest rate. (In my September letter, I called this spending a little now to save a lot later!)
5. Which tax benefits are you eligible for?
After the standard deduction was doubled in 2017, a lot of people found that they no longer needed to itemize their tax returns. Still, there are a few potential major tax benefits for NYC homeowners who do itemize, including:
The 17.5% tax abatement for condo and co-op owners who use it as their primary residence.
The mortgage interest tax deduction, up to the first $750,000 of your principal.
The SALT deduction, which allows you to deduct up to $10,000 of your state and local taxes, which include property taxes, from your federal income tax.
I’m not a CPA, so definitely consult with a tax professional about your specific situation! But these tax benefits could help offset many of the costs associated with owning a home, if they add up to more than your standard deduction. Renters are out of luck, though—there are no tax deductions or credits for paying rent.
6. How much do you believe in the investment value?
This is a tricky one! If you’re like me, you have Baby Boomer in-laws with fantastical tales of buying a home decades ago and selling it when it was worth multiple times what they paid.
But the value appreciation doesn’t tell the whole story. Carrying costs can be high, with common charges and real estate taxes (or maintenance in co-ops) potentially adding up to as much as the mortgage payment itself!
And some apartments tend to appreciate more than others – condos more than co-ops, for example. So, it’s important to keep the full picture in mind and to stay realistic.
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7. How important is it to have a place to call your own?
To many of my clients, a home is not just somewhere to kick your feet up. It’s a symbol of your connection to your community, where you watch your kids grow up, where you make memories and dreams, where you have the freedom to express yourself. It’s a place of greater stability.
Renting just isn’t quite the same, for many people.
You can’t renovate a rental without risking your security deposit, so it might not ever feel like your home. If the landlord decides to sell and you need to move, your kids may need to change schools and make new friends. You might need to make new friends!
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Help me, Judy!
Two months ago, I mentioned a client whom I helped score a major first-time home buyer credit—another consideration in the rent vs. buy vortex.
I knew about the credit because I was familiar with my client’s mortgage lender. And the reason I’m so confident that I can help you, too, is that when you work with me, you work with a whole team of people: lenders to calculate and minimize your costs, tax accountants to help you find the deductions you qualify for; attorneys to protect your investment; even estate planning experts to confirm that your property makes it to the right heirs.
Together—you, me, and the professionals I enlist to help—we’ll chart the best way forward for your unique situation.
Let’s talk!
Yours truly,
Judy
Market Update
A few quick takeaways I got from Manhattan’s October sales and rental reports:
It’s been an unusually busy fall! In fact, Douglas Elliman and comparable brokerages had one of the highest sales volumes in nearly two years.
In Manhattan’s co-op market, new signed contracts in October surged by almost 30% year-over-year, while new listings decreased by 6.5%, with the sharpest declines in luxury listings, including a near 50% drop in listings above $5M. These shifts, perhaps spurred by a historically high stock market, create a tightening inventory in the luxury segment.
Condos in Manhattan were in even hotter demand than co-ops last month! New signed contracts for condos in Manhattan in Oct increased by nearly 50% year over year. Contracts in the $500K-$999K range jumped 76%, while the $5M-$9.99M and above $20M segments saw staggering increases of almost 130% and 170%! Both the condo and co-op market’s strong sales performance confirm a stronger demand in the luxury market, as well as robust market activities in the broader market.
Rentals weren’t snoozing in October either, maybe due to a return to higher mortgage rates environment after the summer dip, pushing some would-be buyers back into the rental market. New lease signings increased by 24% year-over-year in Manhattan, and even the median rental prices rose by 2.4%, reaching $4,295, which was actually the first annual increase since April!
To new beginnings
But I’ve decided it’s time for me to strike out on my own.
I’m moving to the Douglas Elliman national headquarters at 575 Madison Avenue.
I’m still within my dear Elliman family.
What’s changed is that I am now an independent agent, spreading my wings, charting my own path. I am fully in charge of the business and brand I am building. With this change comes more resources to better serve my clients, powered by the amazing Elliman brand. More PR and marketing support, more market intelligence, more opportunities and more markets.
October 22, 2024
The journey ahead
Dear friends,
I wrote and rewrote this letter many times before it arrived in your inbox this afternoon. I have always wanted to provide value in each of my letters, both educational and entertainment.
But this month, I had a dilemma. Something monumental has happened in my world, in my work as a real estate agent, and it’s caused me to reflect on the journey I have had since arriving in New York 15 years ago. I really wanted to share my reflections with you, so I’m dedicating this month’s newsletter to this.
(My regular programming of market insights and happenings in and around town will resume in November.)
Today, I am writing to share with you something big! Something both professional and personal.
I’ve been a part of Grace Chang’s team, based in Douglas Elliman’s Upper West Side office, since my career in real estate began almost four years ago. Grace has been selling New York City real estate for longer than I’ve been alive, and she was my mother’s first real estate agent in NYC when I was still in college. I literally could not have asked for a better mentor as a newbie in the frankly chaotic world of real estate. I can’t thank her enough.
But I’ve decided it’s time for me to strike out on my own.
I’m moving to the Douglas Elliman national headquarters at 575 Madison Avenue.
I’m still within my dear Elliman family. What’s changed is that I am now an independent agent, spreading my wings, charting my own path.
I am fully in charge of the business and brand I am building.
With this change comes more resources to better serve my clients, powered by the amazing Elliman brand. More PR and marketing support, more market intelligence, more opportunities and more markets.
I have expanded my real estate work beyond NYC. This year alone, I have partnered up with an experienced Westchester agent to sell my client’s stunning home in Rye. I have connected my friends with trustworthy agents that helped them secure their first homes in DC and Queens.
I just had a call the other week about connecting a friend with a reliable buyer’s agent in Los Angeles.
I am planning to expand my ability to serve my clients to two new markets next year. More to come on that later ;)
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Are you dreaming of your next home? Book a free 30-minute consultation with me with no strings attached.
On retracing my steps
Retracing my steps the other day, I thought back to some of the places where I’ve grown to who I am today.
I have lived in 10 apartments since I arrived at JFK with three suitcases at the age of 18.
(Yes, for New Yorkers that come here without family or friends, it’s quite common to move this often.)
I stood outside my freshman year dorm at NYU, in the East Village at Third Ave and 11th St and looked at my fourth-floor bedroom window, with the eyes of a 33-year-old married woman running my own second business. I saw my younger self, living happily with five other girls who made me feel at home in a new country, who indulged my Chinese cooking in our shared kitchen, which could get greasy and smoky.
I also stopped by my sophomore year dorm, in Gramercy. The bank downstairs has changed from HSBC to Citizens, and the fancy condo-dorm conversion is finally showing some age, after 14 years. But I still remember being in awe to live in my first luxury condo in NYC, with stainless steel appliances and big windows showing views of Manhattan.
My living situation in NYC also took me to Alphabet City (East 10th St between Ave C & D), Woodhaven (Queens), the Lower East Side (Allen St and Houston St), Bushwick (Jefferson St near Myrtle & Broadway), Hell’s Kitchen (42nd St and 10th Ave), Fort Greene (St. Felix St between Fulton and Dekalb), before I eventually settled down in the Upper West Side, two blocks away from my mother.
Every move was a story. Some ended in tears. I remember pushing a cart of my belongings from my Gramercy dorm to my Alphabet City summer sublet with my college boyfriend, and the wheels of the cart kept sliding off the sidewalk, or getting caught in potholes. It was supposed to be a 30-minute walk, but it took us over an hour, in the heat of summer. We almost broke down on the street.
But it was also these moves, to all these different neighborhoods, that have educated me on the fabrics of NYC, allowing me to see so much about the city that many others might take decades to learn.
And today, as a real estate agent in New York helping clients with homes in Manhattan, Brooklyn, Queens and beyond, I tap into my knowledge and experiences in all the neighborhoods I have lived in to articulate a level of understanding that makes my clients feel seen and heard.
I'm grateful for the journey I have had in New York, and I am so excited to find out where I am going next.
Who knows… maybe I’ll start my own team some day? :)
This is the start of an exciting new chapter, in a new place, and I can’t wait to experience it together with all of you.
Let’s chat soon!
XO,
Judy
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In the media
Early this month, I spoke to the Houston Chronicle about how I use real estate accounting software in my business.
And a few weeks ago I gave my thoughts about mortgage rates to Investopedia. Check it out!
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How I saved one client thousands of dollars (with video explainer!)
Welcome to the second edition of my blog! For everyone who returned for my encore performance, I appreciate you. And if you’re just checking in for the first time, I’m so glad to have you. This blog is where I give you my perspective on what’s really going on in New York real estate, from someone whose boots (or sandals, for another few weeks!) are on the ground!
September 11, 2024
An interest in rates
Welcome to the second edition of my blog! For everyone who returned for my encore performance, I appreciate you. And if you’re just checking in for the first time, I’m so glad to have you. This blog is where I give you my perspective on what’s really going on in New York real estate, from someone whose boots (or sandals, for another few weeks!) are on the ground!
Last month, we talked about how we make sense of the chaos in the market. At the time, a massive stock selloff had just sent global equities markets into turmoil, and there were urgent calls for the Federal Reserve to finally bring down rates.
Within a short amount of time, the stock market bounced back, with the S&P 500 reaching new all-time highs. And the Fed kept rates the same last month, although they announced it was time for a policy change. The path for future Fed rate cuts is more certain.
As shown by the Fed funds futures, the market predicts a 0.25% rate cut for this month and potentially a whopping 0.5% cut in the Fed’s meeting in November.
Important Note #1: Don’t get too excited yet, as the market has been wrong before (like the past 18 months straight…).
But this is certainly a good sign for buyers and sellers alike, as it reflects the positive signals being sent by the highest banking system in the country.
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Are you dreaming of your next home? Book a free 30-minute consultation with me with no strings attached.
Are rate cuts getting priced in?
I’ve been hearing from clients that they’re excited about the impending rate cut because they believe it could lead to lower mortgage rates.
However, the truth is a little more complicated.
GOOD NEWS: Mortgage rates have already dropped for four straight weeks!
But the Fed hasn’t started cutting rates yet.
So why have mortgage rates already dropped? It’s because mortgage rates are not directly set by the Fed.
When people talk about the Fed raising or lowering rates, they mean the federal funds rate, which is the interest banks can charge other banks for short-term loans that they need to meet their daily reserve requirements.
The federal funds rate can affect the interest rates for consumers, such as credit card APRs and car leases, but mortgage rates are even more tied to the 10-year Treasury yield than to the federal funds rate.
Mortgage rates, like the 10-year Treasuries, reflect the market’s sentiments. Investors have been feeling more optimistic lately that the Fed will start cutting rates, which signals that it believes inflation has cooled. This drives investors to purchase more 10-year Treasuries, as lower interest rates make buying Treasuries more attractive.
We all know that when demand increases, and supply is limited, the price goes up.
So, the prices for 10-year Treasuries have increased.
If you prefer a video explanation…
But since the notes offer fixed interest payments (the coupon) when issued, as the Treasury prices increase, the yield (the return on this investment) decreases.
This is just like if you are buying an investment property that has an existing lease paying out a certain amount: the more you spend on buying this property, the less your cap rate is!
And when banks set mortgage rates, they use the 10-year Treasury yield as a benchmark, albeit with a risk premium added on top. When the yield goes down, the mortgage rates generally go down as well.
So that kind of helps to explain why mortgage rates have dropped for four straight weeks even with the Fed dragging its feet.
True story: My clients’ amazing mortgage deal
In early June, one of my clients entered into contract to purchase a new home. They had locked their mortgage rates in early June. By late August, they renegotiated their mortgage rate down a whopping 0.725% (special shout out to my lending partner Mike Bomparola from CrossCountry Mortgage for making this happen!). They’ll save thousands of dollars over the lifetime of the loan.
My clients were able to benefit because they were first-time home buyers.
Many lenders offer special programs for first-time home buyers. If you qualify, these programs can help you significantly lower your costs. In my client’s case, CrossCountry Mortgage, a Douglas Elliman partner I referred them to, provided them with $6,500 in down payment assistance and a $500 rebate for bank appraisal (totaling $7,000 of free money!), through Community Promise, a first-time home buyer program. In addition, this program only required 3% minimum down payment.
With the extra cash freed up, my client was then able to further buy down their interest rate—in essence, paying a little more up front to save a lot of money down the road.
Another mortgage program I love is from Citi’s Law Firm Group, a private banking service with special offerings for some top legal practices and attorneys. My husband used to work in big law, so I’m all too familiar with the grueling hours and sudden disappearances (of my husband at dinners, vacations, etc!). But working in big law does come with perks, and one of them is your firm might be a part of the Citi’s Law Firm Group program: it offers a 0.25% discount on mortgage rates, 90% financing with no PMI (private mortgage insurance that’s usually required when financing more than 80%), and a free rate-lock for 120 days (excellent for co-op purchases which can take longer with the board approval process).
Important Note #2: If you are buying a co-op or condo, the board will have its own minimum down payment requirements that may be higher than what these low down payment programs allow!
My client was lucky enough to qualify for CrossCountry Mortgage’s Community Promise program because they lived in an area that was an eligible census tract, were first-time homebuyers, and planned to live in the home as their primary residence.
And that’s why you shouldn’t start your journey alone. I couldn’t be more excited for my clients to start the next chapter of their lives, and I would LOVE to help you figure out if you could qualify for any extra assistance that you can get in this expensive city!
Truly yours,
Judy
In late August, I spoke with Kim Rittberg, an award-winning video marketer, coach, and podcaster, for her show The Exit Interview. We talked about my personal journey from my home country of China, to the UK for high school, and arriving in New York as a newcomer with no connections and two suitcases (shout out to Zack, now my marketing manager, for helping me carry them from JFK to my dorm room 15 years ago!), as well as how integrating videos in my marketing plan this year has helped me rekindle old connections and create a thriving business. Listen below!
Make it stand out
Whatever it is, the way you tell your story online can make all the difference.
State of the market
Here are my quick takeaways from the Q2 2024 Brooklyn market report:
It might be four years since the pandemic had everyone moving from Manhattan to Brooklyn. But Brooklyn is still hot, baby! The median sales price rose to the highest on record, reaching $990,000, increasing year over year by 4.2%.Median sales price for condos increased annually by 14%, to $1.085M, breaking another record. As the appeal of BK rises, so does the price tag.
Listing inventory increased 14.5% annually, the first time it’s up in nine quarters! This is partly because sales volume declined by almost 5% year over year, so there are more properties available for sale, and the pace of the market (months of supply) slowed. However, Brooklyn is still selling, compared to pre-pandemic times, with sales volume remaining 4% above the second quarter decade average.
Greenpoint and Williamsburg experienced a 68.2% annual surge in sales, reaching 12.3% of the borough market share. I am happy to have contributed to this surge with my buyer’s beautiful three-bedroom condo by McCarren Park, which closed in July!
Cash deals were 42.8% of sales closed in the last quarter, the third highest in a decade of tracking. The highest record of cash deals was in the prior quarter, reaching 45.4%. With the interest rate cuts on the horizon, the market share of cash buyers might reduce further in the coming months.
Bidding wars also slipped a little bit, to 18.6% of market share, down from 20.2%, a welcome relief for buyers (bidding wars are stressful!). But as median sales price hit new highs, this could also be a sign that sellers are pricing more accurately in the market. As a result, when bidding wars happen, the premium paid was 7% over last asking price, slightly higher than the 6.3% premium paid in the previous year.
Allow me reintroduce myself
In April 2021, after running my own translation business for six years (woohoo Cantos Translations!), I got my real estate license. Interest rates were 2.65%, open houses had long lines, and bidding wars were happening everywhere.
August 6, 2024
If you’re wondering why I’ve started a newsletter, then let me give you a little backstory.
In April 2021, after running my own translation business for six years (woohoo Cantos Translations!), I got my real estate license. Interest rates were 2.65%, open houses had long lines, and bidding wars were happening everywhere.
But over the next two years, interest rates tripled, causing chaos for buyers and sellers alike. In Manhattan, we saw some price drops, but it was hardly enough to outweigh the increased mortgage payments buyers were facing. This was because sellers didn't want to give up their low mortgage rate for a high one, causing inventory to plummet. With few affordable options, buyers were left in the lurch.
At family and friends’ gatherings, people often asked me to help them make sense of the market. They needed to know how to navigate the confusing and stressful world of finding their next home.
Cutting through the noise
Yesterday—August 5, 2024—was a good example. Global stock markets abruptly ended a months-long rally in a massive sell-off that saw the S&P 500 plunging more than 8% from its peak. Experts predicted that the Federal Reserve might finally cut rates to stave off further disaster.
What would that mean for the prospective home buyer? How would they know?
For most people, their home is their most valuable asset, and the people who reached out to me, whether through referrals or from within my own network, were looking for the unvarnished truth about real estate.
A lot of people were asking me about a catchy turn of phrase they'd heard: "Marry the house, date the rate." Essentially to buy now in spite of the high interest rates, then refinance later when rates come back down to Earth.
I'd heard the line, too, from one popular real estate influencer or another. The thinking goes, if you buy when other potential buyers are priced out of the market, you'll face less competition. And you might even come in under the asking price.
There are many issues with "marry the house, date the rate," I explained. For one, you won't earn equity as quickly if you're struggling to pay off the high interest. It also doesn't take into account the refinancing costs you'd have to pay when you take out a new mortgage. If rates do come down meaningfully and you refinance into a lower-rate mortgage, that could be ideal, but who knows when that would be? The timeline for a rate cut kept getting pushed back, and a cut of 25 basis points or 50 basis points would not make it worth the refinancing cost and trouble.
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Are you dreaming of your next home? Book a free 30-minute consultation with me with no strings attached.
What your fave real estate influencer doesn't get
My advice was simple. Don't buy a home you can't afford today. Instead, look for a more affordable home. Or wait until you save up for a bigger down payment, so your monthly mortgage is more manageable.
Important distinction: I am not advising you to wait for the rate to come down. Do not try to time the market. My advice is to buy within your means, at the right time for you.
If you manage to save up for a larger down payment, not only will you be able to knock out a significant chunk of the principal, but this may also make you a stronger bidder than a competitor with the same (or even higher) offer price, because you would be more likely to be approved by a lender and the building’s board, making you the safer choice. And it could help you avoid additional costs like private mortgage insurance.
So that's the story of how I saved my friends thousands of dollars—and talked myself out of commissions. You're welcome.
It's those kinds of stories that landed me on the idea for this newsletter. Your source of real estate information should be as reliable as possible, since buying, selling or renting real estate will be one of the most important decisions you'll ever make.
Once a month, I will share my distillation of what’s happening in the market, broken down into clear points for you, while I do the work of sifting through market data, macro-economic trends, and boots-on-the-ground experiences with actual clients.
I hope that, through my words, you'll feel empowered, and that you'll find something worthwhile to chew on while you ponder whether and when to take that next big leap.
This is a journey we're taking together!
In late July, I spoke with Debbi DiMaggio, a fellow real estate agent based in California, for her Mastering the Art of Real Estate podcast. Listen below!
State of the market
A few quick takeaways I got from reading the dense Q2 2024 Manhattan Market Report:
1. Sales volumes are up 12% year over year, as people psychologically adjust to the high-interest-rate environment, and many buyers and sellers feel they can no longer wait to make a move (think a growing family of three or even four squeezed in a one-bedroom, or an empty-nester with not much income hanging on to a four-bedroom). But sales volume still hasn’t quite recovered, landing almost 6% below the second-quarter decade average.
2. Listing inventory is up 4% year over year, and almost 14% above the second-quarter decade average. But more homes are selling than before, so the pace of the market (“months of supply") actually accelerated. Still, the months of supply measurement hasn’t quite recovered to the average, since sales volume isn’t fully back (see point 1).
3. Cash deals were 62% of sales closed in the last quarter. For sales under $1m, 52% of transactions were cash. For sales above $5m, 99.6% of deals were cash. This partly explains why cash buyers in the luxury market are not seeing the kind of cash discounts they might expect, as almost all competing offers are cash too. One reason for this is that high-net-worth individuals are leveraging their stock portfolios for a revolving line of credit with potentially better interest rates.
4. Sellers are pricing more accurately than last year, as the number of sales with price changes fell to 27% from 39%.
5. But even with fewer price changes, listing discounts from last list price are up to 11%, almost double that of a year ago, which was 5.9%.
6. One of the age-old benefits of owning a home might be becoming a bit blurrier, as monthly carrying costs (money that doesn’t build equity) keep increasing. The average monthly maintenance cost for a co-op sale was $2,960, or $2.64 per square foot per month, a new high and up almost 8% annually. The average monthly common charge plus real estate tax for a condo was a record $4,429, up almost 2% annually, or $3.08 per square foot per month. To understand this, imagine you paid cash for a 700 square feet one bedroom condo: your monthly carrying cost would still be over $2,100 per month!
