The New York City real estate market is one of the most attractive in the world, with buyers from around the globe flocking to this metropolis for its rich history and culture. However, as the Federal Reserve has increased interest rates over the last couple of years to put the brakes on inflation, the New York City real estate market slowed.
But recently, the average rate on a 30-year fixed-rate mortgage dropped to 6.09 percent, the lowest it has been in five months, causing buyers to start getting hopeful again.
So what does this mean for the New York City market?
Lower interest rates mean lower monthly payments. This is a major benefit for anyone looking to buy a home or invest because lower interest rates mean less debt. And, with a lower interest rate, you can afford to buy a more expensive property.
Lowering interest rates mean increased demand for properties. And that means increased competition for properties, resulting in higher prices. All of this is good news for sellers, but maybe not so great for buyers.
When interest rates go down, people looking to buy a home will find themselves competing with more people than usual because many more people can afford mortgages at lower rates. In addition to this increased demand from potential buyers, there will also be increased supply as sellers take advantage of the better market conditions by listing their properties at higher prices than they would have otherwise done before this change occurred.
Will this be a 2020-2021 repeat?
Talk to anyone who tried to buy a home during the pandemic lockdown, and you'll likely hear horror stories of having to make offers well over the asking price and offering to waive inspections…and still losing out to someone who offered more. Those were some of the conditions that led to inflation getting so out of control.
The good news (for buyers) is that we likely aren't anywhere near those circumstances now. The rates are not so low as to drive demand that high again now. And the unique conditions created by the pandemic, when everyone was stuck at home and looking for ways to make their homes homier, are not our conditions now.
Rates would have to drop much lower for us to be in that scenario again, and the Federal Reserve has signaled that that is most assuredly not about to happen. But this slight drop in rates could mean it's a good time for you to buy or sell.
If you'd like to know more about your options, the processing of buying and selling in New York City, and what our experienced team of real estate law experts has been seeing, contact The Law Offices of Melvin Monachan today online or call us at (347) 389-1682.