Real Estate Weekly
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Brokers Weekly asks: How has politics impacted the sales market and how significantly?

Aleksandra Scepanovic

Aleksandra Scepanovic, managing director of Ideal Properties Group
America’s macro political stage, strongly shaded by the news of the trade war with China, impacts New York City’s softening housing market both directly and indirectly. Directly, by further diminishing the interest of Chinese real estate investors in their once so loved spurious offspring. Indirectly, the impact is reflected in the Chinese investors adding their properties to the city’s queue of inventory awaiting to be sold. The absence of Chinese investors is most intensely impacting the city’s luxury sales market, decelerating the trading pace. And of course, as a consequence of extended days the properties spend on the market, their price points are also negatively affected.

The significant edits of the city’s housing regulations have not only impacted many properties’ bottom lines, or lessened the equity or the property’s potential future profits. The regulatory changes are prompting investors to shift focus on markets outside of New York City, again slowing down the trading pace and diminishing interest. Naturally, the buyers’ market is likely to persist, as potential property purchasers, still believing in the long-term strength of NYC market, take a stronger command of a weakening market.

Chris Totaro

Christopher Totaro, agent, Warburg Realty
I was seeing more of general sense of malaise in buyers, Q-1-2 and 3 in 2019, that I attribute to politics. What I’m seeing now is that buyers are engaging when they find what they have been in search of and they perceive that apartment as a value. There are certain market segments that are performing well like the rare classic lofts in TriBeCa.

My sense is that, in general, people have shifted from a sense of political doom to more of a state of desensitization to the political climate and recent tax policies are now priced into the current market. Rates are low, the Fed cut rates another .25 percent again and reaffirmed a responsible position of monitoring the state of the economy which instills greater confidence in the markets.

At the end of the day, people need a place to live, the cost of money is cheap and we are in a buyers’ market “cycle” so buyers are engaging. I’ve been working with several buyers who have held off for the last eight to 12 months and now they are making offers.

Martin Eiden

Martin Eiden, broker, Compass
From my perspective, this is the first real estate downturn I have seen – I’ve been doing this for 20 years – that is mainly caused by politics. I feel like I’m in a banana republic!
Buyer anxiety is at great recession levels. As such, three out of the four groups of buyers are on the sidelines.

They are as follows:
• International buyers. In short, they do not feel welcome here. They are buying in the EU.
• Domestic pied-a-terre buyers. While they may be wealthy, they do not feel good about the future. They are not buying big-ticket luxury items such as second homes. They are staying in hotels instead.
• First time home buyers in their 20s-40s. They have good jobs and make good money. But they don’t feel good about the future. They are renting and saving. They have a wait and see attitude.

The only group that are buying is the “must buy now” crowd. The classic example is a couple with twins expecting. They live in a studio and need a three-bedroom asap.

Seth Levin

Seth Levin, associate broker, Keller Williams NYC
The federal tax reform had would-be buyers sitting on the sidelines waiting to see what the implications would be, both personally and to the NYC real estate market as a whole, even as interest rates were hitting historic lows.

More recently we had the new mansion tax and transfer tax implications kick in on July 1st, which caused buyers to push to close on properties in contract before the changes took effect. What this amounted to was a frontloading of closings that would have normally occurred in Q3. Many of the home prices where buyers rushed to close were higher priced properties, skewing the metrics and making the declining market look like it was in absolute freefall.

We have also seen new rent regulations take the wind out of the sails of many would-be investors. The value of multi-family investment properties has subsequently fallen, by what many experts have estimated at approximately 20 percent. Rents have not gone down. This has led to an incredible opportunity but this type of investment is not for all, as landlords have to navigate the new regulations.

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