You probably have heard if you haven’t yet experienced this first hand – inventory is low in New York City. Throughout the summer and even up until now, available inventory has been at 1 percent, if not lower at some points, for both sale properties as well as rentals.
As interest rates continue to be at record lows; sellers are shifting into the driver’s seat with experts expecting bidding wars to break out in certain markets due to the low inventory. While homes will sell quicker this year, they still have to be priced right.
MP Walsh Realty located in Chelsea recently found that synopsis to be most accurate when their most recent $1.5 million dollar listing ensued into a bidding war and the property was sold in just three days above asking price. When asked about their success, owner and acting broker Michael Walsh said the key was pricing it right.
Lawrence Yun, Chief economist at the National Association of Realtors, echoes that sentiment. “The mobility rate has been at a very low rate, meaning that people really did not move during the recessionary years, so there is pent up demand — but sellers need to price correctly,” says Yun.
The Federal Reserve has held interest rates steady at near-record lows during the past several years in an effort to entice buyers into the market, and experts don’t expect significant jumps in the rate this year. In fact, the central bank said it would raise short-term interest rates until the unemployment rate drops below 6.5 percent.
“Mortgage rates were essentially at a generational low last year – they could move modestly higher this year, but it will be the second-lowest [rate] in 40-plus years,” says Yun. “I anticipate by year end that mortgage rates may be close to 4%, but still one of the lowest in a generation.”
Lawrence Yun, said inventory is the key to this year’s housing market. “Favorable affordability conditions and job growth have unleashed a pent-up demand. Most areas are drawing down housing inventory, which has shifted the supply/demand balance to sellers in much of the country. It’s also why we’re experiencing the strongest price growth in more than seven years,” he said.