There is never a dull moment in New York City’s real estate market. Somehow, the past few years have moved faster than a New York Minute, keeping real estate professionals on their toes.
New York City’s real estate market hasn’t gotten back to its normal ebb and flow since the pandemic gutted New York with an unprecedented death toll and mass exodus from the city in 2020, followed by a buying frenzy at the end of 2021 into 2022 as people rushed back to the metropolis.
This year, it’s the failure of small banks — Silicon Valley Bank and First Republic — new federal loan rules, and the ongoing interest rate hikes to cool 2022’s runaway inflation and the housing crisis.
Gay City News spoke with Kristi Ambrosetti, senior global real estate advisor and associate broker at Sotheby’s International Realty, about the challenges New York City brokers, homebuyers, and sellers are facing in 2023. She laid out why it’s so important to find a smart and savvy broker with their finger on the pulse of the market, whether you are buying or selling a home.
“We’ve had so many things thrown our way in these past few years, particularly in New York City, which is really our own very unique subset of the overall national market,” said Ambrosetti, an out lesbian. “We have never really behaved with the rest of the country as far as our peaks and valleys of the market.”
“First Republic was a very prominent force in our New York City Market,” Ambrosetti said. “We see a lot of First Republic deals in New York City. So, to me that one is the one has the greatest impact right now.”
However, it is too soon to tell how the smaller bank fallout and the new Fannie Mae and Freddie Mac rules that went into effect May 1 will affect New York City’s real estate market and buyers and sellers.
It is also unclear how the new upfront fee adjustments for loans backed by Fannie Mae and Freddie Mac that started May 1 to get the lender in line with the changes in Loan Level Price Adjustments (LLPAs) will also impact New York City’s real estate market. The most controversial change was to the assessment of credit scores, which increases the mortgage fees for homebuyers and those refinancing home loans with good credit scores and lowers the fees for homebuyers and those refinancing with less than stellar credit scores. The new rules only apply to loans backed by Fannie Mae and Freddie Mac.
ABC News reported the Urban Institute’s findings that Fannie Mae and Freddie Mac collectively shared nearly 60% of all new mortgages in the mortgage market during the pandemic in 2020. In 2019, Fannie Mae and Freddie Mac collectively shared 42% of all new mortgages in the mortgage market.
“I’m not sure we’ll know until we really get into it,” said Ambrosetti. “I think everyone’s just waiting to see where the chips fall.”
“It’s just been time and time again, as you look historically at these larger moments, how we adjust,” she said. “It’s been a very interesting process being a broker in that time.”
Smart and savvy broker
That’s all the reason why having a smart and savvy broker on each side of the table makes a world of difference, said Ambrosetti, who estimates “about 80% of our deals are about $3 million and below, and then everything else is above that.”
“A lot of our first-time homebuyers are potentially in the range of a $2 million purchase,” she said.
Ambrosetti said her role as a real estate advisor to her clients is similar to what it would look like if she were their financial advisor, legal advisor, or doctor because clients are trusting her to help them with their asset.
“Real estate is often one of their most valuable assets, if not the most valuable asset,” she said. “I really take that very seriously.”
Ambrosetti said a good broker “should be able to guide you through the process help you understand price, present you in a way that the seller finds you to be a compelling buyer and feel confident in the deal.”
Not normal yet
The buying and selling pattern of spring open houses isn’t back to what it once was before the pandemic. Ambrosetti noted that homebuyers and home sellers were very active from mid-January to mid-March, which typically would have been the slow season. It wasn’t. Not just with her listings, but “across the board,” she said.
“It’s as if everyone sort of woke up and started transacting and the market became extremely liquid,” Ambrosetti said. “We did a really significant number of deals from the middle of January to the middle of March.”
“I think it’s taken the better part of a year for buyers to really digest [higher interest rates] and feel armed and feel like they can still transact,” Ambrosetti said.
The federal government increased interest rates by a quarter point for the 10th time in little more than a year on May 3. The Federal Reserve also hinted that it might be the last in this cycle of taming inflation.
Buyers returning to the market signaled to her that the buyer’s market might be closing soon.
“Perhaps for us, this could be the end of what is a buyers’ market before the pendulum starts to swing,” Ambrosetti said. “In other words, if you are a buyer, act now because it seems like prices will continue to slowly increase as we move that pendulum back toward the sellers.”
What is important now heading into June and July is to maximize strategy by being mindful of pricing and timing of listing.
Homes that are ready-to-move-in, also known as turnkey homes, are moving quickly because they are priced well and outdoor space continues to be a popular asset.
“As brokers, we need to make sure that we are up to date on the market analytics so that we can guide sellers about the best time for lists,” Ambrosetti said.
Sellers should have already priced their property right and listed their properties.
“Pricing is critical,” she said stating it’s important to have a grasp on the market and be strategic. “If it’s not priced properly, it will linger and it will eventually sell under.”
Despite the rate increases and bank failures, “there is an abundance of buyers.” She’s still hopeful the season will be a good one for New York City brokers before the market dip she foresees is coming in late summer and early fall.
“I am hopeful that we continue to have the level of activity that we’re having,” Ambrosetti said.