What do crashing stock markets and exploding office gossip have in common? They both feed off of and are fueled by uncertainty. Indeed, today’s political and economic landscapes are both littered with uncertainty stemming from our upcoming presidential election, suspense only exacerbated by the highly polarizing nature of this one. And what do we know in the absence of the known? It makes people not want to take any amount of risk. As uncertainty increases, so does one’s loss aversion.
In terms of real estate, political uncertainty means everyone is holding their breath. The election has become that looming, enormous, ever-present elephant in the room that dampens all activity. People to the left and right all can’t wait for this election to be over, already, so that they can move on with their lives. Buyers and sellers, alike, are questioning what will happen to real estate prices after the election and our answer is: “not all that much.” We believe, especially as it pertains to NYC real estate, though in many ways applying to other vibrant urban centers, three factors are responsible for our answer:
- First, real estate is local. Despite national indices and headlines, real estate always has and will be local, local, local. It has its own local market, its own local supply and demand dynamic, and its own local, living ecosystem. This is why implications of the Case-Shiller only have a fractional impact on the reality of NYC real estate. In many ways, particularly in a country as large as ours, one could argue there is no such thing as a national real estate market.
- Second, real estate is a hard asset. Unlike other “soft” assets that can more easily swayed by regulatory and political trends, real estate generally dances to the beat of its own drum. It’s rather difficult to pass legislation affecting real estate nation-wide, thereby limiting the potential impact that any one election cycle would have on prices.
- Lastly, NYC is one of the world’s premier real estate capitals. It is solidly planted on the international stage, buttressed by a diverse array of buyers from across the globe, and therefore buffered from the more dramatic oscillations that other markets may feel based on any one catalyst.
With all this said, there is one thing that uncertainty definitely brings for the savvy decision-maker: opportunity. When uncertainty diminishes, things go back to normal and the relative paralysis experienced before hand dissolves. Meaning: if you see an opportunity now, take it! The opportunity to list, the opportunity to purchase, no matter – there is much to gain when you act (armed with information and intelligent research, of course) while others are paralyzed by fear or indecision. Pockets of arbitrage still exist and they will always be there for those more seasoned among us who recognize and are willing to pounce on them at the right time. Tic toc …