The election has come and gone … and whichever side you voted on, whatever your politics, what is for certain is that the NYC real estate market will benefit. No, this is not because of Donald Trump’s real estate endeavors; it’s merely because the uncertainty of who will lead our nation is gone. The unknown is behind us, and everyone is beginning to process what a President-Elect Trump will mean for our nation, our cities and our industries. We therefore believe that the relative freezing of the markets that we’ve been experiencing will thaw and that 2017 will experience a pick-up in real estate activity.
Why aren’t we seeing this thaw now? Right away? Many factors come into play. First, the results are very raw on both sides, and it will take a bit of time to truly digest the implications of America’s decision. Second, the first few weeks and months post-election will provide valuable signals as to how much election rhetoric is likely to translate into presidential policy. Third, the holidays are-a-knockin’ on our door, with Thanksgiving right around the corner, and then Christmas, Hanukah and the New Year barreling towards shortly thereafter. Not much activity usually happens during this time, unless there is some looming real estate related tax deadline that punctuates a calendar year end.
We therefore anticipate that it will be in Q1 and Q2 of 2017 that will see our anticipated uptick of transactions, leading to a continued growth of the NYC real estate market. This normalization is set to take place not just in terms of activity, but also in terms of prices, the latter of which have been greatly skewed by the material oversupply of luxury new developments. Their larger than usual market share of overall NYC inventory first put upwards pressure on prices and then had a disproportionate impact on their perceived softening. Once most of these new developments move through the system and close in 2016, (having been in contract for the last 2-3 years as they came to completion), we believe we’ll have a far more accurate pricing base-line, a correction of sorts, that will allow us better gauge the state of the market.
Re-sales will play a more prominent role, therefore, in setting the overall market dynamic. We believe that their predicted activity will help bridge the growing gap between buyer and seller expectations, a gap that has been greatly exacerbated by luxury new developments, fueling sellers’ unrealistic expectations and leaving bewildered buyers out in the cold. The more resale properties that close over the course of the next 4-7 months, the faster we can come to a shared buyer and seller narrative as a healthy foundation for future activity. All in, we believe this will have a positive impact on 2017, especially as it pertains to our 2016 experience.
