The real estate market has officially shifted. And if you are on the seller’s side it isn’t in your favor. In September, the New York Times announced that Manhattan, the crème de la crème of the real estate world had become a buyer’s market terrain. If Gotham real estate can’t sell itself there is something brewing. Quick refresh: in a buyer’s market more homes are for sale than there are buyers to purchase them. Homes tend to stay on the market longer, allowing homebuyers their pick of the litter. Sellers often have to lower their prices to close sales. Needless to say, this can be immensely frustrating for real estate professionals.
Why are we facing a buyer’s market?
As with any market trend, the contributing factors to the current market slowdown are complex. However, some clear legislative factors have contributed to this shift, particularly for the luxury market. Most notable is the mansion tax, which introduced a scaled tax on homes purchased for $2 million and above, motivating sellers to close sales before the law went into effect.
And then we have Trump’s trade war with China. Increased tariffs have significantly stymied Chinese investment in markets across the board, but the luxury market has been hit particularly hard. This is exacerbated by the fact that international purchases, in general, are being vetted more closely. The added red tape contributes to sluggish demand.
The luxury market has seen the worst of it, but the buyer’s market is affecting every price tier. Speculators are particularly concerned because mortgage rates are at a recent low and typically this incentivizes homebuyers to make purchases. If that’s not working, then it may be signs of more turbulent times to come.
The market slowdown can be attributed to a more general sense of economic uncertainty. Rumors of an impending recession have been looming, and since we’re in an election year, many homebuyers are likely to wait to see how the next administration could affect their home purchase. In a buyer’s market, homebuyers have the luxury to pause in their search, allowing something better to come along, which contributes to falling prices and the overall ailment of the housing market. When the market is slanted towards sellers, it’s common for homebuyers to try to outbid each other; today, this is a rare sighting anywhere outside the hottest metropolitan markets.
What can I do?
For real estate professionals, a buyer’s market means nothing comes easy. Homeowners who purchased homes a couple of years ago, when markets were hot, won'y want to sell at a loss. Success in the midst of a buyer’s market is challenging, but you can tip the scales in your favor by remembering that perfect tends to be the enemy of good—now is not the time to highball clients, and you can’t expect them to come to you. Survival in a buyer’s market requires you to be much more proactive with outreach. Plan a comprehensive marketing campaign with targeted, dynamic advertising to get the word out. This can be a multi-media mix of impressions campaigns that reach buyers by location and income level. Advertorial, which tells the story, and social media which is now using artificial intelligence to locate an appropriate audience you might not know about.
You should also incentivize clients to close purchases fast by offering to cover the auxiliary costs of the home buying process, like closing fees and minor repairs and renovations to the property. If a buyer’s market were a cakewalk, it wouldn’t be such a dreaded phrase for real estate professionals. You may inevitably have to tighten your belt and log some major overtime hours, especially if you’re not lucky enough to be working in a hotter market.