Ben Scaglione’s six-month search for a one-bedroom house brought him to Brooklyn Heights.
“When We Saw This” [apartment]light bulbs went out,” Scaglione said.
Scaglione, who worked as a chef before the restaurant where he worked closed, made a $630,000 cash offer for the apartment, asking for $600,000. The sponsor who sold the unit then came back and asked for $20,000 more from Scaglione, who could not get a mortgage.
Still, Scaglione decided to complete his journey to homebuyer status and get the place. He is not alone.
In the past year, rents in New York City have more than recovered from their pandemic-era lows, pushing those with some cash to spare to the alternative.
Douglas Elliman real estate agent Keyan Sanai recently answered a call from a panicked customer who was convinced she should buy after discovering her rent was going to rise $1,200, back to pre-pandemic levels of the Covid concession.
“People want to own an apartment for the first time because they feel like they are wasting their money on rent,” Sanai said.
However, the market waiting for new buyers is full of competition and lack of inventory.
“Once a promising property is listed, it is quickly absorbed and buyers, multiple buyers, are waiting on the sidelines,” said Becki Danchik, a real estate agent at Coldwell Banker Warburg.
The median retail price in Manhattan is up nearly 30 percent since February last year, and the stock is down more than 20 percent, according to a monthly report from Compass. Downtown, Midtown and the financial district — areas that suffered from the exodus that Manhattan saw at the start of the pandemic — accounted for more than 70 percent of sales last month.
“It’s been a rough two years and I think people are just excited,” said Emily Margolin, real estate agent at Douglas Elliman. “The local buyers are really hopeful.”
Agents step up preparation for new buyers in the high pressure market
Navigating the housing market can be tricky for first time buyers. Some are tempted to move to home ownership too quickly, while others don’t understand the nuances of the market.
Sanai said he discourages his customers from buying for the sake of buying, locking themselves into a long-term commitment before they are ready.
“You buy an apartment that you don’t like, you can sell it or rent it out, but do you want to become a landlord?” he said, adding that selling is often a hassle. “I wouldn’t buy based on emotion, but I get a lot from it.”
Margolin said some buyers don’t understand how low interest rates have been and are forgoing mortgage rates that are slightly higher than a year ago, but still well below historical standards. They also have to wrap their heads around the idea of catering to the whims of a co-op board, whose vetting processes can delay a move date.
“I usually have a good 45-minute talk to talk them through the process,” Margolin said. “And then I’ll do it again.”
No one is safe from the heated competition in today’s market, says Ashton Monroe, a new-buyer specialist on the Sotheby’s International Realty’s Field team.
“Nine times out of ten, when I talk about a bidding war, I’m talking about it with one of my entry-level deals,” Monroe said. “It can get a little overwhelming and it’s a little discouraging [buyers] in a way. But again, our job is to encourage and just say there is light at the end of the tunnel.”
The tight market has led some buyers to give up the hunt, waiting for new stock to hit the market in the spring.
“I’m not a real estate agent who will pressure a new buyer,” said Julia Boland, a real estate agent at Corcoran. “Sometimes you have to let them go through it and lose it. No matter how hard you try to position them to win, they have to come to their own realizations.”