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...Rising Interest Rates! |
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Interest Rates continue to be top of mind for buyers. But before everyone panics, it's important to always look at the full picture.
Here are the TOP THREE financial factors
1) YOUR MORTGAGE PAYMENT CAN GO DOWN! When you buy a home your mortgage payment can change over time. How? Through re-financing at lower interest rates or paying down a very large chunk of your principal balance then re-forecasting your home loan.
2) PAY CLOSE ATTENTION TO YOUR OTHER MONTHLY HOUSING COSTS WHEN PURCHASING! When you buy you have a combination of fixed monthly costs coming to you in the way of property taxes and your individual apartment's charges for building costs. This is typically shown as maintenance or common charges on a property and covers running costs of the building you are buying in like water, sewage, insurance, staff, maintenance, underlying mortgage, property taxes (in co-ops) and more.
3) YOU BUY INTO THE MARKET OF THE DAY, NOT THE MARKET YOU WISH YOU BOUGHT INTO! Too many people you know will say "I wish I bought when..." Not knowing the future is the biggest reason people hold off on buying and then have regrets later. Right now in NYC we are recovered from Covid and are back to 2019 pricing. Meaning, we have not had a gain in value from our pre-Covid sales market for most of the city's properties. We expect pricing to only continue to go up over the next few years. The median price of a NYC apt in March 2019 was 1.21M and in March 2022 was $1.175M. So, if you are buying in 2022, in our opinion you are still winning by purchasing in a recovering market.
WHAT DOES THIS ALL MEAN?
It means you should always do the math! Let's use one of our properties as an example that has low monthly housing costs. If you buy this apt at $789,000 with super low monthly housing costs of $1146 per month vs something selling at the same exact price with $2000 a month housing costs you win in the long run. Buying this home at 5.375% interest the monthly payment is: $4,682. Let's say the rates go back down to 3.75% and you refinance, your monthly payment is now $4069. This illustrates how you can reduce your payment over time. If the monthly housing costs were $2000 vs $1146, then no matter what you refinance to your payment is always going to be $854 more a month for a property the same price as this one with a higher maintenance. So, even though property values will for sure go up over time, you are stuck with the higher maintenance for the long haul with no way to reduce that fixed cost. The math is always better for you with lower monthly housing costs, rather than math on different interest rates. The last time interest rates hit 5% was in 2009. Read our blog to understand our 2022 strategies to working in a higher rate market. Check out our most recent blog post HERE.
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Founder & CEO of Compass Robert Reffkin |
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Daoud Heidami and Beth Gittleman recently met with Rob Reffkin after his travels visiting with Compass agents around the nation to discuss the current state of our market. Our discussions centered around how housing prices have dramatically increased throughout the country, while Manhattan prices have not seen as steep an incline. The combination of higher rental prices, the return of the pied-a-terre buyer, and steadily rising interest rates have continued to foster a sense of momentum here. |
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Lifestyle Tips & Tricks |
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If this is the kitchen life you are looking for, you can have it as it's available for sale now, so let us know! Home building plunged after the Great Recession and remained at a recessionary pace long after the economy and job market had recovered. Today there is a plethora of newly built condo inventory to choose from. The NYTimes reports that rising rates will not affect the competition in the market this spring here.
If you're not seeing homes worth your while - |
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5 Places to Obtain Virtual Real Estate Data
People spent over $500 million on virtual real estate assets in 2021, but until very recently, it hasn’t been easy to find the data necessary to make informed purchasing decisions. The situation was such that people often bought land uncertain of where it was even located. Sensing the need for better data, several companies have jumped in over the last year or so to try to fill the void. There are now a few places to obtain good information on the virtual real estate market!
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Open Floor Plan: In or Out?
Over the past few months, we've been noticing the rise in rooms—not just designated areas of a larger space, but sectioned-off spaces complete with four walls. So, what gives? Is the open floor plan on its way out? Admittedly, it depends on who you ask. |
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12 Recipe Ideas for Spring Produce
Spring is just around the corner, and with the warmer weather comes a slew of tasty spring produce ready to add some freshness to your meals. Here are a myriad of recipes that really give mangoes, peas, and more spring fruits and vegetables a chance to shine. |
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Space Age Design Relaunches
Whether you call them Space Age or Atomic Age, the homes built in the 1950s and 1960s represented a new wave of modern architecture inspired by space exploration and futuristic ideas. Now that space travel for the layman is becoming a reality, we can expect to see architects and designers gathering inspiration from the new boom and from advancements in materials and technology.
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