properties

New York’s Real Estate Roller Coaster: Navigating the Highs and Lows of the Housing Market

By Columbus International,29 April 2024

As the world’s financial capital and a global cultural beacon, New York has long been a real estate juggernaut. Its housing market encompasses everything from ultra-luxury Manhattan condos to family-friendly suburbs and bucolic vacation homes. This diversity fuels a perpetual churn of buyers and sellers, each with their own motivations and priorities. However, the pandemic triggered seismic population shifts, with New York losing 2.6% of its residents between 2020 and 2023 according to moving data.

This exodus has contributed to declining listings and sales statewide, even as certain pockets remain red-hot due to inventory constraints. Statewide, new listings plunged 22.4% year-over-year in Q2 2023, while closed sales dropped 22.6%. The median sale price of $405,000 represents a 1.8% annual dip but still outpaces much of the nation. Yet this macro view conceals a intricate tapestry of micro-markets, some scorching, others tepid. “All of these contribute to the diversity of the housing market,” says Jeffrey Decatur, a RE/MAX Capital broker. “There’s strong demand for luxury homes in Manhattan, while the tech hubs attract new buyers from around the world.”

For buyers and sellers navigating these currents, strategic timing is paramount. Higher mortgage rates pose affordability hurdles, while uncertainty surrounding the 2024 election could further dampen activity. Conversely, New York’s resilient long-term appreciation trajectory promises future upside. Ultimately, personal circumstances should guide decisions. “The one thing you don’t want is to think yourself into doing nothing at all,” Decatur advises. “When someone has to buy or sell, the water is fine. Jump in.” In this dynamic landscape, New York’s real estate opus continues its perpetual reinvention, redefining itself with every transaction as an indelible thread in the rich tapestry of the Empire State.

The Transformation Revolution: Old Offices Turn into New Homes

By Columbus International,24 January 2024

Already in the first weeks of 2024, promoters are undertaking an unprecedented mission to redesign old office buildings into actual residential units, setting a record for the highest number of transformed housing units. This growth is a direct response to the remote and hybrid work revolution that began in 2020, leading to high vacancy rates for commercial spaces in many American cities.

Among the proposals is the idea of alleviating the high costs of housing marked by persistent inflation by creating more supply. Providing an overview is the study conducted by RentCafe, which discovered that 55,300 housing units are undergoing conversion from office buildings, marking a quadruple increase compared to 2021. While the year-on-year growth of 22% is more modest than in previous years, the demand for residential space remains a driving force behind this transformative movement.

Despite challenges such as higher financial costs and extended timelines associated with zoning and permits, industry experts like Doug Ressler, the head of business intelligence at Yardi Matrix (RentCafe’s sister company), assert that this trend is destined to endure. Local governments are incentivizing the conversion of more office buildings as they “remain vacant due to hybrid work and preferences for newer and more efficient office spaces” after the pandemic. In particular, these government initiatives aim to breathe new life into these spaces. In Washington, DC, plans are underway to convert office spaces into 5,820 housing units – a significant increase from the previous year.

Following closely is the New York metropolitan area, with 5,215 new apartments planned from former office spaces. Notably, New York’s growth is fueled by the transformation of 25 Water St. in Manhattan, formerly an outpost of JPMorgan & Chase Co., into 1,263 apartments – the largest project of its kind in the country. Dallas takes the third spot, with 3,163 housing units created from offices, representing 83% of all conversion types, the highest share among major cities.

Italian Real Estate Market in 2024: Growth and Challenges Between Milan and Florence

By Columbus International,20 December 2023

What will be the fate of the Italian real estate market in 2024? There is a potential increase in property values, marking a departure from the relatively stable trends observed in 2023. This forecast stems from an analysis conducted by Immobiliare.it Insights, which identifies Milan as the city with the most expensive real estate transactions, while Florence stands out for having the highest rental prices.

Regarding sales, the report predicts a 6% increase in Catania, 4.1% in Verona, 2% in Milan, and 1.1% in Rome. For rentals, a significant increase is expected in Naples (+16.8%) and Florence, where an 18% rise is anticipated. Despite not experiencing the highest percentage growth, Milan will maintain its position as the city with the highest sales prices. In the Lombard capital, the purchase of a property is expected to average almost €5,500 per square meter, representing an increase of about €100 per square meter compared to current values. Positive fluctuations, around +3%, are also anticipated for Naples, Genoa, Bari, Venice, and Turin. The projected prices per square meter vary widely, ranging from €3,415 per square meter in Venice to €1,707 per square meter in Genoa. Additionally, both Bari and Turin are expected to surpass €2,000 per square meter by the end of the next year, marking a new development for both cities. The situation is different concerning rentals.

In 2024, Milan may lose its position as the city with the most expensive rentals. According to Immobiliare.it’s analysis, Florence is expected to approach €29 per square meter by the end of the following year, an increase from the current €24.5 per square meter. Milan, despite an increase to €25 per square meter, will be positioned behind the Tuscan capital but still on the rise compared to the current €24.7 per square meter. According to the report, in terms of sales volumes, both 2023 and 2024 deviate from the exceptional performance recorded in 2022, and the trend will return to a more regular pace, similar to what would have been expected in the absence of the Covid-related crisis.

U.S. Housing Market Defies Odds: Rising Home Prices Persist Amid Economic Uncertainties

By Columbus International,17 October 2023

In recent months, the U.S. economy has stood at a crossroads, teetering between the specter of recession and the persistent challenge of soaring inflation. Amidst these financial uncertainties, a surprising resilience characterizes the housing market, where demand remains robust, and home prices continue to ascend.

Resilience in Housing Market Despite Economic Divides
Efforts by the Federal Reserve to curb inflation have led to significantly higher borrowing costs, marked by a 22-year high in mortgage rates. Despite these elevated rates, the housing market has defied projections of a decline. Goldman Sachs, in a notable revision, now forecasts a 1.8 percent increase in average home closing prices by year-end, a significant shift from their prior estimate of a 2.2 percent decline. This resilience can be attributed to the relentless demand for housing and a limited supply in the market. Strong demand, driven by a variety of factors including demographic trends and a growing population, coupled with constrained housing inventory, has fueled consistent price hikes. The situation is reflected in the recent revision of Goldman Sachs’ home-price forecast, indicating that the market remains on an upward trajectory despite the prevailing economic uncertainties.

Commercial Real Estate Faces Challenges
In contrast to the housing market’s buoyancy, the commercial real estate sector grapples with multiple challenges. The lingering effects of the pandemic, such as rising office vacancies, combined with the Federal Reserve’s efforts to control inflation through interest rate hikes, are impacting this sector. Higher interest rates are particularly concerning, leading to anticipated commercial mortgage renegotiations in the next few years. Regional banks are notably vulnerable in this scenario, exposing potential risks in the commercial real estate sector. The divergent fates of the housing and commercial real estate markets underscore the specific dynamics at play in each sector. The housing market’s resilience is attributed to its strong fundamentals and the essential need for shelter, while the commercial real estate market faces complexities due to evolving work trends and economic policies.

Yield Surge Raises Economic Eyebrows
The surge in the 10-year U.S. Treasury note yield to a 15-year high at 4.258% raises concerns about the potential economic impact. Higher yields could lead to increased borrowing costs, affecting various markets, including stocks, bonds, and housing. Of particular concern is the potential impact on mortgage rates, which could pose challenges for both prospective homebuyers and those seeking to refinance. The housing market, though displaying remarkable resilience, is not entirely immune to these economic shifts. An increase in mortgage rates could alter the affordability dynamics, potentially slowing down the rapid pace of home price increases. Investors and industry stakeholders closely watch for cues on how these yields might stabilize and their subsequent influence on the housing market.

Federal Reserve Balancing Act
The Federal Reserve’s cautious approach, as reflected in the minutes of their July 2023 meeting, showcases the delicate balance they strive to maintain. Controlling inflation remains a priority, and this is evident in the interest rate hikes implemented to slow the economy and curb rising prices. However, the Fed grapples with the need to carefully weigh these actions against their potential negative impacts on the economy, such as slowing hiring and increased business loan costs. The central bank’s actions are being closely scrutinized by various sectors, including the housing market. Their decisions significantly impact borrowing costs and, subsequently, housing affordability. Striking the right balance is crucial for the Fed to navigate the complex economic landscape and support the stability of both the housing market and the broader economy.

Housing Market Defies Mortgage Rate Surge
The surprising resilience of the U.S. housing market in the face of soaring mortgage rates stands as a testament to its robustness. Despite rates doubling over the past year and a half, major homebuilders’ shares have rallied, surpassing broader stock indices. The constrained housing supply, coupled with higher mortgage rates, has essentially trapped existing homeowners in their properties, diminishing available housing stock and compelling potential buyers to explore new properties. This resilience is underpinned by the fundamental need for housing. Regardless of mortgage rate increases, the demand for homes remains high, particularly due to demographic trends and societal shifts. The housing market has adapted to the new normal of higher rates, showcasing its strength and stability amidst evolving economic conditions.

A Glimpse into the Future
While concerns about the U.S. housing market persist due to the rapid rise in mortgage rates and a sharp slowdown in home sales, economists and analysts foresee a moderate market correction, rather than a crash on the scale experienced during the Great Recession. Factors such as low inventories, cautious building practices, demographic trends, strict lending standards, and low foreclosure activity contribute to the market’s resilience. These indicators, combined with the enduring demand for housing, hint at a market that is likely to continue its upward trajectory in a more measured manner. The housing sector is expected to adapt and find equilibrium even in the face of economic uncertainties, reinforcing its position as a cornerstone of the American economy. The U.S. housing market remains a pillar of strength amid economic uncertainties, continuing to surprise pundits and analysts with its unwavering growth. As the economic landscape evolves, only time will reveal whether this resilience is a temporary phenomenon or a lasting testament to the fundamental stability of the housing sector in the United States.