Being the CEO of a real estate listings platform based in New York comes with a lot of responsibilities and a couple of perks — one of which is having a front-row seat to the decisions that consumers in New York City make daily regarding their next home. Because of that, one of the questions I frequently get asked is if 2020 will be a good year to invest in residential real estate.
Even though this should not be taken as investment advice and reflects my opinion, here are a couple of insights I’ve gathered regarding the future of residential real estate in 2020.
We are in a buyers’ market.
If you already own a property you would like to sell, and you can afford to wait without selling, common sense would dictate that the best time to sell is at the time in which you encounter a market that is high on demand and low on supply. However, this is not the 2020 market. The new year will bring buyers great negotiating leverage thanks to so many new developments on the rise and the memories of the global financial crisis that took place in 2008.
Geopolitics is an increasingly important factor.
This year brings about a U.S. presidential election, significant changes for the U.K. with Prime Minister Boris Johnson, Mexico’s controversial president Andrés Manuel López Obrador, Hong Kong’s as yet unresolved protests and trade wars with China. Because of this, experts still worry that a downturn should be expected in the U.S. economy and are primarily concerned over monetary and trade policy.
Condo sales will rise.
A choppy sea presents opportunities for those with exceptional vision and a little patience. During 2020, New York City alone has over 5,600 new apartments expected to hit the market, elevating the supply and lowering the demand. It’s also easy to predict that many people might be reluctant to use the newly acquired negotiating leverage in fear that the market has yet to hit rock bottom, bringing great buying opportunities similar to the ones in 2009.
Rents will rise, too.
In New York, more uncertain wealthy locals are choosing to rent instead of buy because of the reality that owning a home in New York — and especially in Manhattan — is often hard to justify. As a consequence of uncertainty and a clever strategy by offering concessions and amenities, luxury buildings are seeing a decrease in their vacancy and an increase in demand that we can expect will continue through 2020.
If you need assistance from an expert to purchase something, it’s also useful to remember that in many states, it is the seller who pays the broker commission, which means that if you’re planning to buy, you can get help from a real estate agent and purchase a home without having to pay for their expertise and assistance during the time of the transaction.
At the end of the day, whether or not it makes sense to buy rather than rent your home will depend on your financial position and ability to find opportunities. However, savvy decision-makers will always keep important factors like these in mind when making a buy-versus-rent decision this year.