If you’re listening to the mainstream press, you may think the sky is falling. Between stock market volatility, a hard landing for China and crazy low oil prices, we understand why some buyers may be getting jittery.
So here is some information to help you to keep calm and carry on.
Stock market volatility: While recent volatility may be making some people queasy, most economists believe that the fundamentals required for a recession are just not there. Furthermore, the VIX index, which generally tracks volatility and risk, is still at reasonable levels, meaning no one is panicking. Lastly, dividend yields are the highest they’ve been in years, and that’s in an ultra low interest rate environment. Did we mention the continually improving employment picture?
China’s hard landing: China has been on an unsustainable growth path for some time now, having increased debt 28 times since 2000 and bringing it north of 300% of GDP. We are now seeing a very natural unwinding of this debt bubble playing itself out in its stock market, with global ripple effects. While it is painful in the near term, it is a very positive turn of events from a long-term perspective, creating the foundations for a far more sustainable growth trajectory from such an economic powerhouse.
Low oil prices: With the price war continuing between Saudi Arabia and other major oil producers, oil has taken quite a hit. Our ally continues keeping supply high to make sure it’s not losing market share during a time of decreasing prices because of its low cost of production. Newer, more expensive producers will drop out and most experts believe prices will once again hit $50/$60 a barrel in two to three years’ time. Basically, this is a short-term trend that will impact those economies dependent on exporting oil.
What does this mean for NYC Real Estate? The Big Apple continues to be a safe haven for global investors, both from a capital preservation and asset appreciation standpoint. Regardless of how things will actually turn out, what we can reasonably predict is that the first quarter will experience lower sales volume altogether. Buyers are taking longer to decide and are more trigger-shy than they have been in some time.
What does this mean for you seller? If you’re serious about selling now, you need to increase your willingness to negotiate. We’re not saying completely cave in to all demands, but take into account your open house volume, the number of offers you get and the quality of those offers. While we believe spring will bring with it more activity, this also likely means more competition for you from the additional inventory that’s likely to hit the market. Proceed wisely.