Is now the right time to buy a Manhattan apartment?

Certainly with all of the news of late about the slowing of the real estate market, what do you do if you are about to purchase a Manhattan apartment right now? I think it is wise to take a look at a number of factors within your personal situation.

1- How long will you stay in the apartment?
2- Will you be able to rent it out if you have an opportunity/need to move away due to work etc?
3- Will the additional monthly payment offset by tax advantages be more affordable than continuing to rent?
4- What price range are you in?

If you are leaving NYC in 2 years due to anticipated job transfer, purchase if you like, but best to stay away form a co-op due to the restrictions in renting. Typically, Manhattan co-ops will allow you to rent for 2 of 5 years. After that, you will need to move back or sell. Condos on the other hand allow for unlimited subletting. So if the resale value decreases on your recent purchase then you can rent it out. As sales prices go down, rents normally rise.

It has been well documented that the luxury market is experiencing a glut. So if you are going to buy that $15 mm townhouse, have your real estate broker do an analysis to make sure that it is worth the offering price. Recently, I had one potential client that brought to me a listing that was for a townhouse in Chelsea. I just didn’t believe that it was worth the ask and in fact it seemed like the price will probably go down in the future so I told him so.

At the other end of the market spectrum, if you are looking under $3 million that market is still moving  notwithstanding overpriced listings. So be prepared to compete at that level especially for 2 or 3 bedroom apartments which sell due to so many families staying in Manhattan and empty nesters whose dream may be a classic 6 on Central Park west or a 2 bedroom in the West Village.

Two other factors to consider are interest rates and the effect of Brexit. Interest rates are extremely low and even if prices level off slightly, interest rates will rise so the savings may be negated.

Brexit, most agree, may end up being a boon for the Manhattan real estate market, due to investors and buyers looking for a safe haven for their money.

In conclusion, you really need to do an analysis of what your personal situation is and if you decide to go forward with a purchase in a segment of the market that is peaking now, just make sure it’s a long term investment and not something that you need to get out of in 3-5 years.

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