(NEW YORK, NY) — I had the pleasure of speaking with Aleksandra Scepanovic, managing director of Ideal Properties Group, about what forces will influence Manhattan’s real estate market in 2019 and the trends we will likely see more of.
After a slow end to 2018, all eyes are on 2019’s forecast. There are many things to consider: median prices are falling, buyers are hesitant, and financial uncertainties are causing properties to sit on the market for long periods of time. So what does this mean for 2019? And how do buyers and sellers alike adjust their strategies to progress in this shifting market?
Aleksandra is a leading force in the real estate industry. Her expertise and years of experience have allowed her to find success in both slow- and fast-paced markets. Her advice on how to approach the current market suggests careful consideration rather than hesitancy.
Can you share a bit about your background and experience in the real estate industry?
I have a bit of an interesting career journey. I was a war reporter in the former Yugoslavia during the Balkan Wars. Eventually, I sought refuge in the United States and moved to New York City. I pursued a Bachelor of Fine Arts degree from the Fashion Institute of Technology and eventually landed in working at a boutique Manhattan real estate firm. There, I met my partner Erik Serras and we cofounded Ideal Properties Group in 2007. We saw a need for a technologically-advanced agency in Brooklyn. The borough wasn’t as popular as it is today but we saw its potential and knew that it would soon become a viable competitor to Manhattan. We have since grown to five offices – four in Brooklyn and one in Manhattan – with over 250 agents and employees.
In 2018, the number of sales of Manhattan apartments declined along with the average price. Will this continue?
I don’t think we’ve seen the bottom yet. The market has been strained from a variety of forces that exert significant pressure on it. Interest rates are on the rise, for example, inventory is saturated, financial markets in flux. These forces will continue to press on.
What is your take on the oversupply of high-end apartments on the market? It seems more lavish amenities and incentives are being offered to attract buyers.
Oversupply is an extension of a bullish market, combined with shifting (both buyer and seller) confidence landscapes. It is also to a degree a result of previous over- confidence that the high-end market would jump on any product. Offering more lavish amenities and incentives to attract the changing buyer is a good technique, the question being to what extent the buyer will consider the extravagant incentives over pricing. In this market, the more the seller gives, the faster the property is likely to sell. That said, naturally, incentives and abundant amenities are an excellent buyer attraction tool, but an even more important one that’s truly having an impact – is the property’s sales is price.
In addition, as many sellers unsuccessfully navigate the changing pricing trends, very many are not quick to respond to fluctuations, causing a backup and a supply- demand hiccups with more new inventory coming to the market than is being sold in a given quarter.
Will the luxury market continue to slow down 2019?
To a certain degree, I believe it will. Places that are truly exceptional will undoubtedly sell, even if they are pricey. Other inventory, that where perhaps price was based more off of square footage than off its exceptional qualities, are units that are not truly luxury units – are likely to stagnate and linger on the market. Careful consideration of what buyers are expecting will be the key to whether or not a luxury property trades hands.
In your opinion, why are potential buyers holding back from making deals?
People want to be confident that they’re getting the best possible deal, that they’re either at, or somewhere close to the bottom. Since purchasing is a long-term financial commitment, and an investment, for most, that needs to provide a financial level of safety in the near and possibly distant future – people are scared of overpaying. As much as a home purchase is an extremely logical thing to do, it’s just as much, if not more, an emotional journey. The latest financial instability in the markets, combined with the current political uncertainties, has left a lot of people in the New York City market nervous.
How must brokers readjust their strategies to keep up with the shifting market?
Honesty is the best adjustment tool. Analyzing and understanding even the most nuanced pros and cons and their effect on “sellable” pricing will remain of paramount importance. Brokers should also ready their training facilities to educate their sales force on not only the art of correct pricing, but also on managing expectations on either pole of the property sale equation.
What can sellers expect from 2019? Which sellers are most likely to see profits?
For most developers whose product will be coming to market, an understanding will have to be had of the fact that they started their project(s) at a different time, a different market. Most are bringing projects to market that the market has conditioned them to think to expect a home run sellout. In 2019, most of those units will likely shake out to be a single or a double. That’s not necessarily a bad outcome, however. Expectations will be lower, but money will be made all around. I also think we’ll see quite a bit of product in the resale market. If you’ve purchased your property prior to 2017, there’s a high probability that reselling in 2019 you’re still going to make a profit.
Since there are fewer transactions, banks are likely to make more loans. How will this impact the market?
As long as the loans and ratios are healthy (reasonable down payment levels, for example, rather than 5 percent or 10 percent incentives lender may consider to attract more lending), the market should be able to absorb the oversupply, and catch up with regular quarterly activity levels.
What advice would you give buyers and sellers entering the market in 2019?
Sellers – price carefully and accurately for swift sales. Buyers – wait for a softening market to reveal its lowest levels only if this suits your buying needs, or your family’s plans. If pricing is the only concern, you may end up losing out on a home that would turn out to be an excellent asset down the road.
Is there anything else you’d like to share about the current and/or future state of the market?
New York City real estate traditionally attracts many homebuyers and investors, and with the swelling population numbers ahead, this is unlikely to change. Temporary fluctuations that result in downward corrections are commonplace, and happen more often in the cold months of the year, but seem to rarely endure in the long-term. So, New York, happy buying in 2019!