Doom, gloom, fear, and uncertainty have darkened the bright landscape of domestic real estate. Rising mortgage rates and inflation have dampened the enthusiasm of would-be homebuyers and narrowed the outlook of once-confident sellers.
But experienced real estate professionals in Manhattan and coastal Orange County, California, predict healthy real estate markets, especially at the high end.
“This is not another 2008,” says Jeremy Stein of Sotheby’s International Realty – Downtown Manhattan Brokerage. “At that time, we created a bubble with subprime lending. Nothing like that is happening now.”
Spencer Wall, who has been a real estate salesperson in Laguna Beach, California, for 15 years, agrees.
“Lately, there has been a slow-down caused by an uptick in interest rates,” he says. “But, here, it is still a hot seller’s market, as long as sellers are realistic. Our market is still one of the most undervalued in the country.”
Both Wall and Stein point to Covid’s unprecedented effects on the industry, both negative and positive.
“The entire New York real estate market was shut down between April and June of 2020,” recalls Stein, who specializes in high-end luxury condominiums, townhomes, and co-ops. “We could not show any properties at all, and Spring is always Manhattan’s strongest real estate market. When the market reopened in the Fall of 2020, New York real estate was at an all-time low. When we began to see growth in 2021, it marked the beginning of a 16-month upswing.”
Both he and Wall saw a Covid-driven urgency to find ‘forever homes.’
“Covid had a bigger impact on the industry than anyone ever expected,” Wall says. “People made their move. They came to me, saying, ‘Now is the time for what I want.’ They were saying that, if they could live anywhere, then why not here?”
He lists the factors that make coastal Orange County so attractive to home buyers.
“In a beautiful geographic area that’s limited by the mountains and the ocean, we have wonderful weather, clean air, friendly people, interesting architecture, ease of transport – this is a great area to retire, to raise a family, to have a rewarding and meaningful lifestyle. These are the things that make the southern California real estate market an undervalued one: it’s one of those places people don’t want to leave.”
New York, too, drew new home buyers because of Covid.
“When the market began to open up, we saw an unprecedented number of people coming to the city for the first time. This was true across the spectrum, but especially at the high end,” says Jeremy Stein.
He adds that New York has not seen the wild explosions seen in other real estate markets.
“Those are bubbles,” he says. “What we are seeing is a lot of demand, with supply going down. And, 50 percent of buyers are cash buyers.”
Summer is the slow season for New York real estate.
“It will be interesting to see what happens in September and October,” Stein says. “Right now is the slow season, but I believe that we are heading towards a healthy real estate market that does not favor either buyers or sellers.”
“Here in southern California, the demand is red-hot for turn-key properties,” says Spencer Wall. “This is true at all price points. People simply don’t want to take on more work; they want a place that’s all done, where all you need to move in is your toothbrush. Properties like that are hard to find at all price points.”