The overextended luxury market has made prices of two-bedroom houses in New York City to drop finally. Of course, a $1.5 million home at Sheetrock is not a bargain. However, in Harlem’s real estate market, this represents an 8 percent drop over the same period in 2019.
After years of prices being at the ceiling, Harlem’s real estate market is finally becoming a buyer’s market for people looking to live and work in New York. In fact, buyers are getting huge bargains across different styles of two-bedroom apartments, which are the hottest properties in New York City.
While prices are still out of reach for many New Yorkers, the market has opened up options for first-time and move-up buyers. Considering the historically low-interest rates, two-bedroom buyers are scooping up everything in the market, from shiny new condos to income-restricted co-ops.
Harlem’s real estate market peaked in 2016. Since then, observers have been predicting a reduction in prices of ultra-luxury apartments that have been on the market for years. There are many reasons why the apartments have remained vacant and unsold: economic uncertainty, rising transfer taxes, shrinking tax breaks, oversupply, investor speculation, and downright hubris.
However, the declining prices of small apartments in Harlem shows the likelihood of a return to more reasonable prices. For example, over the last quarter, 31.5 percent of all inventory sold in Manhattan comprised of two-bedroom. In fact, these properties have been in demand for years, by both agents and buyers.
At one point in the 1990s, two-bedroom accounted for 50 percent of all inventory sold in Manhattan. However, over the last few years, ultra-luxury condos have made headways as buyers opt for bigger and more lavish apartments.
Guide to Buying an Apartment in Harlem
The complex Harlem real estate market can be challenging to navigate, even for savvy investors. Should you settle on a neighborhood first or choose a broker? Do you need to get pre-approved for a mortgage?
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If you are a first-time homebuyer, continue reading to find out how you can lock down the perfect house in Harlem.
Beginning Your Search
One of the biggest mistakes more first-time homebuyers make is putting the cart before the horse.
After you’ve decided to look for a house, you may think that you need to choose a broker. However, the most important thing to do at the beginning is to explore the neighborhood. From there, you’ll need to contact mortgage brokers to find out whether you can get pre-approved for a home loan. Getting pre-approved will help you know the price range of homes that you should be looking for. Finally, you can start looking for a real estate agent.
You can keep your house hunting efficient by narrowing your search to specific neighborhoods. Moreover, doing this will help you to eliminate areas that you don’t like. Also, getting pre-approved for a mortgage early on is a plus. You should include the pre-approval offer in all bids.
When it comes to choosing a real estate agent, you have various options. For example, you can ask for referrals from friends or search online. Use the internet to carry out background checks on prospective agents to see their past transactions. Ideally, you want a broker that has had success in helping buyers get apartments in Harlem at affordable prices.
The broker should have a deep understanding of Harlem’s real estate market. Apart from this, he/she should have a proven track record in scouring deals in the neighborhoods you may be interested in.
Before hiring a broker, meet with the prospects on your list and interview them. Sit down with the potential brokers and outline what you are looking for. Find out what the brokers say about your prospects of getting a house in the neighborhoods you prefer and within your budget.
Should You Buy a Co-op or Condo?
In Harlem, co-ops and condos make up the majority of non-rental properties. Before starting your search, it’s essential to know what you prefer.
Are you looking for a new structure with many amenities? Would you be looking to rent out the property in the future? If so, you should get a condo.
On the other hand, if you prefer living in a community setting, go for a co-op. However, keep in mind that cooperative apartments are usually located in older buildings.
It is also important to know the prices of both condos and co-ops. If you are planning to put up the units for sale or rent in the future, find out their potential profits. You may want to buy a co-op rather than a condo because of the price. However, if you are thinking of long-term investment, an expensive condo would be better than the cheaper co-op.
Most co-ops are small and do not feature as many amenities as are available in condos. This is why co-ops are typically cheaper to buy.
Another reason why condos are expensive is property appreciation. From 2005 to 2015, the average sale price of condos increased by 45.2%, while co-op prices increased by 22.5%.
Use Data to Your Advantage
Use data to find out the types of homes you can afford in different parts of Harlem. When you know the type of house that you want and what units are selling, you can easily understand what to expect to get with your budget.
Look for real estate information from New York brokerage firms that track inventory, sales prices, and listing prices. You can compare reports from different years to get a sense of the performance of the market as well as where it’s heading. This information will give you bargaining power when you find a promising offer.
When inventory is at a record low, a first-time purchaser can be tricky since there are not many properties to compare. However, this does not mean you shouldn’t proceed with your quest to buy a house. If you want to get a great deal in real estate, you need to be aggressive.
Stay in regular contact with brokers in charge of the listings you may have toured and liked. These brokers can keep you in the know of upcoming units in the market.