Why is Everyone Rushing to Buy Properties in New York

Low Interest Rates Continue to be an Attractive Feature for Borrowers.

The Federal Reserve has kept interest rates at rock bottom levels since December 2008. This means that borrowing money is cheap and easy, which makes it easier for people to borrow money to invest in property.

If someone is looking to purchase a home or investment property, then the current low interest rate environment will make life much easier. If you have been thinking about purchasing real estate but haven’t yet done so, you’d surely be convinced that it’s the right time to buy now.

There’s a Lack of Supply of Homes

New York City has become one of the most popular places to live in the world. The city’s population grew by almost 2 million people between 2000 and 2010, making it the third largest metropolitan area in the United States. This rapid growth means that there are fewer homes available than ever before, which makes buying a home in the Big Apple particularly difficult.

According to Zillow, New York City had only 1.9 months worth of inventory on the market in May 2015. That was down from 3.4 months in April 2014, and 8.3 months in November 2013.

But Why are They Buying Now?

New York Apartment
Image: New York Apartment

Back when interest rates were higher, many investors would look to rent out their properties rather than sell them. But with interest rates being as low as they are today, more and more investors are deciding to sell their properties instead.

This trend is likely to continue because the prices of homes in New York City are still relatively high compared to other cities around the country. For example, according to Trulia, the median price of a home in San Francisco is $844,000 while the median price of a house in New York City is $1.2 million.

In 2019, the average down payment was 12% for all homebuyers: 6% for first-time homebuyers, and 16% for repeat homebuyers, according to a National Realtors Association survey. But if you can, you should really put 20% down on a house, according to Bernadette Joy, founder of Crush Your Money Goals and contributor to NextAdvisor. With a 20% down payment, you’ll build equity faster, pay lower monthly payments because you’re financing less, and you can avoid paying private mortgage insurance (PMI) an extra cost your lender tacks on to your monthly payment when you don’t put 20% down.

Strong Demand Pushing Up Prices

The real estate market has been heating up lately, and it’s not just because of the hot summer weather. In fact, competition between buyers is one of the main reasons why home prices are rising so quickly.

In order to get into a bidding war over a particular property, potential buyers need to have a large amount of cash ready to spend. And this can lead to a sharp increase in the price of a home.

For example, if two people want to buy a house together, they might each put 20 percent down on the deal. If both parties have enough money to do this, then they’re going to end up paying less for the property than if they didn’t have any extra funds.

What does this mean for me?

“You don’t want to end up in a position where you’re rushing to buy a house. People are acting like it’s their last chance, and it’s not their last chance. There will still be houses next year,” says Jennifer Beeston, a mortgage educator and industry veteran who is one of the top 1% of mortgage originators in the country by dollar volume.

If you want to buy a house now, it might be worth waiting until prices drop again. This means that if you want to buy a property right now, you should probably look at buying something smaller than what you were planning.

If you decide to go ahead with your plans anyway, you’ll definitely benefit from the strong demand for housing in New York City. You’ll also be able to find some great deals on houses.

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