- Let's get a check on housing.
The XLRE down over 20% since the start of the year.
Over the last year, the sector getting
hit hard by higher mortgage rates that have
kept buyers out of the market.
But there is some good news.
Rates are starting to drop as this spring
buying season gets underway.
The 30-year fixed has declined four weeks in a row to 6.28%.
So for more on what they say the housing market looks like,
we want to bring in Frances Katzen,
the Founder of the Katzen team at Douglas Elliman.
Frances, it's great to see you here.
And I know you're focused on New York City,
so let's start there.
Give us a sense of the activity you're
seeing and whether or not the slight dip that we've
seen in mortgage rates, whether or not that's really
moved the needle.
FRANCES KATZEN: It absolutely does.
I think there are a lot of people who've
been really struggling with high rate of rent
and wanting to get back into owning equity.
I think there is absolutely an opportunity for buyers.
I think that the higher rates that are now
coming down and returning to where they were
at the start of the year has definitely pushed buyers
to jump back into the market.
We're seeing inventory up month-over-month.
Last month, I think, inventory for condos was 449 units.
And now we see 770.
It's almost doubled.
So I think there's definitely an opportunity
for people to take advantage.
And I think these rates that are coming now down,
I think we're almost at even more.
5% on a 30-year can be done.
So I think it's interesting for buyers now.
- What about in terms of how people are approaching this.
We talked about how more people are offering all cash offers
here because the fact that mortgage rates
had spiked over the last year.
Are you still seeing that trend?
FRANCES KATZEN: Yeah, the market share of cash buyers
has risen for a second consecutive record
at reaching 56.8%.
I suspect that is, in part, a little bit
tweaked by simple virtue.
There was such a slowdown in finance deals,
so it's really making its platform known.
I'm not convinced that means there's more
cash in the market, per se.
- Frances, bidding wars in the luxury market,
is that still a thing?
FRANCES KATZEN: Sorry, one more time?
- The bidding wars that we had talked
about during the pandemic, people offering way
over going head to head with so many other buyers,
is that still a thing?
FRANCES KATZEN: It's down.
I think we've definitely seen an adjustment.
Just to give you an example, in the outer suburbs of New York
City, for example, the run up, we were seeing 50% of the deals
were happening with bidding wars.
It's now down to less than 30%.
In New York City, it's really only
happening on the ultra luxury.
So $4 to $10 million, we're seeing that up a little bit.
But overall, no.
- So Frances, it sounds like demand
is pretty healthy at least in New York
City and the surrounding areas.
Give us a sense of the national picture.
Is that the case?
FRANCES KATZEN: No, it's not.
I think what we're seeing, though, is this wishlist
to kind of build back equity.
So we are seeing permits jump up.
13.8% jump in people taking out building to build homes.
That came from the Census Bureau.
But overall, I just think that everyone's kind of holding
back based on the rates.
I think the big issue is that most buyers are going to have
to give up, or owners, are giving up
their 3% and 2.5% mortgage rates to get a buy up,
which would probably not be as low.
- Yeah, exactly.
And then that also brings up the inventory issue where sellers
are comfortable right now.
They're happy with the rates that they are paying.
They're not willing to give that up.
When you take a look at the inventory levels,
Redfin was just out with a report
saying that new listings are down over 20% year-over-year.
What are the inventory levels that you're seeing?
And do you expect to see that improve any time soon?
FRANCES KATZEN: We are seeing more inventory hit
month-to-month as the spring market ramps
up with that double-digit mentioned prior.
But overall, the inventory has been down 20.8%.
It's correct.
And I think we're hoping that spring season push that we're
seeing now will push everyone back into doing it and creating
a little bit more demand.
I think that's been the big question,
do they wait and hold and wait for the rate
to come down a little bit more or do they go in now
and take opportunity because there's no sociability?
And sellers are coming off that aspirational pricing.
- So that's a buying and selling part of the market,
homebuyers and home sellers.
What about the rental market?
Because we certainly did see a massive run
up in rental prices.
Are we starting to see maybe those pressures ease a bit?
FRANCES KATZEN: That's a really good question.
I think that we have never seen such a rental high as we did
over the past two years where it was almost 40% on rent increase
from during the pandemic, where it was
just really a different world.
And now I think once you had the mortgage rates start to climb
in June of last year, I think that rental market
seemed to maintain.
Even in February, we only had 2.7% vacancy
in New York City, which was just astounding for an off market,
off peak time.
- It certainly is astounding, especially
when you take into account how big
and how many apartments there are in New York City.
For instance, if people at home right now,
they're thinking about getting into the buyer's market,
thinking about owning a house.
What would be the two or three steps you think that they
need to consider first?
FRANCES KATZEN: I think they need to understand how
to structure their mortgage so their monthly is
soluble and comfortable for them.
I think they need to understand that they're
probably going to get the most negotiability right now.
And I think that's when it becomes interesting for value
proposition long term.
And I think that the buyers that are frightened and are trying
to time it ultimately will decide
that sellers are not prepared to sell below a certain threshold.
And I think ultimately, that's why
you go in when there's still a little bit of lack of clarity.
And I think that's where the opportunity lies.
- All right, Frances Katzen at Douglas
Elliman, great to have you.
Thanks so much for joining us here this afternoon.
FRANCES KATZEN: Thank you so much for having me.