The Trump Bump
You just never know what to expect. In the wake of last month’s election, after a few days of shock, both the stock and real estate markets here in New York came vividly back to life. The promise of tax cuts, reduced regulation, and infrastructure spending seem likely to stimulate the economy, even if they add whopping numbers to the Federal deficit. While it remains very hard to judge what the intermediate or longer term implications of a Trump Presidency may be, the mere fact of putting the election behind us and putting reduced tax and regulation policies in front of us has brought both stocks and New York real estate back to life. After several slow months we now see steady absorption in the middle and upper markets; even some of those $5,000-per-foot condominiums on 57th Street are seeing contracts signed. A convergence of factors around purchase-ready buyers meeting price-reduced properties has generated serious deal volume across the price spectrum during the past two and a half weeks.
It started slowly. The day after the election, two of our agents called me to say their buyers were now backing out of deals, too uncertain about the U.S. future to invest here; two or three days after that both were back in the market and preparing to sign contracts. Over the subsequent weeks buyers began making offers again: not high offers but reasonable offers. And reasonable sellers at every level of the marketplace, including developers at the top end, are accepting those offers. As of this past week-end, a number of Warburg exclusives which had remained on the market for several months with little activity appear to be going into contract. The logjam has clearly eased.
While the condo market revives, especially with negotiable prices, the largest sales challenge remains co-operative apartments in need of renovation. As the owners of these properties look to make their next purchase, they increasingly favor the ease and amenities of the new condominiums; in addition, those condominiums are primarily located in the revitalized neighborhoods in the southern half of Manhattan, which appeal to many of those who raised their families on the more sedate Upper East and Upper West Sides. With so many of the features which drew buyers to pre-wars in the past (ceiling height, room size, gracious spatial arrangement) now being duplicated in new construction, the constituency for the older co-op apartments, with their often invasive Board requirements and construction rules, diminishes from year to year. Today, co-ops hold their value not so much because of their pre-war charm (substantial though that may be) as because of their situation, dominating many of the city’s most beautiful and sought-after locations. Still, these properties must be priced to factor in the cost, time, and effort of renovation if they are to be sold successfully in the current re-energized environment.
For now, economic optimism is in the ascendancy. New Yorkers and out-of-towners alike have moved past the uncertainty of recent months and become ready to lay their money down, providing it is reasonable money. Few surprises now, few outliers or impulse purchases — we seem to be moving into a market in which demand will once again balance the supply.