You probably hear a lot of different things about what is happening in real estate but keep in mind national, regional, state and local markets can move in unison; but all markets are local and move independently. And Forest Hills is probably more local than most due to its’ strong desirability, location and lack of buildable space.
Here’s a look at the conventional wisdom that is more regional or national in nature, as well as my thoughts on Forest Hills.
>Interest rates are up–they are, mostly 6.0% and up.
- That affects every market, including Forest Hills. Mortgage payments of the same amount can get you a total mortgage size of 40-50% less than a year ago. That pushes buyers with financing down into lower price points, but not necessarily out of the market altogether. People who started looking a year ago and could afford one price but now have to look at significantly lower price points and some of those people have paused their search. But interest rates aren’t actually “high”; they just aren’t low; the 3-4% rates are more of an anomaly that lasted an unusually long time. Over time, normalcy will return even though some may never be able to afford the home that they could in 2021.
>Inventory is low.
- Forest Hills total inventory hasn’t dropped dramatically but many of the current listings are older and new listings have not been coming to market at the rate they typically do recently. This actually works in the favor of those who are selling; limited inventory means more people are likely to see your listing and you have fewer listings to complete with. If a home is well-priced, renovated nicely or some combination thereof; your home will very likely will get attention from buyers. I have had 2 listings in the last 4 months sell above asking price.
>It’s a buyer’s market.
- Not exactly. Prices are down in many markets but prices are stable in Forest Hills. With the low inventory and desirability of Forest Hills, there are actually more buyers than there are sellers. Many buyers have had to adjust their target price based on interest rate increases but there still are cash buyers and other buyers still looking who have large amounts of equity in their current homes that they can use to step up in price while maintaining an affordable mortgage.
Here are a few charts that show what is happening in the Forest Hills market.
The first shot shows total home sales by month since December 2021 (includes Coops and Condos as well as houses). After peaking at 92 in the month of August, there were only 39 sales in January of 2023. It is a steep decline, mostly coming from Coop sales.
The next chart shows the average home sale prices (inclusive of Coops, Condos, etc). January average sale price is essentially as high as any other month; no drop is shown as you might expect based on the drop in the level of sales. Bargain hunters who think they can swoop in and get steep discounts are bound to be disappointed.
Here is a look at interest rates from a historical perspective. As said before, they aren’t really high now, but no longer low; which many people have come to view the “norm”. The average from 1972 to 2022 is actually 7.76%. There is bound to be a transition period as people absorb how this affects what price of home they can afford.
What I interpret this all to mean is that the Forest Hills real estate market has so far resisted some of the larger trends towards price reduction but the FH market could face significant headwinds for the near future, if the level of sales volume continues to decrease.
Bruce