Market Update: Volatility In the Global Economy - What It Means for Real Estate
2016 has been characterized by high economic volatility. Different areas of the market have changed dramatically and unexpectedly both up and down. The oil price was heading towards $20 per barrel causing havoc in the global equity markets, now it is up again at $40 per barrel. About a month ago, the DOW had dipped below 16,000, now it is up 9%. Since the start of the year, mortgage rates have been dropping -- almost unimpeded. Freddie Mac reports that U.S. mortgage rates have dropped on a weekly basis through January and February despite fears at the end of 2015 that they would rise in the New Year. In other parts of the world (Japan, Sweden, and Switzerland), interest rates have hit negatives causing many to wonder what's next. While January was slow for the Real Estate market overall, February transactions turned around to rise 50% above the number of transactions in January. What has become clear is that over-priced properties are staying on the market longer and seeing adjustments, particularly on the high end of the market. Properties over $4 million (representing 15% of the market share Manhattan) have seen softening in prices with buyers having greater ability to negotiate than we've seen in the last few years. By contrast, the $3 million and under market has been very hot, with properly-priced listings resulting in bidding wars and over-ask prices.