Housing inventory is tight across the country, but it's even worse in “The City That Never Sleeps.” Manhattan is the smallest – yet most densely-populated – borough of New York City. Finding affordable housing here has always been a problem, even when the housing market was doing well, simply because of the number of people wanting to live in the epicenter of American culture. So you can imagine how difficult it can be for a buyer to find a home in their price range these days with such a limited supply of homes for sale!
Just how limited is the inventory?
The number of listings in Manhattan fell 34% from the fourth quarter of 2011 to the fourth quarter of 2012. In fact, the inventory level in the fourth quarter of 2012 was the lowest on record over the last 12 years!
Like much of the rest of the country, homeowners in New York are either unwilling to sell their home, or would like to sell, but simply cannot afford to do so because they are underwater on their mortgage. The result has been anemic inventory, so many homebuyers in New York City have turned to a cheaper but more labor-intensive alternative – they are buying fixer-uppers. These homes, also called “wrecks” among realtors, are properties that are in need of serious repair. They are significantly cheaper to buy, but require a lot of remodeling and renovations before they are ready to be lived in. Some buyers consider this to be too much of a hassle, but an increasing number are going this route. The president of Miller Samuel, a leading real estate appraisal firm in Manhattan, recently told the New York Times that when his company tracked the sales of properties listed as “wrecks” or in “fair” or “poor” condition they noticed an 83% increase from December 2011 to December 2012.
So, what’s behind the soaring increase?
More people are deciding that they'd rather purchase a run down property and pay to renovate it they way like, instead of shelling out tons of money for a home that may or may not fit their style. After all, like most other cities around the country, New York City's housing market has turned into a seller's market. Most homeowners who have their property listed are receiving offers from multiple buyers, so they’re the ones with all the leverage. Many sellers have decided that they will not budge on the listing price, and they’re watching and waiting as competing buyers try to outbid each other.
The situation has frustrated some buyers, so they have decided to buy a cheaper “wreck” property and invest their money in the renovation of their newly-acquired home, instead of spending it on a bidding war.
In fact, buying wrecks has become such a popular trend that many realtors and online real estate listing services have created a search engine option on their websites where house hunters can specifically search for “unrenovated,” “needs work,” “wreck,” or “fixer-upper” properties for sale in the New York City area! Analysts say that high-end luxury homes (mostly condominiums and townhomes) will always dominate the Manhattan market, but they expect the “fixer-upper” trend to continue to be a popular option among buyers who can't afford those high-dollar homes.
Bottom line – expect to see a lot fewer “wrecks” around New York City in the not-so-distant future!
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