“July’s closings were so low, you could hear crickets chirping. Concerned that our numbers could be incorrect, we used three reliable sources to confirm the closing figures; Urban Digs, Corcoran’s in house database and Streeteasy. The numbers are not just low, they are record breaking!

Taking a deeper look at what this means, July 2019 brought 36.8% less closings then July of 2018 and less than half the amount of closings in July of 2017. To be clear, in 2017 there were 1,162 closings in the month of July while this last month brought us only 497 closings. It doesn’t make any sense if you think of it logically. Prices are down 15%-30% over the past two to three years. Interest rates are on par with the lowest we have EVER had and around 25% lower then what we saw at this time last year. Let’s break down the reality of what this actually means in real numbers:

Buying Example #1 in 2017

• Sale price: $2,000,000
• Financing: 80%
• Amount down at closing: $400,000*
• Monthly mortgage payment: $8,589**
• Total mortgage cost over a ten year period: $1,070,680

Buying Example #1 in 2019

(now 15% less expensive but the same apartment)

• Sales price: $1,700,000
• Financing: 80%
• Amount down at closing: $340,000*
• Monthly mortgage payment: $6,107**
• Total mortgage cost over a ten year period: $732,840
• When you go to sell you will be starting out with a $300,000 profit over the same purchase in 2017. This is a $637,840.00 swing for ten years of ownership on a $2,000,000 property.

That’s crazy!

Now take into play that this is using a conservative 15% savings on that purchase and we are seeing clients save 20% or more today over 2-3 years ago!!!!!! There are 55% less people buying today, then in 2017. Twice as many people bought in a more expensive market.

Don’t fear if you are one of the 2017 buyers, your value will come up again and will be well above your purchase price in a few years. The only failure in this kind of market is to pass on the opportunity of a purchase with literally 8,000 options available in Manhattan alone. Baron Rothschild once said “the time to buy is when there is blood on the streets”, and oh do these numbers bleed.

* We are leaving out all closing costs to make this simple

** based upon a 5% interest rate for 2017 and a 3.5% interest rate for 2019 quoted by Wells Fargo”

Source: The Meier Report August 2019