If you’re a homeowner in New York City, the tepid real estate market might have you cringing at the thought of losing value on your investment -- but there’s a silver lining to a cooling market that can put you ahead in the long-term, both financially and emotionally.
If you’ve considered an upgrade to more space or a better location, a down market is the best time to sell and upsize. For many homeowners, the net gain on your purchase outweighs the loss on your existing home, giving you a higher-value property and more money in the bank.
Here’s how it works: say the market goes down 10%, and you own a property worth $1.5 million. Your home is now worth $1.35 million. At the same time, a home previously worth $2.5 is now worth $2.25 million. If you sell and upsize, you see a $250,000 gain from your purchase, and a $150,000 loss from your sale, giving you a net gain of $100,000.
For young families looking for more space or a home closer to school, a down market presents an opportunity to upgrade in the most favorable environment possible.
Two other factors have made upsizing in the current New York market favorable:
The Townhouse Advantage
Your net gain is often worth more than your net loss in any down market, but this is particularly true for townhouses, where inventory is unique. When you’re not competing against near-identical 2-bedroom condos in an already over-supplied market, you’re better positioned to take advantage of the opportunity. Remember, other savvy homeowners will be looking to move up, and they won’t be “upsizing” to a studio apartment.
Additionally, there are opportunities in the townhouse market to purchase 2-family or 3-family homes, which will both allow you to get additional space and decrease your carrying cost. In some instances, the monthly townhouse carrying cost can be equal or lower than a condo due to the additional income.
Buyers Are Thinking Bigger
If upsizing makes you wary of your chances to easily sell in the future, consider this: nationwide, buyers want bigger homes. Millennials, now the country’s biggest group of buyers, are prioritizing space as they start families. This holds true even in cities. At Leslie Garfield, we’ve seen prime oversized townhouses go into contract in less than a week. Buyers want space, and in New York, that’s a prized commodity.
How to Upsize in Harlem
Although national trends can help you understand the benefits of upsizing, New York is its own beast, and every neighborhood is different. Here’s how to take advantage of current conditions to profitably upsize your townhouse in Harlem:
- Look at future projects. In the coming years, what projects will affect an area’s overall value? If you expect the 2nd Avenue subway to extend into East Harlem, you can expect your property value to rise. Keeping an eye on new development can give you an indication of what areas will see the greatest value in the long-term.
- Learn about Opportunity Zones. If you’ve been considering upgrading to a multi-family townhouse with tenants, Harlem holds significant advantages. Learning about Opportunity Zones can help you find the greatest value, if you qualify.
- Know your value. Getting the best possible net gain starts with knowing your value. Read market reports to familiarize yourself with current trends, and as always, I recommend working with an expert to learn how to best position your home.
If you’re interested in understanding the value of your own townhouse, whether you can benefit from Opportunity Zones, or what your best opportunities are in this market, get in touch at firstname.lastname@example.org. I’m always happy to help.