Kirsten Jordan, Douglas Elliman real estate advisor and ‘Million Dollar Listing’ cast member, joins the Live show to discuss real estate trends for luxury homes and the role of social media in listing homes on the market.
DAVE BRIGGS: Welcome back. Remember those headlines about Manhattan real estate being dead? Well, it’s safe to say it is back from the dead, very much alive– headlines this week that sales reached a record $7.3 billion in the first quarter, the average sale price north of $2 million in Manhattan.
Let’s talk about that and rising mortgage rates as well with Kirsten Jordan. She was the first woman on the “Million Dollar Listing New York.” She is a real estate advisor with Douglas Elliman and she joins us now in Manhattan. It’s good to see you, Kirsten. So tell us– what happened?
It was thought that COVID just killed Manhattan real estate. Everyone left. A lot of them came to my town out here in Connecticut. But it is back with a bang. How did it happen?
KIRSTEN JORDAN: What we have seen is there are die hard New Yorkers. They want to be here. They’ve been here for a long time. They used the COVID discounts to be able to trade up. They bought their forever homes. They’re renovating them.
And then there was product that arrived on the market that we’ve been waiting for for a long time in prime neighborhoods that were large apartments. And those folks also traded up in those situations. They put deposits down. They’re going to be closing on those in probably a couple of quarters.
And then in addition to that, we have the die hard New Yorkers that had to leave for whatever reason, because maybe they were already going to leave, they needed to for affordability reasons, and they want to have a pied-a-terre in New York or there are just those international buyers that are starting to come back as well because they want a piece of New York. They’ve seen the resilience. And so we are lucky here, because we have a lot of different pools of buyers that are interested in our product.
DAVE BRIGGS: 3,585 sales in the quarter– that is astounding for a market that was decimated by COVID. I guess a lot of people are having remorse about going out to the suburbs. That, of course, is not the situation across the country, where rising mortgage rates are starting to impact the market.
What are we seeing maybe outside of Manhattan in markets across the country in terms of the impact of these rising rates?
KIRSTEN JORDAN: Outside of New York City and outside of these big cities, what we’re seeing is there is inventory shortage and, of course, the mortgage rates rising are making the buyers have to reshuffle and think about what they’re going to do. We are seeing buyers rushing to try to make purchases so that they can lock into these rates before they go up any higher.
However, the data is really hard because there’s less trades in a lot of these places because of the lack of inventory. And builders are not able to keep up with the demand. And so they’re trying to build, they’re trying to identify plots of land, they’re trying to get contracts and deposits from purchasers so that they can at least know that they’re going to be able to build this and have somebody ready to close when these homes are actually completed.
So it’s difficult, data-wise, for us to really track what’s going on. Because in the end, a lot of these properties were getting 20 bids, and now they’re getting five bids. So it’s still a strong market, it’s just not blistering crazy hot– it’s just warm hot, hot, as we have a spring season.
DAVE BRIGGS: Warm hot, hot. So what is your advice then? You mentioned some of those people who are trying to rush in and get ahead because these rates are going to continue to go up. What would be your advice?
KIRSTEN JORDAN: The most important thing, especially for the buyers who are looking to sell and what I call thread the needle to make that purchase and get out of the home that they’re in and make sure that they move into something else, is being prepared, making sure that they know their numbers, that they’re working with a financing professional who can really break it down for them in a true spreadsheet fashion of how much they need to put down once they make that purchase, make sure that they know what could happen.
And worst case scenario, if the seller backs out or decides that they can’t find a home and something falls apart with their contract, being prepared for those worst case scenarios, making sure you have the numbers perfectly really buttoned up. And then you need to be ready to go.
So when you’re working on the sale, you need to be working on that buy at the same time. And you need to be ready to maybe look at a lower price threshold because we’re still seeing those bids over asking.
DAVE BRIGGS: We’re seeing an interesting number pop up in recent months– millennials are now 43% of new homebuyers. Again, what is your advice– are you seeing a lot of those millennials? And what would be your advice to them? Because they’re certainly coming at a different price point and are primarily first-time homebuyers.
KIRSTEN JORDAN: Well, as a millennial myself, I will tell you that my contemporaries are definitely looking to get that home, because they’re sick of paying rent. Rents have gone up.
They are really trying to find that first home. And the thing is, is that they have been watching from the sidelines for a long time. And the process has been actually pretty tough, because it’s their first home. They’ve been renting forever.
They aren’t used to all of the closing costs and what it’s going to take that they’re going to put into the property maybe once it closes to improve it. And so we’re seeing sticker shock from our millennials, but they are optimistic, they want to be in the market. Some of them are willing to be more flexible with geography, move out to areas that they would never have considered before. And that’s why we’re working in a lot of the different boroughs instead of just Manhattan.
DAVE BRIGGS: So these mortgage rates really have flipped what was an interesting dynamic. We had multiple– 10, 15, 20 bids on homes, high above list in cash, even some customized gifts from some real estate agents and some of their buyers. And now, prices are beginning to fall a little bit. Are you seeing any making of a housing bubble? And could it burst?
KIRSTEN JORDAN: What is important to note is that this discussion about the prices coming down is partially because of the data of the scarcity of data because of the scarcity of inventory. So it’s very important to watch this data, because it’s very, very difficult and it’s really, really localized.
So it really depends on your specific market, first of all. The indicators and what we’re seeing as far as predictions are saying that we will still see increases in housing prices until 2023. It’s going to be because of this lack of inventory, and it’s going to be because of the fact that this rate hike is going to push us, and people are going to able to lock in rates, and they’ve got a couple more months on it, and we’re moving to seasonality in the market, which we didn’t really have for a little while because of the craziness of the pandemic, and we’re walking into a spring market where there will be some more inventory and those buyers who’ve been waiting on the sidelines, and watching, and watching are going to pick up that inventory.
So I do see everything stabilizing and normalizing a little bit more. We’re seeing it slowly. But I think that this talk of things falling off a cliff over the next six months are not what we’re going to see. We’re definitely going to see, I think, a softer landing.
And then it’ll be interesting to see how it plays out with institutional investors who’ve been buying up a lot of these single-family homes as well– or these two, three family homes and displacing some of the end user buyers.
DAVE BRIGGS: All I see when I look across the country is that lack of inventory you mentioned, and that looks like the key difference between now and 2008. A question for real estate agents out there– how important is social media today in marketing a home? And are people actually selling homes on TikTok, on Instagram, and the like?
KIRSTEN JORDAN: Social media has become paramount for sales. It’s become a really, really important way that we reach our buyers, we reach our market. And it’s not necessarily that TikTok is the thing that sells it or it’s that one reel on Instagram that sells the home, but it’s about this collective consciousness, I call it.
Part of the marketing is working with ads that are digital ads that are based in these social media posts and imagery, photography. We’re going to this image-obsessed movement of buyers that want to see Instagram-ready homes.
I’m staging more than I ever have before. And that is because of social media. I need to make sure that the properties are perfect so that we can get that kind of traffic and so that people are sending the photos to their friends and saying, isn’t this apartment so chic and so cool? I want to go see it.