Historic Housing Market Opportunity

The Federal Reserve has raised interest rates in 2022 increasing mortgage rates to an average
of 6.83% as of October 7th, 2022. This increase in interest rates is putting pressure on buyers
as the higher cost of financing requires home prices to fall. While lower home prices may seem
like an excellent opportunity for buyers who have been marginalized to enter the market, it also
raises concerns among investors who own the asset class.
At Brownstone NYC our mission is to increase Generational Equity through home ownership.
This is achieved through creating value in gentrifying neighborhoods among underserved
homeowners and underrepresented investors.
We often partner with homeowners who don’t have the ability, expertise or resources to
leverage increasing home prices. These homeowners typically have lived in minority dominant
neighborhoods for decades. Their homes usually need renovation in order to maximize their
sales price. Many times, the homes are a fraction of the potential value that may be attained
with proper development and air rights.
By partnering with Brownstone NYC, homeowners receive a customized solution that can help
solve financing, development or acquisition challenges. Brownstone NYC’s vertically integrated
business model preserves the value throughout the transaction and shares it with the
homeowner. This solution has proven to be overwhelmingly valuable for homeowners and
investors alike.
Brownstone NYC begins by assessing the property value, analyzing the exit options and
renovation or development costs. This information is presented to the homeowners to provide
them with options to maximize the sale price based on their needs. This alternative to selling the
property as is, allows the homeowners to leverage their property’s potential. Usually,
Brownstone NYC can provide immediate liquidity to meet short term financing needs and allow
the homeowner to maintain ownership of the property while it is developed.
Rising interest rates have caused many home buyers to settle for a property with a lower price
tag. It is also causing homeowners to re-evaluate their selling price to be more competitive in
the market. In contrast with the sellers market of 2020 – 2021, many property listings have gone
without a bid due to mispricing based on present market conditions.
Lower home prices have changed the cap rates for investors. While real estate has historically
been a great hedge for inflation, investors have been reluctant to commit large amounts of
capital to the asset class due to fear of prices continuing to decline. Additional concerns exist for
liquidity as investors prioritize ease of access to capital over capital appreciation.
While the market has no shortage of concerns about the number of issues at hand due to the
rising interest rates, experienced investors understand the value of the opportunity available.
Difficult market conditions separate the professionals from the amateurs. Having successfully
navigated the 2008 market crisis and the Covid Pandemic, Brownstone NYC has the
relationships and experience to add value for homeowners and investors.
Backed by a 16 year track record, our vertically integrated business has established Acquisition,
Renovation, Real Estate Brokerage and Property Management operations. Our distinct mission
of creating generational wealth among underserved communities has helped create
partnerships with some of the leading companies in the New York real estate industry and
throughout the world.
Having a network of international investors has given us access to capital from investors from
many countries like Lebanon or Turkey who have seen their currencies lose 50% or more value
in 2022 alone. This steady stream of capital has allowed us to continue to purchase properties
in all market conditions and employ a team of professionals who live in the neighborhoods
where our investments are located.
While prices may fall 10 – 25% throughout the boroughs of New York City before reaching a
bottom, history has shown that there will always be demand for housing due to the robust
business environment. Even during the 1970s when inflation rivaled the rates seen today, real
estate prices appreciated due to strong demand.
A strong labor market creates demand for affordable housing. Brownstone NYC has the
privilege of creating new homes and making them affordable by developing single family homes
into multi-family condos.
Home prices may dip temporarily, but the drop in home prices may be a buying opportunity of a
lifetime. When the Federal Reserve reverses course and begins to drop rates, capital will flock
to real assets as an inflation hedge. The property portfolios of Brownstone NYC have seen
double digit returns for investors in tight markets and are expected to increase as our acquisition
cost drops due to a short term market adjustment.
Investors are encouraged to review the Brownstone NYC Investment without Displacement
model to learn how we are serving investors with collateral backed assets that can appreciate in
a rising interest rate environment. Our vertically integrated model allows investors to choose a
return based on their investment duration (how long until they need the money back) and risk
tolerance.
While we expect many news stories highlighting the challenging economic environment, we are
sure that we will continue to serve our communities, homeowners and investors. The fear of the
unknown is typically felt by those who lack understanding of the options available. With over 100
years of combined experience on the Brownstone team, these markets are where our investors
have the opportunity to compound their returns and create a legacy for generations to come.
For more information about working with us please visit https://brownstonenyc.com