Market Report: Buyers Out In Full Force
A: OK, so you know I'm a real estate broker and most of you think fairly negatively on people like me. But if you read my blog you should know that I try as hard as I can to give you unbiased, market reports along with my thoughts on how YOU can best profit from this crazy New York City housing marketplace. What I'm about to tell you is purely from my own observation and from talks that I have on a consistent basis with colleagues to try to get a grasp on current market conditions. Todays conclusion: Buyer Activity Is Picking Up Big-Time!
Before I begin my anaylsis here, you might be interested in today's report that stated, "Mortgage Applications Soar in First Week of '07". A quick tidbit from the article:
U.S. mortgage applications skyrocketed during the first week of 2007 as interest rates fell for the first time in five weeks, lending support to the view that the housing market is stabilizing, an industry trade group said Wednesday.Be sure to note that last sentence there: However, the monthly average shows a decline in the volume of applications for home loans, with the four-week moving average down 2 percent....showing that a majority of the activity is in refinancing.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and purchasing loans, jumped 16.6 percent to 671.1 for the week ended Jan. 5. However, the monthly average shows a decline in the volume of applications for home loans, with the four-week moving average down 2 percent.
About 3 weeks ago I started a report on, 'Prepping For Sale' and discussed how the apartment looked BEFORE I was brought in, and how it looked AFTER I advised my client on what work to do and more importantly not to do.
Well, after 2 weeks on the open market we had a bidding war between 2 buyers with the top bid being accepted slightly below full asking price. Since, I have received about 20 phone calls/emails about the property from prospective buyers; not brokers, direct buyers. I now have a contract out waiting to be signed and a very happy seller and buyer; a rare combination. It was priced right and in a good location so one can attribute this activity to that.
However, I have another client looking for a JR1 or Alcove studio in the under $450,000 range in neighborhoods like Union Square, Gramercy, UWS, and UES. After spending a few of the past 3 Sunday's with her going to Open Houses, I can tell you firsthand that most of them had very good traffic; by that I mean at least 4-5 different buyers were there at the same time we were. And that was ONLY 15 minutes or so of a 2 hour open house!
I've also had talks with a few other agents holding OH's and they report to me a noticeable, 3x or so, pickup in activity and this is across a range of price points across the city! This is the kind of reporting that you can take advantage of if your in the hunt to buy in the very near future! I'm not making this stuff up. If I had to estimate, I would say my own business has picked up about 4-fold in the past 3 weeks alone; most of it in the past 7-10 days!
BUYERS ARE OUT THERE IN FULL FORCE!
If you don't believe me, fine; I really don't care. I don't have to do this. But if I was a buyer or a seller, this is the kind of reporting that I would be MOST interested in; that is, what is happening RIGHT NOW! My advice to you is this:
AS A BUYER - Don't try to low-ball or wait out a housing downturn if you plan on signing a contract in the next 1-3 months! If you do, you will NOT get the response you hope for as the seller's broker most definitely is reporting the rise in activity to their client. If you choose to wait until March or so you may not find the inventory as attractive as it is today. If all this buyer activity results in what I expect it to, you will later on see sales volume come in very strong during the months of January & February, removing alot of unsold inventory that has built up over the past few months.
AS A SELLER - No one can tell you when to sell your home. That is your call. But, if you have been planning on selling your home in the next 3-6 months, it might be worthwhile to get it ACTIVE NOW and get in on some of this action! You may even be able to price slightly higher than you were original thinking to test out the market, as it is times like these (that is, a surge in buyer demand) where sellers get their price or more a good percentage of the time. Don't overprice tremendously unless you have a huge terrace, incredible views, or an unbelievable renovation (although the first two are the best reasons for pricing higher as Im not convinced buyers will pay top dollar for a very high end renovation job).
Posted by sgolden600
Wed Jan 10th, 2007 01:56 PM
Could also be a dead cat bounce...
Posted by Skeptical
Wed Jan 10th, 2007 02:56 PM
How can you jump to such conclusions so early on in the year? Isn't it always the case that one sees an increase in real estate activity in the first few months of the year, when Wall Streeters and other professional-class NY-ers enter the market flush with bonus money? And that the true arbiter of whether this market has "stablized" (a term which in itself is subject to many different interpretations) can only be surmised by looking at post-March activity, and into the summer months?
Isn't a lot of the inventory sitting on the market since last June because it is overpriced or simply unattractive in some aspect to a more discriminating market?
How much of the CNN/Money article bears actual relevance to the Manhattan scenario?
You have done a good job de-mystifying the process of buying an apartment in NYC for would-be buyers. Kudos to you for that. However, this post, given its knee-jerk basis, is a discredit to your fine work thus far.
Posted by Noah
Wed Jan 10th, 2007 04:12 PM
Skeptical - Thanks for the comment, my reponse is: PLEASE REREAD THE POST!
I SAY - "Don't try to low-ball or wait out a housing downturn if you plan on signing a contract in the next 1-3 months!"
Which means, that Im reaching out to buyers under a time pressure and telling them that activity has picked up dramatically and that there is more competition. Some bidding strategies I talked about on the blog wont work, including low-ball offers, and if you are going to buy in the next few months, be prepared for this competition and possibly less inventory in your price point as time goes on.
2. I SAY - "Be sure to note that last sentence there: However, the monthly average shows a decline in the volume of applications for home loans, with the four-week moving average down 2 percent....showing that a majority of the activity is in refinancing."
Which means, I just wanted to report this new data and point out that much of it was skewed towards refinancing. There is no mention of geographic breakdown making your question impossible to answer.
To answer your question about unsold inventory; I would say most of that inventory has been reduced in price to more realistic levels at this point and starting to get more attention. Time will tell how the pickup in buyer demand plays out, but for now, it is an early trend worth monitoring.
And yes, I predicted a pickup in the first few months of the year as the seasonal nature of real estate in NYC proves to show activity increases during this time, but it just seems more powerful right now, and again, something to keeo an eye on.
Posted by Noah
Wed Jan 10th, 2007 04:48 PM
Forgot to say, I disagree with your statement:
"...And that the true arbiter of whether this market has "stablized" (a term which in itself is subject to many different interpretations) can only be surmised by looking at post-March activity, and into the summer months?..."
Seeing a strong summer months might certainly be one gauge to an overall market turnaround, but I would like to see more fundamental data such as:
1. Decrease in Inventory Levels
2. Sales Volume Increasing
3. Time On Market Decreasing
I think these guys are very important metrics to watch out for for longer term sustainable housing appreciation. Plus, Im talking solely about NYC real estate here as that is where I work. Nationally, housing still has issues. But time and again, NYC proves to be last hit by a housing downturn, and FIRST to lead the way in a turnaround.
And Im sorry you feel that way based on this post. As always, Im just telling it as I see it, and this is a trend that has been gaining steam for 3 weeks now. Had to report on it.
Posted by Christine
Wed Jan 10th, 2007 05:40 PM
Noah - the day after Christmas I sold two homes - right off the bat.
The weekend of New years - I sold another one.
Within one week - I sold three homes.
Inventory is there - It is still percieved because of the inventory that it is a buyers market. BUT, with that said, any seller who is selling now - can list their home at or below the competition. I think that the market in itself has absolutley picked up. BUT, with that said - its the rate of appreciation that has changed. In order to sell now and quick - price it lower and do the repairs and plan to not treat your home as an ATM.
I have even seen builders peeking around again. Which is good. I am happy how the market is now - I am far from slow!!
Posted by Noah
Wed Jan 10th, 2007 07:53 PM
thanks for your feedback Christine!
Posted by newbie
Thu Jan 11th, 2007 09:00 AM
Thx for the post. There's definitely a market out there.....it's just changed from pervious years. The market appears to be correcting iteslf rather than 'sinking' - prices are adjusting to demand.
We're coming off a huge surge in real estate prices so it seems sellers were expecting to get a price based on - say - 20% over the previous year's value. Instead they might get 5-10%.
Posted by Douglas h\Heddings
Thu Jan 11th, 2007 09:52 AM
Hey Noah,
You're right on here and I know from my blog that people just hate to hear that the market continues to chug along. That said, we are insanely busy right now and I attribute it not only to the Wall Street buyer but many who have been sitting on the sidelines from other industries have noticed that prices aren't dipping as much as we anticipated and they are jumping back in. As far as sgolden600 suggesting that we are all "jumping to conclusions," I and it seems like you as well aren't concluding anything except that the market is indeed heating up again. I personally think this summer will be a quiet one, much like last summer but that remains to be seen.
Posted by Noah
Thu Jan 11th, 2007 10:16 AM
Thanks Doug - Yes you are 100% right. I think it was misleading because I said "TODAYS CONCLUSION - Buyer Activity Is Picking Up Big Time"..
But that is a conclusion that is accurate and is not a conclusion that the market turned around and is booming again. Thats why I think skeptical commented the way he did.
Hey, if people want to hear what is going on RIGHT NOW they could read these reports on blogs like ours. If they want to WAIT and get the data from economic reports released 3 months later, so be it! Personally, I find this kind of observation directly from the field very useful if I was a buyer or seller about to make a move in the coming months.
Posted by drtomaso
Thu Jan 11th, 2007 11:14 AM
The MBA survey is being skewed by churn in the subprime lending sector. As borrowers are seeing lending standards tighten, as well as whole sub-prime lenders just close up shop, they are increasingly moving to MBA lenders.
You also have to worry about RE statistics that are seasonally adjusted. We're having one of the warmest, mildest winters on record, and seasonally adjusted figures report a minor increase in activity as a massive surge.
For a much more analytical perspective, I recommend Barry's blog:
http://bigpicture.typepad.com/comments/2007/01/a_phantom_rebou.html
or
http://bigpicture.typepad.com/comments/2007/01/nar_home_prices.html
Posted by Craig
Fri Jan 12th, 2007 09:56 AM
Noah,
I appreciate a lot of the information on your site, but I think this piece is a bit misleading. It is not uncommon for activity to pick-up after the New Year, but lookers don't necesarrily become buyers. It is quite possible these people are just looking at more apartments before they make decision. Also, there are 2 myths people should stop spreading. The 1st is that investment banking bonuses lead to a huge increase in sales. Yes, people buy apartments with their bonuses, but if they are owning already than that is still another property right back on the market. The sales data alsho shows NO NOTICEABLE INCREASE in #'s of sales relating to bonuses. The bonuses keep going up, but the sales # from the 1st quarter are actually steady year over year. The 2nd myth is about inventory. A property that goes into contract but doesn't sell (and this happens frequently) doesn't ever go back on the list of inventory. This gives a false impression of decreasing inventory.
Posted by Noah
Fri Jan 12th, 2007 10:12 AM
Craig - Thanks for the comment. You raise VERY good points and for the most part I agree with you.
Mainly I agree that - "A property that goes into contract but doesn't sell (and this happens frequently) doesn't ever go back on the list of inventory. This gives a false impression of decreasing inventory."
And I agree - "Yes, people buy apartments with their bonuses, but if they are owning already than that is still another property right back on the market."
However, in terms of sales data it is very important to note that this data is LAGGING, and represents what has happened 3 months ago. This report was simply to reach out to those who are thinking of buying or selling in the very near future (within 2-3 months), so that they can at least be informed of the pickup in activity that is being reported uniformly throughout my brokerage company and others.
Whether the activity is of high quality is irrelevant, as psychology might be enough to make one interested buyer act more swiftly if they feel competition for a place they like.
Thanks again for your comment!
Posted by jack
Mon Jan 22nd, 2007 01:24 PM
It is the brokers job to try to say there are activities and in fact there isnt much.. How can you trust someone that has a bias view and also an incentive to mislead. Housing market is over priced, so significant that it will collapse. People are just buying for the heck of it, herd mentality. If you add mortgage payment, common charges and these special tax abatements when it sover .. you can see that it is expensive. Morgtage apps is higher due to refinancing.
Posted by Noah
Mon Jan 22nd, 2007 01:37 PM
Jack - I advise my clients who have already decided to BUY vs RENT to walk away from a property 9/10 times.
Do you read my blog? Your comment makes me think that you do not, because if you did, you would see past articles on everything you have mentioned, my views, how to decide whether to buy or rent, and my prediction of housing going down in the short term.
If you have a 5 year timeline to be in NYC, and decide to rent a 1BR for $3,000/mth in a doorman building, cause thats what you want, you will have spent $180,000 with nothing to show for it when your done. Is that how you build wealth? If you read my blog you will clearly see what situation I think a buyer should be in to make the buy vs rent decision.