Market Report: Active Transition
A: With many of you out on Mother's Day enjoying the great weather, I was still in town working with some buyer clients and holding an open house for my sellers. As much as I would like to take these holidays off, it tends to be a great time to take advantage of marketing a property when most inventory takes a week off of advertising. Those that do show up at open houses also tend to be more serious buyers, helping my chances of procuring a bid for my clients. What I saw yesterday is a still active transition month!
I browsed 3 open houses, mostly in the Murray Hill area, with some buyer clients of mine and noticed that all of them had pretty active attendance while we were there. Not only that, but the open house for my exclusive at 205 E 78th had about 13 people show up. Not bad for Mother's Day holiday!
While I still believe we are in the midst of a transition from a seller's market to more of a buyers market, right now I would have to say we are still closer to a housing market that favors sellers. If I were to visualize on a scale where I think we are right now, it would look something like this:
A few months ago that 'notch' would have been 3-4 ticks to the right as we were in frenzy months with more buyer demand, bidding wars, and very little inventory. Right now the market seems to be fairly similar to that with the only difference being a minor slowdown in buyer demand. I am still seeing tight inventory and even a few bidding wars.
I can tell you one bidding war situation that happened at 325 E 79th, a classic 6 in the UES, where a good friend of mine went $100,000 over ask and still didnt get it at the best and final deadline of 12 NOON on Saturday. While I am upset that my friend didn't get the property they went for, I am relieved that they didn't end up paying such a premium (over $1085/sft for a unrenovated low floor unit) in a building whose last few sales were about $775/sft (for higher floor 2BR units that were smaller than this one).
Recall my post I wrote on "how to handle a bidding war" and if you are a buyer keep in mind one very important thing: BIDDING WARS ARE A SELLERS BEST FRIEND. IN SUCH A SITUATION, YOU ARE IN ESSENCE BIDDING BLIND AGAINST YOURSELF AS THERE IS NO WAY OF KNOWING WHAT YOUR COMPETITION IS BIDDING. IN GENERAL, IT IS VERY HARD TO BUY FOR VALUE IN A BIDDING WAR SITUATION THAT IS SO FAR ABOVE PAST BUILDING SALES. USE DISCIPLINE AND KEEP EMOTION OUT OF YOUR ULTIMATE BIDDING PRICE IN THESE TYPES OF SITUATIONS.
UrbanDigs Says: It's encouraging to see the Manhattan real estate market as strong as it is. While there has definitely been a slight slowdown since earlier in the year, for the most part the market is still healthy as inventory remains tight and prices remain high. I would expect inventory to remain tight in the coming months and buyer demand to slow more, especially as we hit late July and August. This is when a seller's true colors should reveal itself in either price reductions or more negotiability during the bidding process!
Posted by Buckman17
Mon May 14th, 2007 08:50 AM
I was one of the bidders for this apartment. I have been looking for a pre-war 2 BR/2Bath on the UES for about a year now. The market for this type of apartment is extremely competitive and in my experience is pricing above where sales of other smaller units or post-war units are pricing. There is extremely limited inventory, and so when something like this classic six became available with huge renovation potential, the market priced it accordingly. Floor didn't matter in this case. Also, this happened to be on the north side of 79th St. facing south, so the light was good, and the spacing of the buildings across the street was reasonable. An ask price of $1.8mm that probably that will probably go for $2mm. Bidding wars are very frustrating situations, of which I have been a part of twice in the past month. I have been sticking with what I think is right, but people are willing to pay more. That's the bottom line.
Posted by Noah
Mon May 14th, 2007 01:27 PM
Thanks Buckman for the insight into what you went through. And I agree, there is such a lack of quality classic 6's on the market that what the building trades at no longer matters for bidding purposes, rather they are asking what the rest of the classic 6 market is asking. I wonder if appraisals will be an issue.
Posted by Kevin Tomlinson
Mon May 14th, 2007 10:38 PM
Hey Noah--
Interesting stuff. It continues to surprise me how much the Miami Beach market mirrors the Manhattan market given the fact that we've been dubbed 'the sixth borough'.
Posted by Noah
Tue May 15th, 2007 07:33 AM
Is Miami Beach market hot? What about rest of Miami? I heard there is tons of inventory and still more building? Are prices still falling or does it look like its turning the corner?
Posted by Kevin Tomlinson
Tue May 15th, 2007 10:24 AM
Miami Beach is a very small area. The inventory is on the 'Miami side'. There is basically no more land in Miami Beach. The 'season' here (in Miami Beach) was very good.
The majority of units coming to market in the next 18 months is in downtown Miami.
There should be about 20,000-25,000 units completed in that time period. It is like a wound that the rampant over-building created. That should create about 5 years of inventory. Not pretty.
Posted by Bill
Tue May 15th, 2007 12:53 PM
I see that you had an open house @ 205 E 78. Any idea what is going to be built next to 205 at the Third and 79 Street corner (Hunter's and Annies). Curbed.com mentioned it.