Market Report: Transition To A Buyers Market
A: Its already starting to happen folks! Its May 1st and already I am noticing the beginning signs of a slowdown in Open House activity! After being on record since January 10th for stating that market activity has begun to surge, I am now going to go on record for stating that market activity is beginning to wane at public open houses. What we are seeing now is the transition in the Manhattan real estate marketplace from the sellers market of January - April to what will eventually be a buyers market as we get closer to the months of July & August. Sellers, its time to pass the torch back on to the buyers!
Brokers, Buyers, & Sellers - After reading this post I would love to hear your comments on what I am seeing as this is really only the 2nd week I have noticed things starting to slow a bit! Are you noticing the same thing?
Its important to note that media outlets differ from blogs because they usually lag in their reports to the readers after waiting for the event to happen and data reports to show a trend or surprising number. In the blog world such as UrbanDigs, I'm doing my best to tell you what I see right now!
And what I see right now is slowing open house activity! I went to three open houses this past Sunday and the most traffic out of any of them had only 2 other people there at the same time we were. The others we were the only ones there for the 10 minutes or so we stayed. Compare that to what I said back on January 10th:
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!As for my own business, I am noticing continued activity from brokers via appointments scheduled during the week. Most of my deals are co-broke and I usually rely on the Manhattan brokerage community heavlily to bring to the table the most qualified and highest bidder for my sales clients. Once this starts to slow I know I am in the dog days of summer.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!
My last open house was two Sunday's ago and we actually had a decent showing with about 12 people stopping by; not uncommon for the first open house of a new listing. I'm certainly curious to see how my first open house for my other new listing goes this coming Sunday; I'll report on that one next week although first open houses are not the best gauge to notice any new trends.
If I were to visually design for you how the NYC real estate market is seasonal, it would look something like this, for months JAN - SEPT. I left out OCT-DEC because those months seem to me to be very erratic; sometimes hot and sometimes cold. The months of JAN - SEPT have market characteristics to them that are easy to notice and eventually take advantage of:
To prove this, recall Jonathan Miller's chart breaking down the AVG Price Per Square Foot per quarter by clicking here. I wrote about his findings in my post titled, "Data Shows NYC Real Estate is Seasonal", and stated:
I talk often how buyer demand in the months of JAN - MARCH are normally much more active than any other 3-month consecutive range of the remaining calendar year. The months of MARCH - MAY are transition months where activity from buyer demand tends to move from very active --> to active --> to good ---> to slow. Once we get into the months of JUN - AUG, the market is typically significantly slower with only a few serious buyers coming to open houses and much fewer appointments during the week!UrbanDigs Says: During the month of May I expect brokers to start noticing a gradual slowdown in total buyer activity; mainly buyers working on their own. If brokers were getting between 20-30 buyers at an open house during the months of JAN - APRIL, I would think that number will shrink down closer to 10-15 towards the end of this month; a noticeable 50% reduction in traffic. As we head into the months of July & August, expect that traffic to shrink closer to 7-10 people per open house with the overpriced listings getting more like 5 people to show up! For all you sellers out there who are under a time pressure to sell, I discussed your 5-week warning last week with thoughts of what to do based on your strategy!
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Comments (8)
Im looking for a studio apartment and the open houses I went to still had some buyers there but not as much as a few weeks ago.
I went to a cheap one bedroom open house just to see what the extra money would get me, and I was the only one there.
Posted by sara | May 1, 2007 8:57 AM
This is interesting information. I can tell you from my own experience that in Brooklyn, it seems that from April to August the open houses do much better.
(In my agency) Where we were getting on average of 6-10 buyers Jan - Mar, now we are visited by 10 - 20 in a 2 hour period.
Prices have leveled off a bit and sellers are starting to realize that no offers in the early part of the year means it's time now to lower prices, and to prove the point with an example, in Marine Park, first week of April we saw a dramatic drop in prices on listings and as of this week there more homes sold, in contract or with AO's than before April.
Posted by Allan Berkovitz | May 1, 2007 9:14 AM
Not only are there fewer buyers in total - but there is a different mix of buyers as well.
We have been active looking since February 2007. We not only see a slight cooling of raw numbers of attendees at OHs, but we also note that there are more casual shoppers in the ranks. Several weeks ago, it was pouring rain all Sunday, and only the hard-core buyers - people really inspecting the units were there. Let's call them "tape measure" buyers. Now that the weather is nice, and it's pain-free to breeze into a unit, we see more "cruisers." A classic "cruiser" is someone of comes in to a unit without a broker, skips the sign-in, looks at the kitchen, and leaves! Perhaps they are remodeling and want to get ideas. We're seeing more of them (there were no cruisers on that rainy Sunday weeks ago). So in addition to fewer buyers in total, there are more cruisers amongst them.
Posted by Nana | May 1, 2007 9:35 AM
Should I come back? should I dare?
Posted by More Cowbell | May 1, 2007 1:12 PM
Allan - hmm, interesting. I dont get that as it is the exact opposite here in NYC. Just look at Jonathan Miller's data to back it up. From the field, I can tell you the market slows significantly in the summer in terms of buyer activity. People seem to leave the city in the summer on weekends.
Cowbell - Well, I can tell you that you will have more control over negotiating in the very near future.
Yes, come back! You need a place to watch the JETS season opener! And I need you to save my spot on the couch!
Posted by Noah | May 1, 2007 1:28 PM
Hey Noah,
70 people and multiple offers for 850sf 2BR open house this past Sunday. Anecdotal, but can't be ignored. having said that, no doubt market will slow going into the summer months and I suspect it will be much like it was last summer. Fewer transactions and maybe even some "deals" from sellers who must sell...we shall see.
Posted by Doug Heddings | May 1, 2007 2:53 PM
Unreal! Doug is the man at pricing a property correctly and I can only hope that I can achieve half the talent he has in this business!
Rock on Doug!! Rock on!
Posted by Noah | May 1, 2007 5:54 PM
we've been going to open houses for the past few Sundays, and was suprised to be the only ones there at 70% of the OHs we visited. This was for 2 bedrooms in Manhattan.
Posted by distar | May 1, 2007 6:01 PM