Market Report: Tight Inventory

Posted by urbandigs

Mon Jun 25th, 2007 08:22 AM

Share |

A: I've been back to work for a week now and trying to get my mind off my family's recent loss. While one week is not enough to deduce any trends from after working only part-time for the 3-4 weeks before that, I can tell you a few things about Manhattan's current real estate market. There is very little good product, still healthy buyer demand, but higher rates seem to be hitting home with more patient buyers less likely to throw their money around so quickly. It seems to me that buyers are very picky these days. Or is it they are savvier?

First some macro & local market observations and example listings:

1. Interest rates made a big move higher in the past 4-5 weeks forcing sellers with overpriced properties to lower their prices to re-stimulate demand. Those sellers with no time pressure to move are keeping their asking prices higher. Buyers are beginning to realize how much the rise in rates is actually causing them.



2. New properties that are priced correctly (that is, a bit lower than what comparable units were priced at during the more active earlier months of this year; Jan-April) are getting quick offers. Some examples of properties with Accepted Offers within 2 weeks of listing:

205 E 78th - 1 Week Total on Market

444 CPW - 4 Days on Market

516 W 47th - 2 Days on Market

3. Sellers who originally priced high and now appear to want to move their property fast have been lowering their asking price repeatedly since rates really started to rise. These types of properties should be focused on by serious buyers. Some examples of properties that cut their price at least twice in the past 4 weeks include:

205 E 78th - 2 Price cuts in 25 days

23 E 10th - 2 Price cuts in 19 Days

159 W 53rd - 2 Price Cuts in 11 Days

4. Buyers seem to be picky to me given tight inventory trends and very little product to choose from. It seems that with rates rising they feel they should be getting a better deal on price, however, since inventory is so tight and buyer demand is still healthy prices are yet to come down here in New York City. How long this trend will last remains to be seen, but if buyers continue to remain picky and if rates remain at these levels or rise further, I would definitely expect sales volume to slow dramatically and that could help reverse inventory trends as we get closer to years end. Of course, even if this theory did prove true we wouldn't know until Oct-Dec when lagging market reports start reflecting activity from July through September or so.

I'll break down advice this way for buyers and sellers, with the common denominator being time pressure on both sides.

For Buyers Who Must Close By Sept. 30th - It will take time for inventory trends in Manhattan to become favorable for buyers. That means months at the very earliest! Months you do not have as it normally takes at least 2 months to close on a co-op or condo deal; generally longer for co-ops and for deals with financing involved.

Get out there NOW and start looking at every possibility. Don't wait for inventory to build up or else you might be stuck with a property that you don't like. Consider short term rental to help extend your purchase deadline!

For Buyers With No Time Pressure - Learn product knowledge in this tight New York City real estate marketplace and only move on a deal if you fall in love with it and its priced more in line with market value. Sales should slow as we get deeper into summertime helping to reverse inventory trends as product takes a longer time to sell on the open market. This should give you more options towards the end of the year; hopefully!

For Sellers Who Must Close By Sept. 30th - Reduce your price. Stop playing around and make that price cut so that your property is aggressively priced in your building. Instead of being at a price point that HELPS THE OTHER PROPERTY SELL FIRST, be proactive and make your property the best deal in the building! If you don't do it now, it'll only get worse in the next month or two eventually forcing you to take an even bigger hit if you must sell and close within 45 days or under. In that event, you'll have to advertise a fire sale because you have no other choice but to get an offer secured within days to close by your deadline.

For Sellers With Time / Little Incentive To Sell - Consider taking the property off the market. If you haven't gotten top dollar for your apartment by now, and you are testing the market with an overpriced asking price, then chances are you won't get it at all in the next few months. Take the listing off the market and try to keep it fresh for the next time you decide to try again; hopefully during the generally active months of every new year. No good can come from having an overpriced property on the market for 6+ months with still no incentive to lower the price!