Why Manhattan Price DATA Will Stay Strong in 2008

This hits the nail on the head. Noah - what impact, if any, do you think that these types of articles have on the market. One would think that buyers see through these articles by looking at comps and recent sales, while sellers may continue to cling to any sort of news/stats that support their prices. To me, this just perpetuates the stand-off, resulting in even higher inventory levels.

Im sure it may scare a few buyers off, and maybe even HELP to make a sell decision for some sellers who have been considering selling, but in the end, its still not enough inventory to warrant any crazy moves or a trend. If this continues and sales volume continues to drop and inventories continue to rise, then it might be the sign the lagging slowdown is here.

Manhattan slowdowns are generally short lived as it really is a market where buyers come alive if deals are to be had. Now we must see how sever the job losses and economic slowdown will be!

Still no inventory. Try to buy a reasonably priced 3 bedroom, 1700-foot-plus family apartment near transportation and in a good school district. The only ones I have seen are 10-20 percent more than I paid in summer-fall 2007. I would expect layoffs and uncertainty to cause prices to drop, but they still have not, and I still don't see any quality apartments at clearly lower prices. I also know of plenty of people who believe they can time the market, who are waiting on the sidelines for the "right" time. Boy, oh boy, when they realize that the world is not ending, that is massive pent up demand. They still don't want to move to suburbia, they still want to have kids, and they still don't have a Manhattan apartment with enough bedrooms.

Prices are up because even with the uncertainty, there are more buyers than sellers.

That's funny, "Buyer", I mean "Broker Posing as a Buyer", I actually am a buyer and I have seen much more product since the beginning of the year. My sweet spot is 2+BRs, and not only has inventory been shooting up, but price cuts are in full force.

Another interesting stat:

Inventory now above 6,500, a WHOPPING 23% INCREASE SINCE THE BEGINNING OF FEBRUARY.

At several open houses this past weekend, brokers went out of their way to emphasize the negotiability of their prices. You should know this "Broker Posing as a Buyer"!

I've never felt more comfortable as a potential buyer, and it just gets better by the day.

I am seeing weakness in one bedrooms and small two bedrooms.

Large two bedrooms (1,500 square feet plus) and three+ bedrooms are stronger, and less available, than ever before. I don't know if "Buyer" is a broker, but you still can't find affordable 3+ bedrooms at reasonable prices in a good neighborhood. Prices on these babies are higher than even 3-4 months ago, and I don't see any increase in inventory on large family style apartments.

What I see is in line with Wes & anon #4..3+ BR market is still very tight! Trend is clearly rising. Thats the important takeaway

I should say, I've never been more comfortable as a P

Wes: "but you still can't find affordable 3+ bedrooms at reasonable prices in a good neighborhood. Prices on these babies are higher than even 3-4 months ago, and I don't see any increase in inventory on large family style apartments."

Word up. Noah has to admit that prices are up, up, up, but wants to keep telling buyer clients that prices will fall. It's what they want to hear, but it's not true. Prices now have to fall about 10 percent, since Noah said prices will fall, just to break even. You heard it here first, prices Q4 will be higher than Q1, for median co-op resale.

Anon - I have posted here for about 8-9 months, since I found this site during my research during my buying process, and always under the same handle ("Buyer"). I believe Noah can confirm this for you. I work in finance. I paid cash for a 3-bed in the central Village last fall. Sold my 2 bed uptown shortly afterwards, top price ever for a 2 bed in the building. Show me a true 1700 foot plus 3 bed (with set back terrace) for less than 2 mill, doorman, top school near transport with all open windows and a landmarked view. Please document the falling prices with real listings. The data says prices are up across the board - one-beds, studios, 3-beds. co-ops, condos. You name it. Link a listing that says otherwise.

Of course buyers want lower prices. They may or may not get them. 6500 inventory is nothing. If it goes over 8000, with lots of family 3-beds among them, then I will accept prices likely to soften a bit.

But - do you want your money in stocks, bonds, cash, hedgefunds or NYC real estate? I have all of them, but feel quite safe with my NYC real estate.

I don't even think 1-beds will drop much. All the boomers are retiring to the city after selling their 'burb home.

I know this is kind of a strange comment, and I'll admit that it demonstrates that I really need to find a life, but I follow the StreetEasy new listings rather zealously, and I happened to notice that Elliman (the company who for some reason recently gave up listing number of bedrooms in a unit) has given up listing at all (at least since 03/31) in StreetEasy. Also, Elliman tends to list in StreetEasy a couple of days behind it's listings in the NYTimes.

This adds (unless StreetEasy is already capturing these units, I don't know how their system works, so I could be wrong) about 125 more units over the last three days, more if one accounts for the lag. (OK, I'll admit, I did a rough count using the NY Times database. Curiosity killed the cat, BUT satisfaction brought it back.) This may be nothing, but I found it curious.

you got me. I guess the jig is up

Buyer,

Crazy talk. The city is no longer that enticing to boomers retiring to the city, and will become much less so when the services are no longer so freely available because of the economy. Retiring boomers hit their stride returning about three years ago. I haven't heard that much about their return since. Plus, many of the traditional retirement markets are now DIRT cheap, AND we have out own retiring baby boomers who may very well be looking for a change of scenery. With their investments tanking, they may NEED to sell to have the cash to live, and to MOVE. Many people have mandatory retirement ages imposed by their employers.

There is a terrible shortage of school spots available, at every level. Preschools hit this year, kindergarten was awful, but is expected to truly suck next year, and I don't even want to speculate about the number of talented public middle school students who are going to be looking for spots due to the betterment of the elementary school system (certain schools, of course) in the next few years. Oh, but of course we have plenty of money to build the additional schools we need. We will have an AMAZING overabundance of the 3+ bedroom apartment in 3-5 years, what with our boomers retiring and the new construction occurring.

Brenda - You are a cheery sort. Have you considered buying in dirt cheap Florida or Arizona? The main problem with that plan, is you need to live in - Florida or Arizona. That's the catch, so to speak.

In 3-5 years there is an overabundance of large apartments (even though they are only 6 percent of the Manhattan RE market). How do you figure? These people retire to Florida? They move to Maplewood? All once their kids graduate elementary school?

Manhattan has the jobs and the money and this will only continue. Read Richard Florida's work. "Superstar" cities attract talent that adds value in the modern economy. This does not happen in Arizona.

Barring a rise in crime in the city, I see no reason for 2 career couples to ever want to move back the burbs en masse.

Again, Q4 beats Q1 for co-op median resale. You heard it here first. Noah will be here to explain that up does not mean up, but it will be up nevertheless.

No, Buyer, I'm not particularly cheery. I'm fairly angry, and probably not for the reasons you'd think. I think the Street has alot of explaining to do, along with the Fed, the Administration, the mortgage industry, the credit rating agencies, the monolines, etc.

$33000 a year per child and rising for one year of private school? Falling prices in Westchester and NJ? A city that arbitrarily just told school districts to cut spending, with Bloomberg saying that any financial organization can find a percent or so to shave?

Capital projects halting because there's no money? 200,000 commercial banking jobs being lost, who knows how many Ibankers and corporate attorneys? How many retirees can continue to afford Manhattan? Tax abatements beginning to phase down, affecting resale prices in new developments?

As to Manhattan prices, well we'll just have to see, but right now I see alot of developments with alot of inventory, and much of it is not yet "released." The fringe areas, such as Harlem, LIC, Williamsburg and Downtown Brooklyn are looking kind of frightening. Most of these developments are looking for the same sort of dollar, the highly paid young professional. The other Manhattan and Riverdale developments are looking for the highly paid young professional and the VERY highly paid professionals with families. This is not an infinite subset of the population.

AND the construction continues. There was an article recently, I think in NYMag (you can link from here), about how the upcoming change in the 421a tax abatement laws has continued to goose development.

AND there was a sobering article in the NYTimes (you can also link from here) about how more New Yorkers than was thought may be less than prime. 28% of loans written for NYC (I know, this includes the boroughs) were written with piggy-back HELOCs. I can't help but think that tightening credit standards will do nothing positive for the new construction condo market.

Buyer - now I understand why you're pumping the market so aggressively:

YOU JUST BOUGHT!!!!!

It is crystal clear to me now.

Look, I hope you love your apartment, and god knows if I had just bought this past fall (good god) I would not be torturing myself by following the market.

My advice to you, Buyer, is to enjoy your apartment and don't pay attention to the market. Don't read blogs, don't follow inventory/price cuts. Just enjoy your place and stay long term.

If you intend to flip, however, I would say your timing was about as bad as it can get, and I would advise you to rethink your investment horizon.

anon - Do you own or rent? For how long? You seem like this blog to have some cognitive dissonance going - prices are up. Up, up, up. Not just averages or big apartments or condos or 15 CPW. All apartments, all categories in prime Manhattan. I can't help you if you buy on the Gowanus canal because a broker tells you it is the next hot thing. Prime Manhattan co-ops are up in all categories. People don't flip co-ops, that's why there are almost none of them for sale, but if I did, I would be ahead right now by at least 10 percent maybe more.

Brenda,

You have good ¢, and you are not the only one who is angry. Channel it into something positive and make a difference even if it is only a small thing. It helps, and small things have a way of growing. :D

Buyer - look, if it helps you feel better about your recent purchase to tell yourself that the market is still booming, that's fine. Don't let me get in your way.

All I can share with you are my own observations, which is that properties are sitting longer on the market, price reductions are in full force - they are actually accelerating, even compared to the fall, and the credit markets are frozen. I have been to many many open houses, as I prefer to understand the market well before I purchase, and loads of brokers have been telling me that prices are negotiable. This is a 180 degree change from even last fall. The market has changed dramatically.

So there is NO rush to buy. We potential buyers are extraordinarily comfortable watching the landscape get better for us by the day. I save myself money every day by doing this.

The recent articles are only used by brokers to pump prices up and recent buyers (such as yourself) to rationalize perhaps an ill-timed purchase. Everyone else who's close to the market knows the real story with recent prices (see Urbandigs' excellent column of several days ago painstakingly explaining why those articles are putting forth misleading statistics).

Anyway, again, if you just bought, you should enjoy your place and avoid reading about the market. Or you can continue to post about the wisdom of your purchase, how the market's "going up, up, up", and look foolish among readers who know you're rationalizing a recent purchase.

Buyer,

Actually, for the first time in a couple of years I'm seeing some much more reasonable deals on Tribeca loft resales, about $1000 per square foot for 1600 sf properties. These had all but disappeared until now.

Also, go onto StreetEasy and take a look at those properties with reduced prices. Hopefully brokers are at least trying to price new listings properly (they obviously need the cooperation of their clients) so recent properties shouldn't have as many price cuts, but many of them do. Look at the coop resale market, specifically, where some people may actually need to sell.

CR - thank you. You are right. I've worked in soup kitchens before, in hospitals with children, and it DOES matter. I'll be thinking of how I might contribute. Our daughter is older now, and I finally have more time to do something, so I'll have to commit myself to helping. It SO angers me, however, that those who have been responsible for our welfare have chosen only to take so rapaciously.

With all that free time on your hands now might be the perfect moment to enter the political arena. Someone has to get elected...it might as well be someone who actually gives a damn about something other than their ego.

Buyer - your words are definitely not indicative of the current market nor what the market has been in the past 1-3 months. Every broker I speak to is very slow. Sales are not selling as originally thought. Prices are coming down to reality. Its NOT that general prices are asking below last years levels, its that overpriced properties that USED TO SELL, are not selling! Plus, some deals are going at below last years levels.

The fact that sellers STILL expect 10% appreciation since this time last year, is what is causing a rise in inventory. If sellers keep this up, they are in for a rude awakening as inventory will continue to trend higher during the course of 2008.

I truly think that you do not understand the effect on buyer confidence that is going on right now, at the same time that we are in a recession and the lending market has gotten extremely tough! I am about to lose a deal because my buyer cant secure a committment; credit score excellent but banks now require very conservative debt/service ratios and if you cant document that, well then you are out of luck.

Noah - I just did a Natefind.com search on average Village post-war 3-bedrooms of 1600-2000 feet (listing). They are asking 2.4 to 2.6 million, more than 25% above what I paid last summer. Maybe they have to "cut" their asking price 15%. Still way above last summer.

Perhaps after Bear people feel they should get a discount. Maybe it will happen. But so far, median prices are way up from when this site has been predicting a crash. Prices have to fall 10 percent from current transactions last quarter, just to break even from when this site suggested timing the Manhattan real estate market.

Buyers always want cheaper prices. But sellers at present don't agree. We shall see. I still claim median co-op resale is higher Q4 than Q1. (Also, if, as I did, you have to sell your old place when you buy a new place, "timing" makes even less sense.)

I still don't see those cheap family apartments people keep telling me about. Could someone provide a link, please??

Buyer - well I dont know natefind's reach for their listings, nor do I view asking prices as a leading indicator of a market (a seller can ask whatever they want, its where it sells that is important), and I wouldnt even look to PRICING data as a indicator of current health of Manhattan real estate; given the lagging nature of the metric.

With that said, and as I ALWAYS stated here on urbandigs (go look at my posts from early 2007 and you will notice I was bullish given very low inventory and very strong sales trends and activity), I look at inventory trends + sales activity from field + sales volume for signs of health!

Period. Jonathan Miller obviously thinks the same way. Also, if your simply talking about W Village or Chelsea, or SoHo, of course those tight and high demand areas will not be indicative of overall Manhattan as a whole. W Village is one of the most highly desireable and lowest inventories neighborhoods of Manhattan. We must look at it from bigger picture. And bigger pictures in y view shows a hit to buyer confidence (not a depression style hit, just a decline in confidence in general), slower sales volume, and rising inventory. I use this as leading indicators into where the market may be headed. I dont see those cheap family apts either, and I dont think you will until 2009! 2008 will be the year inventory rises, as I stated many times, and clearly its happening this way so far.

Interesting post. This leads me to believe that co-op price changes are a better indication of the market since new developments are all condos, and not co-ops.