Manhattan Broker's Dealing w/ A Softer Market
A: It's official, Manhattan real estate has changed. Well, official in the sense that brokers realize they actually can discuss it openly without fear they will lose direct business that is! A shock? Not if you are reading UrbanDigs.com, where the decline in buyer confidence since late 2007 (AUG & SEPT & OCT) has been discussed in depth! Keep it here if you want to stay ahead of the curve!
According to The Real Deal, here are a bunch of broker's observances of how the credit crisis hit buyer confidence here in Manhattan:
Eddie Shapiro, president and CEO, Nest SeekersWho do I agree with? Anthony del Rosario, Deanna Kory, Kathleen Brimlow, Yuval Greenblatt, Darren Sukenik, Gil Neary, Jim Mazzeo, & Heather Bise.
The credit crunch seems to be over. Yes, we will still continue to experience side effects, but at least we don't have to hear about it every single day.
Jessica Armstead, vice president, the Corcoran Group
It is more important than ever to be pre-approved before venturing out into the Manhattan real estate market. Lending criteria has changed.
Antonio del Rosario, managing director and executive vice president, Barak Realty
June will be tough for sellers of studios and one-bedrooms because of the surge of inventory we are experiencing.
Deanna Kory, senior vice president, the Deanna Kory Team, the Corcoran Group
Overpricing is the kiss of death in this market.
Kathleen Brimlow, director of planning and development, Manhattan Apartments
I believe we will see fewer transactions in June and July.
Yuval Greenblatt, executive vice president, Prudential Douglas Elliman
Activity seems to suggest there are plenty of buyers. However, more seem unrealistic and looking for discount opportunities that do not exist.
Melissa Leifer, senior agent, Best Apartments
The rents are going up, less is available, and the quality of the available apartments isn't as high.
Gloria Sokolin, senior vice president, Fox Residential Group
Would-be buyers are putting off buying, so they are renting instead.
Darren Sukenik, executive vice president of luxury sales, Prudential Douglas Elliman
Banks aren't lending to able buyers. The pendulum has swung so far that that in and of itself is hurting the market.
Joanne Wong, senior sales associate, City Connections Realty
I don't think it's realistic for buyers to think they can wait for prices to resemble what one would find in other boroughs.
Gil Neary, managing partner, DG Neary Realty
Low owner-occupancy buildings and buyers who cannot go full doc[umentation] are hitting a bumpy road with lenders.
Jim Mazzeo, president, Weichert Realtors, Mazzeo Agency
The apartments are taking longer to sell and require more showings.
Heather Bise, associate broker, DJK Residential
Prices are still inflated, and we are seeing many buyers holding out for lower prices.
I disagree with Eddie Shapiro's statement about the credit crisis being over. Far from it, as the bond insurers got downgraded yesterday insuring (no pun intended) another round or two of massive write downs for the financial sector. Plus, defaults and foreclosures are rising and what was once subprime, is clearly proving to be a problem in higher quality debt classes. This credit crisis is not over, and there will be talk of it for a while longer. In addition, lending rates are still behaving independent of the bond market, indicating a continuing re-pricing of risk and capital crunch in the mortgage markets.
I disagree with Melissa Leifer about rents, although I am not actively in rentals anymore and am basing my disagreement with the fact that as macro deteriorates, so will affordability in general. Rental prices have been VERY strong over the past 2-3 years, and are up about 30-40% or so. A softening in this market as job losses mount seems more likely for near-medium term.
For Jessica Armstead's statement regarding being pre-approved, she certainly is correct except buyers' should know that pre-approval's amount to basically nothing these days! What matters is securing a loan commitment and that part of the deal doesn't come until AFTER you get a signed contract of sale. So, take it a step further and request a pre-commitment whenever possible and discuss the terms of the commitment beforehand to ensure that your loan will be secure! Credit quality, loan-to-value ratio, and debt service ratio are the terms buyer's need to get familiar with right now!
Still, great stuff by The Real Deal in getting quotes from across the industry! As always, the crew over here at UrbanDigs will do our best to give you 'ahead of the curve' opinions on the state of the macro economy, so that you don't have to play catch up! Right now, the credit crisis, the oil crisis, inflation, and the weakening economy rules the day.
Posted by Fred
Sat Jun 7th, 2008 10:07 AM
My personal fav: "Melissa Leifer, senior agent, Best Apartments
The rents are going up, less is available, and the quality of the available apartments isn't as high."
These are the same jokers with an office above a chinese massage parlor on W 72nd, I think? The only rents that are heading higher are foe the space between Melissa's ears.
It's good to see the pendulum swinging the other way. I actually heard directly from a broker at your company, off the record of course, that the down cycle could be 8 to 12 years. No serious buyer is actually pulling the trigger in the city. We walked by the Harrison this AM en route to an overpriced but good breakfast. $750 PSF seems like a good solid number for new, over-designed, medium quality construction. I look at the older crap, walk ups etc and I just feel for the folks who didn't get out when you could. Crappy one bed/studios are heading back to 150k a pop. Most of the walk-ups should be condemned quite frankly - they are fire traps.
Posted by Noah
Sat Jun 7th, 2008 10:31 AM
yea that comment when right by me too...its not uncommon for brokers to have their own little world (their business) strong or weak, countering general trends. That happens quite often. My sales business is very strong, yet the market is soft.
But to say rents are rising, when I see many managers offering OP's again, is kind of silly. Maybe if the rental didnt keep pace with the market, the rents are still rising a bit, but in general, for rentals that have appreciated with the market, its not so easy to get 3,300-3,500 for a 700 sft 1BR anymore. Give it time, as the slower the economy gets, the clearer the softness in rentals will show itself.
Posted by Brenda
Sat Jun 7th, 2008 02:46 PM
I was talking to a friend who works for Bloomberg's housing admin., who said that a fair number of the upcoming newly developed units would most likely be rentals. How many luxury rentals does this city need?