Fed BB: Co-ops/Condos Down 15-20% Since Mid Summer
A: Quite interesting to see this right after a discussion on how illiquid this market is right now. The Federal Reserve Beige Book was released today and there is an interesting tidbit on NYC real estate, confirming the real time discussions on UrbanDigs.com over the past several months. Lets keep on keeping it real at UD!
From the Federal Reserve 2nd District - NEW YORK:
Construction and Real Estate"Thin Volume"? Sound like something you read here on UrbanDigs.com recently? Thats because you did! The major appraiser was Jonathan Miller's firm Miller Samuel. Jonathan blogs over at the Matrix.Housing markets in the District have deteriorated further since the last report. A major residential appraisal firm reports substantial deterioration in New York City's housing market over the past two months: prices of Manhattan co-ops and condos are reported to have fallen by 15 to 20 percent since mid-summer, though it is hard to get a clear handle on prices due to thin volume--much of the recent activity is reportedly from desperate sellers. Transaction activity has dropped off noticeably, and there has been a large increase in the number of listings. Some buyers that had signed contracts for units under construction earlier this year are having trouble getting financing at the contract price now that market values have dropped. Many of those having difficulty selling their apartments are putting them up for rent, boosting the number of rental listings substantially--particularly in doorman buildings. Average asking rents are reported to be down 1 to 4 percent from a year earlier.
Earlier Today ---> The Buyer Seller Disconnect
"The distance between buyers and sellers right now are contributing to this illiquid market and the cycle feeds on itself. I wouldn't be surprised to see sales volume down 40-50% in the 4th quarter. The knee jerk correction from peak levels is in process and its time to see who is overexposed."NOV 20th ---> Adjustment Phase Will Reveal Skinny Dippers
"With the market highly illiquid right now as buyers back off, sellers that were overexposed, over-leveraged, lost their job, bought on the currency trade with expectations to flip at a profit, or just scared about the future, aggressive price reductions are the only way to move property."NOV 14th ---> Manhattan Inventory Passes 9,000
"As sales volume slows and inventory rises, it represents a shift in psychology amongst both buyers & sellers. The Manhattan real estate marketplace right now is noticeably more illiquid today than normal for this time of year."NOV 8th ---> A Downturn Begins
"If I had to estimate where we are right now, I think we had the quick adjustment of 12%-18% from peak levels already, with pockets of distress doing deals at lower levels or wherever a serious bid that can get financing comes in at. We are at now now and I will tell you that the price that deals are happening at in ALL neighborhoods in Manhattan are down right now from peak levels!"OCT 16th ---> Yale Club Highlights
"Sellers are anchoring to peak 2007 types of prices of $1,400 per square foot. They have not yet faced the reality that to move their properties they will have to compete with other listings and offer buyers a margin of safety. I think forces are conspiring for a significant break in prices, it hasn't happened yet, but buyers are going to be in charge soon."JULY 7th ---> Low Ball Bids & Cold Feet
"That is how I would describe today's Manhattan real estate marketplace. Today's Manhattan real estate market is one of caution and proper pricing. On the streets, brokers are learning very quickly these days that the used car salesman approach to selling properties doesn't really work anymore; and in fact, only makes the agent using the tactic look like an idiot and way behind the curve. I am finding buyer's to be very savvy these days, very cognizant of what is going on around them, even if they do not fully understand the depth or severity of credit deflation that is currently occurring. It all adds up to the same thing, continued decline in buyer confidence. This results in cautious bidding."Keeping it real folks!! That's what you get here and what I will continue to do. You want to stay ahead, keep it here!
Comments (4)
As Baron Rothschild said "time to buy when there is blood on the street".
It is a simple principle, your capital has more value when others desperately need it i.e. seller is liquidity constraint (i.e distress sale).
A true insider who can differentiate between asset classes, will tell you that distress sale is happening in equity markets, bond markets, high yield, but not yet in Manhattan housing market.
This distress is coming next year, when bubble riders exhaust their severances, loose all hope of finding a job at another I-bank or hedge fund. And are saddled with huge mortgage payments outflows from their savings.
Time to be patient and enjoy the holidays.
Posted by EV | December 3, 2008 4:59 PM
noah.... did u see the news regarding the subsidized loans from fannie/freddie? at 4.5%!!! insane!!
Posted by anon | December 3, 2008 6:22 PM
Not that it will really affect the Manhattan market, but one wonders if next year the bankruptcy laws will be rewritten, overturning the preferential treatment given to banks on credit card debt (fought for tooth and nail by the banks) and making it easier for homeowners to keep their homes in bankruptcy again.
I'm assuming Fannie/Freddie hasn't yet, at least, expanded beyond the conforming market? Over at Calculated Risk I read today that Fannie/Freddie actually had to tighten standards for debt ratios on loans over 80 percent of value because of demand by PMI carriers. Mortgage insurance, what a blast from the past.
Posted by brenda | December 3, 2008 6:36 PM
anon - YES, Im pissed! I published a new post, check it out and please offer comments
Posted by Noah | December 3, 2008 6:57 PM