Market Has Been Active; Where Deals Are Happening
(Christine Toes here)
Consistent with the pickup discussed here, I have also seen a huge pickup in my business in the last 4-7 weeks & Noah asked me to share where the deals are actually getting done - as that clearly is the most real time information I can provide to you. To give you a frame of reference, before September 2008, I used to do a consistent 1 - 2 sales per month (and a lot of rentals). Last fall and early spring were pretty abysmal, I did about 4 sales in 6 months. In the last two weeks of May, I had 4 signed contracts. For June, I have 4 signed contracts, 1 contract out that might be signed by early next week, and 1 offer that was just accepted.
Where are these deals happening, who is buying & why are they buying now?
West 100s - just over $2M. (Over ask) An extremely similar apt in the building sold for $3M in June 2008. So this is a 33% drop over last year. This seems pretty consistent with what other brokers are seeing in the higher end market. There was a bidding war, both buyers were all cash. Best deal in the neighborhood, Central Park Views, approx $1,000/sq ft., which was a 2004 price for this building. Pied a terre. Buyers first Manhattan purchase. Legal field. Would say that this was a "value" buyer.
Village straight studio - Approx $315K (Slightly below last ask). Came on market in Feb for approx $350K. Price reduction to $325K when my buyer jumped on it - this is about the least expensive studio you can get in the Village in an elevator building. Apt needs work. Similar apt sold in late 2005 for this price. In 2008 this would probably have sold for about $375K, so this is approx a 15% drop. First time buyer who is currently renting and thought it made more sense for her to buy at these prices and interest rates. Web Designer. Qualifies for first time buyers homeowners credit. Would say this was a "location" buyer.
Gramercy alcove studio - Approx $375K (Slightly below last ask). This is a 2005-2006 price for this building. 2008 prices were approx $420K. This is approx an 11% decrease. First time buyer who has been looking for 9 months for the absolute best deal out there. Architect.
Upper East Side alcove studio, unrenovated. Approx $360K (ask). Bidding war (had offers over ask but buyers not as qualified). Retired couple. Primary residence. "Value" buyer (building has very low maintenance).
Village one bedroom. On market since August. Approx 25% off original ask (determined at close to height of market). First time buyers. $600K-$700K price point, apt has outdoor space. Construction & marketing fields. "Location" buyers.
Approx $400K condo. Brooklyn new development offering 10% off asking prices but no other concessions. First time buyer who saw everything else in Brooklyn and LIC, determined this was best value - not that many condos in this price point that are a good quality/location. There was also only one line of apts w/ the exposure that he liked & this was the only apt in that line in his budget, so he had an incentive to buy earlier than he probably would have liked. Concern about whether they will sell enough units to get a competitive mortgage rate but building's preferred lender is lending at just .25 more than current rate so buyer decided the risk was worth the potential reward. Internet field. Qualifies for first time buyers homeowners credit.
Brooklyn prewar conversion. $500K-$575K price range, 2 bedroom. Small, pre-war building. Prices reduced by 20% from last year. First time buyer. Internet field. Qualifies for first time buyers homeowners credit. Charm/value were most important to this buyer.
Upper West Side prewar conversion. When they were determining original offering prices for this apt, they were going to list at over $3M. Buyers paying approx 35% less for an apt that is being customized to their specs (which developers never used to do). Buyers felt that net costs of purchasing were less than what they would be paying in rent, wanted to build equity + take advantage of low rates. Looked at over 35 apts including every new development & condo conversion on the UWS. Made several very low offers before determining where best "deal" was. These buyers spent months searching for value, quality, charm & location. Finance and health care sectors.
Village one bedroom, $700K-$800K range. Hard to determine where pricing would have been last year, largely non-owner occupied building. Financing is difficult. Very unique product (pre-war, outdoor space). Multiple bids including two cash offers. Internet field.
Murray Hill studio, $400K price range. Last year's comps suggest a 10% price reduction. Even though this wasn't a huge discount to last year's pricing, there were multiple offers. As a lover of pre-war buildings, I think the apt held its value because of the charm factor, which is what attracted my buyers. Pied a terre buyers.
It seems that lots of the "creative types" are getting into the market now. Lots of first time buyers who have been renting and waiting for some type of relief after years of price appreciation. Some of these buyers have been looking for months and painstakingly looking for the "perfect" apartment. Buyers really have been picky & patient, as Noah wrote about a while ago! Others have had lifestyle changes or have rental leases expiring and figure that this is the right time for them to buy.
Naturally, I've got my fingers crossed that this trend continues, but if rates increase further...or stocks turn around...or this crisis proves to have a 2nd wave, well, we may have to deal with some slower pockets again.
Comments (15)
thanks Christine for the update. Always good to hear where deals are happening at.
I am finding the studio market to be fairly active, and sellers are not willing to give deep discounts to move property unless they are uber desperate, which Im finding is not really that common out there.
This equity rally, reflation trade, fear of rising rates, and first wave down complete has combined forces to make this market VERY active in past 8 weeks or so - now, doesnt mean prices are rising that much, more like deals are happening at lower end of range I provided for each price point, rather, that many deals are getting done! A far cry from Q4 and Q1. Its still not easy to get deals done, and negotiations are tough/long, but they are happening.
I question the sustainability of it though, and welcomed it after the slow time post Lehman. Markets working! This is all very healthy for our market, and there will be deals at every price. Lets just keep it real, and understand we are not out of the woods yet with this crisis and possible consequences that come with endgame. The new world will be a very different world from 2003-2007 parabolic credit world.
Posted by Noah | June 17, 2009 9:11 AM
CT - thanks for sharing! Glad to hear deals are getting done. Keep up the good work.
Posted by OT | June 17, 2009 9:18 AM
Finally, some comments about the lower end of the market! Seems everybody focuses on the Classic 6/7/8 stuff.
Personally, I think that low rates, incentives and naive ("they won't go lower than this!") buyers are holding up the low end right now. I expect a slow creep down in prices to continue for a while.
Posted by Jay | June 17, 2009 10:04 AM
It seems to me that there is significant demand <$400k which makes sense based on what people actually make and can afford in this city.
It will be interesting to see how long this trend continues- will the pent up demand dry up, or will the "rank and file" class decide its time to own?
Posted by Kevin | June 17, 2009 11:06 AM
Does anyone think that ARMs moving into much higher zones is a factor that will affect the market soon? I assume quite a few people who figured they could afford the higher monthly payments because they'd get raises etc. will find their salaries are now flat or non-existent, but I don't know if co-ops tend to weed out people with ARMs or if the high rates won't kick in for most recent deals for another five years or so.
Posted by Sharon | June 17, 2009 2:50 PM
Does anyone think that ARMs moving into much higher zones is a factor that will affect the market soon? I assume quite a few people who figured they could afford the higher monthly payments because they'd get raises etc. will find their salaries are now flat or non-existent, but I don't know if co-ops tend to weed out people with ARMs or if the high rates won't kick in for most recent deals for another five years or so.
Posted by Sharon | June 17, 2009 2:50 PM
Even though I'm bearish, I don't think ARMs will have a major impact in Manhattan.
I think the impact will come from horrible employment numbers, salary decreases, and a big decrease in Wall Street bonuses.
Posted by Thisson | June 17, 2009 3:11 PM
With LIBOR way way down as credit came in big time over the past 3 months, its not the reset that concerns me at all, in fact, some people will see resets LOWER, however, the RECAST problem is upon us for the next 2-4 years. Thats only 1 element of the equation though and will impact banks, delinquency rates, and perhaps securities tied to securitized option ARMS with negative am natures way more. Not many of those here.
Posted by Noah | June 17, 2009 3:16 PM
Another "yikes" moment we are going to have is when owners in tax-abated buildings start getting hit with their full taxes.
Posted by Toes | June 17, 2009 4:50 PM
Only one sale above the conforming loan limit. This looks like bad news to me.
Posted by Yikes | June 17, 2009 5:45 PM
Well, two sales over $2M, but one buyer chose to pay cash... A lot of buyers are still using $416K as their benchmark for getting the best rate, so two other deals mentioned have loans higher than $416K. But yes, the first time buyers, especially those below $500K are out there in full effect.
Posted by Toes | June 17, 2009 6:21 PM
isn't nyc a 720k super-conforming limit?
this is good color, thanks very much.
what would be helpful is to see if this trend continues. we still have supply but it seems like things are moving if priced correctly.
i am waiting till early next year, if i have to pay 5% so be it but i want to make sure i have a good handle on my finances.
Posted by batman | June 17, 2009 6:48 PM
interested to see the 500-575K prewar brooklyn purchase, as that almost exactly describes my own recent buy.
my place was down roughly 15% from a 2006 comp in the building, no 2007 sales in the building so no direct comps there. i would also say that my two primary priorities were charm and value. and, i would add to that, that i was willing to sacrifice a bit of space/amenities in order to be in a prime neighborhood. i considered fringe brooklyn areas just too risky at the moment.
honestly, if i were simply trying to time the market, i would have waited another year. however, i had other reasons that it was a good time to go in and i found a great place. (i'm still nervous, of course, but excited to move in.)
Posted by perhaps | June 17, 2009 8:01 PM
Two things are happening this week:
1) The fed is busy buying bonds so the equity markets are being neglected
2) MM's don't want to get stuck w/a bad book like they had in April.
Lots of noise this week b/c of opex. Next week, positions will clear. Depending on which way the books close on the big issues - SPY, DIA, XLF - they will gun the shares in the direction that results in the least pain.
After that, we're in window dressing for Q2.
Posted by In Debt We Trust | June 17, 2009 10:49 PM
Great to see that sales are picking up. I noticed your list did not include the Sutton Place area. Any thoughts on buying in Sutton Place?
Posted by Diane | June 28, 2009 9:43 PM