Manhattan Q3: Sales Surge 46% From Q2, Prices Fall
A: Not news for UD readers, but will certainly cover the main street media headlines today. Here is your Q3 data.
I must say I am a little surprised they focused on continuing pressure in price levels in the headline, rather than the surge in activity from the prior quarter. Good to see the headlines keeping it real!
Via Bloomberg's, "Manhattan Apartment Prices Decline for Second Straight Quarter":
Manhattan apartment prices fell for a second consecutive quarter, helping drive the biggest gain in sales in more than 13 years as buyers seized on discounts. The number of sales jumped 46 percent from the second quarter, the biggest third quarter increase since 1996.According to NYMag, sales surged from 1532 in the 2nd quarter to 2,230 in the 3rd quarter, but prices were still pressured. Simple and expected. Sales volume surged on a quarter to quarter basis, but fell on a year over year basis. For seasonal markets like housing its best to either seasonally adjust or compare a quarter to the same period a year earlier. The pace of decline for prices slowed after the fierce move down defined by the Q2-2009 report. Here is an updated snapshot on Manhattan Co-op + Condo sales:
The median price slid 8.4 percent to $850,000 in the third quarter from a year earlier, New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said today. Values fell for cooperatives and condominiums of every size and price as New York City’s unemployment rate jumped to 10.3 percent in August.
Studio apartment prices fell 6 percent from a year earlier to a median of $399,000, Miller Samuel said. One-bedrooms dropped 11 percent to $645,000; two-bedrooms fell 23 percent to $1.18 million and three-bedrooms dropped 41 percent to $2.25 million.
Four bedroom apartments plunged 49 percent to a median of $5.18 million, reflecting, in part, a decline in luxury sales, Miller said. Those sales declined 16 percent. The luxury segment is defined as the top ten percent of co-op and condo sales.
The above graph makes it clear to see the decline in sales in each quarter since the peak in 2007. With many deals still in the pipeline, we might be able to beat Q4 2008's number when that data is released January 2nd, 2010. Our active season was delayed as deals started to pick up in May with prices correcting to a new, lower level. It was this adjustment in prices that re-sparked interest in Manhattan residential property. As months went on and a reflation mentality took hold for all markets, activity surged. This is what today's report shows.
The biggest concern right now is if sellers get too euphoric with the improvement in bids since fear engulfed the markets earlier in the year. I am starting to see this happen over the last few weeks. For the period of May-Aug or so, many sellers came to the realization that bids for their property were coming in at this new, lower level. It took some time but the message got through and many deals were finally signed into contract. It wasn't because bids all of a sudden spiked higher, rather, sellers over time got more realistic about what the market was telling them their place was worth. After 4-5 months of this type of activity, I am getting the feeling that sellers are starting to take it a bit too far.
In early August I wrote about this future concern in, "It Takes Two To Tango: Are Buyers On Board?", which garnered a nice reaction in comments:
"I don't see a sustainable uptrend in bids just because stocks say so, as buyers don't seem to be fully on board the gravy train. But this fierce equity rally may just be enough to alter the psychology of sellers and slow this market down a bit. Unless buyers change too we will see a disconnect again leaving brokers and those same buyers wondering what the heck is going on."For what its worth, I am starting to both see and hear about sellers getting too optimistic with the improvement in bids recently as our market stabilized from extreme distress. I am even hearing brokers tell me, "this property has been on the market for 8 months, we cut the price twice and the seller doesn't have much room to go from here - so we decided to take the listing off the market until buyers wake up". Yes, I was told this! I think its the seller that needs to wake up.
Sellers expect bids to continue to improve and to price in future profit potential that hasn't happened yet. As a result, they are a bit less motivated to move property until they get their number. This is a dangerous emotional element for any seller considering the foundation that this so called reflation rally is built on. It can change on a dime at any time! Sellers need to ignore the equity rally and continue to price their properties where deals are happening - at this new, lower level. If they don't, sales volume will dry up pretty quickly and a reversal of inventory trends can put a bit more competition on each listing. Take advantage of the action and understand where the bids are!
Posted by reader
Fri Oct 2nd, 2009 09:34 AM
http://www.urbandigs.com/2009/08/putting_manhattan_into_perspec.html
"For the record, I would expect sales for Q3 to come in around the 2,000 - 2,250 level or so."
you nailed it last month! after reading this, I get the sense that the market is starting to stall? is this the case? keep up the great work
Posted by SellerStatement
Fri Oct 2nd, 2009 10:49 AM
I think making a statement that seller's are over-excited and pricing in profit is absurd. Depending on when they bought due to extreme circumstances, many sellers have had to take losses. There are fixed costs you have and I don't think it's reasonable for buyers nor you to think that just because it's a buyers market there should be a push to have a seller accept that they have to take a loss. It's supply and demand period and once the supply goes down the prices will rise. IF the seller can hang on and wait for a better price, they will and if they can't they won't. But I don't think anyone or even in large part that any seller is thinking woohoo, let me price in profit and party like it's 2007. That's an absurd statement. What I have found is that sellers are hoping nowadays that things are improving to at least break even and get out their fixed costs instead of taking a loss. I have found there are a great # of buyers who will look at the last sale price and completely ignore renovation in what they bid and they're losing out on great apartments that are discounted. I had a buyer look at the fact that I bought my apartment which is on the market for 1.2 and it was a gut reno. I put in 200k to renovate it 2 years ago. I only have it on for 1.3 because I am reasonable and I have gotten sellers who offer me 800k. That's just obnoxious and I'm not unrealistic, they are. So there is a dichotomy yes, but buyers are definitely delusional. My neighbor has a 3 bedroom, 3 bath, gut renovated with top of the line everything from last year listed more than fair at 1.5 and she is getting bids of 900k. There are fixed costs period, we aren't pricing in profit - that's a joke and you are making a mockery out of intelligent sellers. Once sellers pay brokers who still have the audacity to request 6% in a bad market, there isn't any profit. What are brokers doing, are they taking discounts on their percentage, no - so it's not about pricing in profit, it's about pricing in not taking a very serious loss. Sellers are excited about not taking as big a loss as they would have had to a few months ago, not about taking profit. The scale is about how serious a loss you will take, not profit. Period.
Posted by bob
Fri Oct 2nd, 2009 11:47 AM
Forget what you have in the apartment. In CA, one buyer bought in 2006 for 1 million, put 200k into renovations and is now selling for 700k. Buyers are pricing at what they feel is a fair price with some safety to the downside. If prices are at 2003-2005 levels in other markets, why do you think a seller should be able to sell at 2007 levels.
Posted by bob
Fri Oct 2nd, 2009 11:47 AM
Forget what you have in the apartment. In CA, one buyer bought in 2006 for 1 million, put 200k into renovations and is now selling for 700k. Buyers are pricing at what they feel is a fair price with some safety to the downside. If prices are at 2003-2005 levels in other markets, why do you think a seller should be able to sell at 2007 levels.
Posted by anonymous
Fri Oct 2nd, 2009 11:57 AM
Hey SellerStatment,
I'm sure some buyers are absurd and looking for too much of a discount, but if you are not getting bids over 800k, then that is the market for your place, and that is reality today. It doesn't matter how much you paid for your renovation, there are plenty of places that were renovated and/or are brand new. No one is (or should) going to pay just because you did. Maybe they think your ask is just as obnoxious. Maybe the market will reflate in the future like you said, but remember, sellers can eventually give up after a while and come down to market. Paying fixed costs as you say every month doesn't make sense if you lose faith in a rebound. Everyone has his breaking point. FYI, your rant does become incoherent at the end, which implies that your reasoning is filled much more with emotion than logic. I've seen this emotion in my business. Everyone tries to hold out on price decreases at some point. Eventually, everyone caves. Some sooner, some later. This has been happening for six years, in the face of a growing number of deals. I think one thing that increased sales does, is that it justifies today's market prices and provides better comps for other sales. It's hard to argue you are worth more if there are a number of deals that priced lower. This can actually help pull the market down.
Posted by UDfan
Fri Oct 2nd, 2009 12:44 PM
Good points anonymous. SellerStatement - sounds like you are an angry/crazed seller and can't admit that you are going to take a large loss. The buyers dictate what your apt is worth. You can call buyers obnoxious, unrealistic, etc. but at the end of the day you need those bids to make a sale. Good luck getting over $900k!
Posted by Noah
Fri Oct 2nd, 2009 12:46 PM
SellerStatement - I just disagree on a number of levels. Ill go in order:
1st - "making a statement that seller's are over-excited and pricing in profit is absurd"
No, actually its not. I see it out there, Im experiencing it. I also see where the bids are coming in, I got four in right now for properties ranging from 775K to 3.3M. I see the comps. I am talking to brokers all day long for weeks, and see that properties that are priced high are not selling as brokers tell me 'we had number of bids in, none were accepted - you have to come near ask'. How would you interpret that? Are the bids wrong or is the seller a bit disconnected with reality? You can argue the statement, but is no way absurd. Its happening.
2nd - "Depending on when they bought due to extreme circumstances, many sellers have had to take losses. There are fixed costs you have and I don't think it's reasonable for buyers nor you to think that just because it's a buyers market there should be a push to have a seller accept that they have to take a loss."
Loss or not, the property is worth what someone is willing to pay for it at any given period in time. Period. I dont care if the owner takes a loss or not, or the severity of the loss. Its a market. It is what it is. If a seller has to sell, and they have to take a loss, they will ultimately accept the highest and best offer that turns out to be a real offer and not some buyer playing games verbally but with no intention of signing a contract.
3rd - "So there is a dichotomy yes, but buyers are definitely delusional"
There are always delusional buyers just like there are always delusional sellers. Im tryng to write about where bids seem to be coming and I have done this from the very start of the freeze up in Oct 2008. When I wrote about a 15-25% discount from peak in bids in late 2008, everybody scalded me. But it was true. Thats where bids were. With all the contracts signed on the last 4-5 months, clearly buyers and sellers are getting on the same page! If you are priced right, you should get bids in the range I described a week ago. If not, you wont get the traffic, wont create any sense of urgency, and likely will get the passer by buyer that is only interested in uber low balling you with the hopes that you are in distress and may have to hit their bid. These guys are around in every market - its part of the marketplace!
4th - "I had a buyer look at the fact that I bought my apartment which is on the market for 1.2 and it was a gut reno. I put in 200k to renovate it 2 years ago. I only have it on for 1.3 because I am reasonable and I have gotten sellers who offer me 800k."
When did you buy? Yes, I agree that renovations should and must be calculated into a bid. Doesnt mean it will happen, as a buyer can do what a buyer wants to do. Maybe they dont like your reno, and feel they need to renovate your renovations? Who knows. If you bought at peak, put 200K into it, and your price point is trading down from peak around 18-20% now with the improvement in bids lately, then my guess is your property trades around the 1.1 - 1.15M range or so. So I would say your pricing should be 1.195M or as close to that range as possible. Now, this is a tricky area because buyers always try to keep bids under the 1M mansion tax mark. Its only 1% but for some reason that expense is over exaggerated on the buy side. If bids are not coming in that range, than that tells me maybe there is a feature to your property that is making it a hard sell? Location? light/views? Who knows.
5th - "There are fixed costs period, we aren't pricing in profit - that's a joke and you are making a mockery out of intelligent sellers."
I said sellers may expect a future profit potential to be priced into a bid that has NOT come in yet! Its a psychological thing. Appraisers deemed this market a declining market, meaning there is a negative time adjustment marked to comps. What I am saying is sellers have recently started to expect a time appreciation for their property based on recent comps. So, if a flat out similar property traded at 1.2M a few months ago, then the seller expects to get 1.275 or 1.3M just because of future appreciation that has not happened yet. That is what I mean by the statement that you criticize.
I do agree with: "IF the seller can hang on and wait for a better price, they will and if they can't they won't."
There are always sellers that are not pressured to sell and hoping to get their price who behave in this way. Always, in every market. But this doesnt mean they will get it - 320 CPW (4C) is an example which was on market for a year, price cut, and then taken off market - clearly because bids did not come in the realm of acceptability for the owner. Serious sellers, who need to sell and are not simply testing the market to see if they get their #, should be warned against pricing too high from where this market seems to be trading because of this reflation rally! It will be counterproductive.
All that matters is where bids are coming in, and where deals are happening. If you didnt sell, and you think you are priced not only right but aggressively, then where are the bids? Its not uncommon for sellers to think there home is worth more than it actually is. Quite the opposite, that is very common and I was a victim of this myself when I was selling. Ultimately, I came to see where the market priced my home and I was willing to sell it there. I guess its a matter of financial situation + need to sell - as you say, if you dont have to sell, might as well wait for your price or for better conditions. But for now, there is a market and finding out where it is in real time as it changes is most interesting to me.
Posted by Anon
Fri Oct 2nd, 2009 12:52 PM
SellerStatement,
Perhaps some buyers you have encountered are looking for distressed sellers. However, if you did your reno 2 years ago, that implies that you bought in 2007--at the very top of the market. Then you put in 200K for a reno. Does that mean that a buyer should pay 2007 prices plus 50% of your reno now? No way. The market is what it is. I don't know what area you of the city you are in, how many bedrooms, bathrooms, whether your copay has gone up, whether the tax increase is coming to your building, etc. But prices are generally down 20% in your price range. So that takes you to 1,120,000 if you price in your reno at 100%--assuming it was worth it, the buyers love it, plan to make no changes, etc. Yet, you are listed at 1.3!
Better yet, if we ignore the reno, you are looking at 960K. Not that far off from the bid you got.
Posted by Noah
Fri Oct 2nd, 2009 01:06 PM
reader - its not that the market is stalling, rather, in my opinion the frenzy that took place in May/June/July as prices hit their lowest levels in a high fear environment is non-existent. Pent up demand from frozen 6 months prior, surged in, and now its back to normal. The level of action from May-July or so was similar to the best months in the peak year of 2007. No way we could keep up 1200+ contracts signed a month for long. I believe we are back down to 750-900 or so, which would be more normal for this time of year. I still find the market active, plenty of buyers out there, but I am starting to wonder if more and more sellers are expecting to do a deal at much better levels.
Lets take a simple hypothetical example:
Bids at $2M apt at PEAK
Bids at $1.5M apt in FEB/MARCH
Bids at $1.6M-1.65M apt TODAY
SELLER EXPECTS AND WILL ONLY ACCEPT A BID OF 1.7M-1.75M because of the reflation rally and improvement in confidence.
Is there a buyer out there that will dance? Im sure a few, but not the masses. Thats what Im starting to see, but its only been the past 2-3 weeks. Buyers not quite chasing at the same pace sell side optimism seems to be growing.
Posted by Fred
Fri Oct 2nd, 2009 01:57 PM
The whole problem here is everyone is stuck on this peak-to-current metric. The peak was a fantasy. It was the free foam on your SBUX latte that you neither paid for, nor requested, but lapped it up anyway. Why? Because the debt markets told you to. Pricing will reset to 2001 or earlier because that's when we last saw reasonable mortgage underwriting standards in Manhattan. The real question medium/long term is the boomer impact on resi in NYC. So many folks bought their units for nothing and have been treating them as their retirement account (not borrowing against the value per se), but assuming that they would simply sell and either downsize or relocate. NYC real estate was not always like this - it used to be normal. We don't know what the retiring population syndrome will mean for this town yet. I tend to think that a buyer is best served by looking at regional values and comparing that with NYC. I barely see decent stuff moving off the $1,000 PSF mark and that, my friends, is crack. So, imho, there has been no correction in NYC, yet. By definition a correction requires a new equity base stepping in because the old one is gone. Stocks had that back in March. Bonds as well. Commercial RE is about as upside down as you can get with the slight exception of multifamily - but that seems to be trending down now as well because RENTS suck. Residential just hasn't gotten there.
Posted by Noah
Fri Oct 2nd, 2009 02:45 PM
"Sellers are excited about not taking as big a loss as they would have had to a few months ago, not about taking profit. The scale is about how serious a loss you will take, not profit. Period."
Again, I agree with you here. You are missing my point. The point is that sell side optimism is outpacing buy side confidence, at least it is starting to feel to me. Its early yes, but Im just talking about what I see.
My point is that sellers are expecting a bid to come to a level that buyers look at as a premium for pricing in future profit potential. As if the market is in the early stages of sustainable price appreciation. Future profit potential. Better bid higher because this asset will be worth more in a year than it is now. Pay up for that. That is what optimism I fear on the sell side will drive sales volume down after what we just went through and where we came from.
I am not talking about a sellers end profit or lack thereof
Posted by Crosby
Fri Oct 2nd, 2009 03:13 PM
What is current market? According to Shiller's graphs (going back 100 years) prices still have a ways to fall. Therefore SellerStatement, if you bought in the last few years your price may not be accurate. And according to Shiller, you may have a long wait for the reflate.
Posted by mimi
Fri Oct 2nd, 2009 06:09 PM
Hi Noah!
Do you know of Jonathan M. has specific data for Harlem? Last quarter I remember reading this kind of info in his report. Does he add data later on?
Posted by Former Seller
Fri Oct 2nd, 2009 07:04 PM
Seller Statement- as someone who blew through most of my savings paying all the monthlies on my vacant apartment while trying to sell during the most illiquid period of the past 12 months (in addition to rent where I moved to), I certainly empathize with other sellers who are trying to avoid seeing their largest, often only major asset get decimated.
The brutal truth, however is that Noah is right- the market alone dictates what your property will sell for. As such, it is an amoral creature; it doesn't care whether or not sellers must take a huge loss if they must sell, fair or not. I decided to move back in and refinance, and will not be considering selling for a while.
Having said that it's pretty clear that most of those who comment here are sideline buyers; for every sentiment that the market could level off or improve, you'll find 20 or 30 saying that all RE is still overpriced. I wish more sellers would come here to comment, if only to provide UD readers with some more perspectives- and one would hope, some healthy debate.
The biggest problem I have with comments like UDfan's (buyers dictate the market) is that it assumes the market is completely asymmetrical, as if the pool of qualified buyers only consists of buyers that name their price for the property they want, and get as soon as they enter the market. The RE market may not work like a stock exchange, but there is a DEPTH OF MARKET. Some sellers price their listing right, and some buyers enter the market with aggressive bids. Likewise, there are many sellers priced too far above the market, and many qualified, willing buyers that will only offer below the market. Just like the overpriced sellers who eventually give in, some of those below the market buyers that really want to buy eventually give in. People can argue there are more high priced sellers than underbidding buyers, but stop pretending only one side exists.
Fred's comment is at least nuanced, so I can appreciate his point of view.
Posted by WestSideMan
Fri Oct 2nd, 2009 11:28 PM
Unemployment in the city at 10.3% and trending higher. Fewer players on Wall Street (both number of firms and overall employment) - sure the guys who are left are minting money, but there are a finite number of them. Price / rent and price / income ratios out of whack with historical levels (and by historical I mean pre-debt-fueled asset price inflation). 'Nuff said....see you in 2011.
Posted by cluelessandconfused
Sat Oct 3rd, 2009 03:59 PM
I am so confused. This market is changing way too fast for me. I started looking to buy in April. What has happened from then to now is almost mind blowing to me. I feel melancholy, as though I've missed the bottom already. I put in offers on two places over the past two months and both agents told my agent pretty much to suck it. Not exactly, but they told her that they weren't going to waste time counter offering to an offer so low. As a buyer, I felt humbled after going out gangbusters based on media reports only to find out, I've had to get more realistic too. It's a buyers market, but it's not an easy one either and it changes every time I go out to look. There is no way to predict what will happen. I cannot discount my reality though, I know what I read and I know what my firsthand experience is and as much as I'm a bear, I really don't feel that it's bearish out there. I do not know what is happening, but, the great deals seem to be disappearing. I'll be honest with you, just as Lehman was an event that effected this market, I feel like Goldman's profit was another that effected it the other way. I see where unemployment is but I don't feel in my firsthand experience that buyers are strictly dictating the market anymore. It's 2 sided for sure now in my teeny tiny experience. It's definitely a buyers market, but how much longer, I don't know. It's just a very fast moving game in my experience.
Posted by Douglas Heddings
Sat Oct 3rd, 2009 04:31 PM
Just an anecdote but I had a seller call me 2 weeks ago wanting to put his apartment back on the market at pre-Lehman price because in his words "the market is coming back." Needless to say he needs to find someone else to market his apartment at 30% more than it's worth because I don't have the time. Never a dull moment no matter what the market is doing.
And as always...I love your commentary!
Posted by Fred
Sat Oct 3rd, 2009 06:01 PM
Former Seller - you are dead on right. even if things get worse, there will be buyers who care less about what the average or the trends are. also, as we see with the sub $1mm units, folks are scurrying to buy financeable units - but i think that is more of a function of available financing than it is any deep commentary on the value proposition for a 600sf studio or 1 bed in Manhattan. the higher end is telling because (a) that's where you see the real discounts (granted $5mm is still $5mm but it's way way off relative to smaller units discounts over the last two years) and (b) the higher end's illiquidity tells you a lot about what the smart money thinks about the value proposition (or rather lack thereof). i really look at this market on an all cash basis if i were buying something to operate an as apartment. if i can't make my annual all-in, plus a reasonable capex estimate, plus at least what the long bond would give me, why would i lock up my equity? one reason would be that renting is more expensive for a comparable apartment (but we know the opposite is true right now) or i might do so because i can get cheap debt. the problem is that at the end of the day the relationship between rentals and ownership in Manhattan does have a lot to do with the cost of funds which is fairly unique to NYC. we're going to see an influx of cheaper high end rentals come on line really soon and we are also going to see a fairly robust period of multifamily going belly-up. the problem with that for the sales side is it puts pressure on the sellers to compete with the declining cost to rent overall. think about it, 1 beds in pre-war doorman apartments on the UWS are off 20% or so and you don't pay fees anymore. walk-up studios are pushing $1,500 a month, 1 bed walk ups are $2,000. that's your buyer base for all this "low end" product out there. until we see both rents trending up and sales volumes of at least 2x the last two years' annualized, there is no meaningful money coming into the ownership side. of course, i am miffed that we can't get a decent 3 bed for $1mm but i am holding out for that day! we'd love to raise our kid in the city but at a $1,000psf there are better things in life - like vacations, paying for college, owning a car, having a place outside of NY, good food, etc.!
Posted by Howard
Sat Oct 3rd, 2009 09:57 PM
Valuing something in this market is difficult. I disagree that all 1 bedrooms, 2 bedrooms, 3 bedrooms are selling at a set average and that you should ignore the money put in for renovation or the location etc...All units like companies simply aren't the same. Why would I pay a million bucks for a wreck if I can get a gut reno even if it's not my taste for a million bucks. The market is far more fluid than all these statements and it's about looking at things on a case by case basis. There is testing of the market with offers as well. There are plenty of people who see something listed at a million and bid at 500k because the valuation is in their own mind having nothing to do with the market. You cannot tell someone oh, well wherever you're getting bids is where the market is at - that's completely inaccurate when the market is in the buyer and seller's minds on a case by case basis. Is that now lower, sure, but I think the generalizations here are just that - way too general. I imagine a year from now we'll all be making the same argument at higher price levels and 2012 of course will probably be back at 2007 levels.
Posted by Noah
Sat Oct 3rd, 2009 10:17 PM
Howard - appreciate your comment but if I take that approach there will never ever be anything to talk about. Manhattan would move, do its thing, and in the end its just case by case.
Housing in general is an illiquid asset class, Manhattan is no different. I never discuss this market like it had a bid/ask of an equity. I tell you where I see bids coming in. Im not the whole market, Im one guy, of course there needs to be generalizations and if you read this site daily you would know that I often discuss how unique features and variables will always impact how a buyer bids - so I wonder if you are a new reader and commenting off this one post:
http://www.urbandigs.com/2009/09/looking_at_todays_manhattan_ma.html
"It SEEMS to me that each price point is now trading at the lower end of the % discount from peak range noted here in earlier posts. So it would look something like this:
HIGH END ($5M+) - down aprox 28% - 38% from peak
HIGH/MIDDLE ($2M - $5M) - down aprox 23% - 28% from peak
MID END ($1M - $2M) - down aprox 18% to 23% from peak
LOWER END (Under $1M) - down aprox 15% - 20% from peak
*NOTE: approximations of where price points seem to be trading must always take into account any one unit's unique identifying features (light, view, raw space, renovations, layout, outdoor space, monthly expenses, bldg amenities, etc.) Fine tuning the analysis based on the unique features of a property then comes into play."
Click the link and see for yourself that I openly discuss what you are arguing. Your right, valuing something in this market is difficult which is why I am trying and have been trying to tell you what I am seeing out there and what Im hearing from top producers/sales managers I speak with. There is no set formula. At any time a buyer with no care in the world can fall in love with any one property for any one reason, and rules go out the window. But when you represent buyers, put in bids, hear seller responses, sell property and see where bids come in, etc.. all over the course of 5+ years, you get a feel for the market on a relative basis. So, I talk about it. I never put one set price level on any price point and say it will trade there. I give general ranges, and admit the generality of it and that is where bids 'seem' to be coming in.
I never said the market is where the low ball bids are. There are always unrealistic buyers just as there are always unrealistic sellers. If your property is only getting low ball bids, then clearly the market is not as fluid as you say. Its never easy out there, not like it was when credit went parabolic.
But I hear and see where deals are getting done, and I see listings that are not selling and where they are priced. Your statement is actual repeating much of what is discussed on this site, yet not in the above post. There is testing of the market, always. There are low ball bidders, always. That wont change, ever. I think you are mis-interpreting statements. Fact is, bids seem to be coming in the general ranges I discusses previously, and the reports that come out later with the closings are supporting these statements. Period. If any one individual property experiences differently, clearly it is because of features that are unique to that property that may or may not be desirable in this marketplace. There are so many variables with any one listing, ranging from the need to sell to the original pricing and marketing strategy, to the unique features of the property, the features of the building, the costs of ownership and how that affects affordability, etc..
real estate transactions will always be a case by case in this market. But its nice to have a general idea of where this market is trending, trading, and where we just came from!
Posted by Noah
Sat Oct 3rd, 2009 10:29 PM
Doug - thx buddy..good to hear from you. well, I made a decision a few months not to work with sellers anymore, as I delve into a new direction with this site. hopefully its worth it. but i am working actively with many buyers right now. I totally can see what you talk about, and Im hearing about it from colleagues too. There simply has been a shift in confidence a few times over the past 12 months: from worry, to fear, to reflation.
as clusless comments, this market always has been and always will be a faster paced market. one thing I will say, the depth of wealth and resiliency of the buyer pool that is interested in Manhattan property, especially prime Manhattan real estate, never ceases to amaze me.
Posted by Noah
Sat Oct 3rd, 2009 10:36 PM
Howard - take a look at some of the deals that closed where contract was signed in march, or early april..you telling me that the market at that time was irrational? Or maybe it was reacting as it should to the uncertainty and fear that was gripping all markets at that time?
http://www.streeteasy.com/nyc/sale/283224-coop-490-west-end-avenue-upper-west-side-new-york
http://www.streeteasy.com/nyc/sale/211308-coop-1165-park-avenue-carnegie-hill-new-york
http://www.streeteasy.com/nyc/sale/373235-coop-470-west-end-avenue-upper-west-side-new-york
http://www.streeteasy.com/nyc/sale/343473-coop-116-east-63rd-street-lenox-hill-new-york
There was a period not too long ago where lots of deals were done because the seller hit the best bid that came in, and it ended up surprising many. Since this time, the market seemed to price out fear via the improvement in bids. But I think it reached a point where sellers expect continued improvement, but buyers are getting less and less motivated to dance.
Posted by Fred
Sun Oct 4th, 2009 10:00 AM
Noah - using streeteasy's data on new developments, approximately 15% of the current available inventory is sub $1mm at an average asking of $1,150 PSF. as you move up the price point, the asking PSF skyrockets to $2,000. here's my question, if 85% of the current new available inventory is at best jumbo financeable, don't you see these asking prices coming down steadily over the next few years? isn't the real story here what the long run impact of the loss of jumbo financing on all residential values in Manhattan? half of the available inventory is in new development with a median asking of $1,500 psf. if the banks simply start selling to move (because it's clearly not happening organically), what happens to your cookie cutter West End Avenue co-op that is getting $800 psf now? it's got to go down, right?
Posted by Alan
Mon Oct 5th, 2009 11:28 AM
We have to consider a lag of real-time information to the real estate market. When Lehman was collapsing, many in finance were fully aware though it hadn't reached mainstream yet. The pull back obviously happened before the collapse itself. If they can mark the downfall, they can help to indicate an uptick. I don't think it's unrealistic to say that some of the optimism we're hearing are from people who work in finance. The stock market is but one tiny piece of the financial world. There's private equity, VC, just tons of different areas that quite frankly are thriving. Every single friend I have in finance that was laid off, landed up somewhere, and they're all working again. I get the numbers, as accurate or inaccurate as they may be with regard to unemployment etc...but I'm talking to people in finance who for as distraught as they were a year ago are now quite frankly very optimistic. Based on nothing, I really don't see asking prices coming down. Expect the unexpected at this point.
Posted by Fred
Mon Oct 5th, 2009 11:50 AM
Alan - private equity, VC and these other "tons" of "different areas" are thriving???? PE and VC are about as stuck as you can get. why? there's no debt financing for the take out much less the acquisition. how many acquisitions have you seen of late that are not corporate mergers paid with balance sheet cash? maybe, oh yeah, none. there is no revival of the wall street economy happening. incomes are way down and bonuses outside of trading are history. only bankruptcy lawyers and traders are making any money these days. i would argue that the unexpected is actually prices falling further simply because folks seem to think the adjustment downward has already happened. it sounds like your argument is NY real estate is marked by insiders who somehow magically know that the tide is about to turn, so they go real long and beat the minions to the punch bowl? it's RE man, not a tech IPO!
Posted by anonymous
Mon Oct 5th, 2009 12:30 PM
Hey Noah,
One quick question. The fact that inventory is high and transaction volume is relatively low in comparison, I would think that mostly the best units are moving, and average units are not getting much attention. Could this distort your prices? Based on what you are seeing, would you expect lower prices for an 'average' apartment, or is this your feel for average apartments in these price ranges?
Posted by Noah
Mon Oct 5th, 2009 12:56 PM
Anon - excellent point. Yes I think that phenomenon is happening out there. The highest of quality units are moving, whereas properties with tougher features (dark, undesirable location, no views, too small yet marketed as a larger room property, etc.) are having a bit of a tougher time. Why?
BUYERS ARE PICKY!
I dont see many primary residence buyers settling simply because the deal is good. I find buyers to be pickier than normal and choosing their new home carefully, now that future price appreciation is perceived differently than it was in 2005-2007. Back then, people didnt care much because they were highly confident the asset would appreciate big time with each passing year