UPDATE on Where the Deals Are Happening, Q 1 2010
Christine Toes here. Since Noah is on vacay, I thought I would update my post from late February on what I have seen in my own business in the first quarter of 2010:
Jan 2010 - 201 E 28th, large one bed co-op with HUGE outdoor space/views/three exposures, asking $799K on 9/1, reduced to $749K mid Oct, contract signed early January. Closed in May at $700K. Note that these sellers took a loss of at least $75K.
Jan 2010 - 77 Seventh Ave (14th St), renovated, converted alcove studio co-op w/ views asking $525K. Multiple offers. First open house 1/17, contract fully executed 1/27. Fastest co-op closing ever due to buyer who was really on top of everything and fast board approval. Closed in April at $520K, less than 1% below ask.
Jan 2010 - 101 W 23rd St, renovated, converted one bedroom in a landlease co-op building. In contract at asking price after being on market since 9/2009. Price drops in Oct & Nov, then with reduction from $275K to $260K on 1/4, OFAC within ten days. Since it hasn't closed, I can't give you a price yet, let's just say it was very very close to ask. Seller and buyer asked for delayed closing. Landlease building, praying for no last minute issues with financing. Note that this seller took a loss.
Feb 2010 - 115 East 9th St, updated, one bedroom co-op w/ views. On market 2/7, first showings 2/12, 52 buyers viewed property between 2/12 and 2/15. Four offers at best and final. Cash offer accepted over asking price, 1/15. Two bidders were putting over 50% cash down. Two of the bidders had just lost bidding wars on other units, came to view the apartment during a blizzard and came in strong with offers the next day. Seller changed mind, decided not to sell (long story).
Feb 2010 - Williamsburg, Brooklyn new development condo - Under $500K One bedroom, contract out at 8% below asking price, sponsor paying transfer taxes and sponsor's attorneys fees, so total package was 10% below asking price. Only 35% sold at time CSGN. Closings projected for late Summer/early Fall (which likely means late Fall/early Winter). This buyer backed out of a deal at another Brooklyn new development. His attorney and I made sure he had an "out clause" if they hadn't closed by a certain date. They were three months behind schedule with at least another 2 months before TCO. Buyer decided that the Williamsburg building was a better deal, even though there are risks involved because it isn't very far sold.
Feb 2010 - Williamsburg, Brooklyn new development condo immediate occupancy, 85% sold and closed. $830K two bedroom w/ city views, buyers wanted 15% below ask, developer would only do 10% citing market pick up. No deal.
Feb 2010 - Same buyers as above. Williamsburg, Brooklyn new development condo, 60% sold and closed - $850K two bedroom w/ city/bridge views, buyers wanted 15% below ask (prices already reduced 19% since offering plan filing), developer would only do 10%. After looking around a bit more and deciding that this was the best deal for them, buyers eventually increased offer but requested that an alteration be made to the master bath (addition of double sinks). Sponsor agreed to do renovations but buyers had to produce a mortgage commitment letter prior to the renovations being started. Closed May 2010 at $800K.
Feb 2010 - Upper East Side one bedroom co-op with outdoor space, ask $560K, on market for three open houses, contracts signed at less than 5% below ask. Buyer putting 50% cash down. No closing yet due to fact that 50% of building is sponsor-owned. (Buyer is real estate attorney and knew this could be an issue but loved the apartment and outdoor space. We had been looking in three boroughs for almost a year Plus he has a financing contingency). In February, bank said "no problem" re: sponsor ownership. Then lending guidelines changed between Feb and May and bank said "sorry, no deal." Buyer has new lender who says "no problem." Fingers crossed.
March 2010 - Chelsea one bedroom co-op asking $650K, thought customer had it for $615K, contracts went out, higher all cash offer came in, buyer lost apartment.
March 2010 - Same buyer as above finds Village apartment asking $590K. After another multiple offer situation, he signs contract on the apartment for slightly over the asking price. Closing in two weeks. Note that this seller purchased one year ago, did not do any renovations to the apartment and is selling at a higher price. Bank actually gave us a hard time on that one because they were arguing that it was a "flip," but it worked out in the end.
Post to follow tomorrow on 2nd Q 2010.
Posted by Brian23
Fri Jun 4th, 2010 01:23 PM
Nice article below about Manhattan prices. Miller Samuel quoted. Worth the read:
http://www.businessweek.com/news/2010-06-04/manhattan-empty-condos-may-become-rentals-as-leases-beat-sales.html
Posted by lars
Fri Jun 4th, 2010 01:54 PM
Christien,
Your examples are all small apartments. Should I draw any conclusions other than that is your customer base (ie most recent action is in sub- million market)?
Posted by lars
Fri Jun 4th, 2010 01:55 PM
opps, Christine...
Posted by Fred
Sat Jun 5th, 2010 08:55 AM
Thanks Christine. What stands out is that low-end sales are still being heavily discounted off ask and that buyers are walking, even for 5%. Imagine what the middle and high end is like these days???
The standing question for the low-end remains what happens when the non-agency financeable segments (i.e. $1mm+) re-price? My gut says the whole stack collapses, just not as much for studios and 1 beds - but if new construction goes to $600 or $700 / SF, does one really think walk-up studios aren't headed for $300 / sf or less? From the link posted above, Jonathan Miller's new venture:
"Rent Multiplier
Condominium Recovery LLC, the firm started by Miller, Westwood and Guterman, bases its analysis of the market on Manhattan's ''gross rent multiplier'' -- the purchase price of an apartment divided by the annual cost of renting a similar one.
The relationship between home prices and rents typically remains steady within a market, Miller said. In Manhattan, the average apartment, adjusted for inflation, cost 8.1 times annual rent from 1991 to 1997, according to Miller Samuel data. That means that in those years, buyers in Manhattan concluded that the long term benefits of owning an apartment -- tax savings and property appreciation -- were worth an initial investment of eight times the cost of renting.
Then in 1998, Manhattan prices began a decade-long climb, with year-over-year values rising by 10 percent or more in most quarters. By the second quarter of 2008 apartment prices peaked at 22.4 times annual rent, according to Miller Samuel data.
Buy Vs. Rent
At that level, buying rather than renting in Manhattan only makes sense if the purchaser expects prices to continue rising at a meteoric clip, with future sales' profits justifying ownership costs that also include property taxes, interest and maintenance fees. New York is the No. 1 city in the U.S. where the overall costs of buying are ''significantly more expensive than renting,'' according to a report released yesterday by property website Trulia.com.
Manhattan's multiple in the first quarter of 2010 was 19 times rent, even as rental prices fell 6.1 percent from a year earlier, according to data from Miller Samuel.
''That suggests a few things,'' Miller said. ''One is that prices are poised to slip further.''
The median value of apartments for resale in Manhattan has already fallen 31 percent since 2008, narrowing their spread over rents, Miller said. By comparison, apartments in new developments, which are saddled by debt for construction loans made during the property boom, have fallen by 24 percent -- and much of that drop was due to smaller units being sold rather than significant price reductions by the developer, Miller said."
Posted by John
Sat Jun 5th, 2010 05:50 PM
poor renter fred....still disillusioned....
Posted by Fred
Sat Jun 5th, 2010 10:28 PM
John - i apologize. forgot that this is NYC and prices only go up. my bad. it is better to own at any cost because bragging rights are priceless - especially on anonymous blogs.....
Posted by Sam
Sun Jun 6th, 2010 10:08 PM
Writing "...HUGE outdoor space..." with all caps in the first example really sets the tone for this piece: written by a broker, from a broker's perspective.
Not saying that one doesn't get any information from this post, but it's really all anecdotal, from a very small number of examples, viewed through the broker lens. Seems out of step with the data-driven site that noah seems to be aiming for.
Posted by Prague-Noah
Mon Jun 7th, 2010 04:20 AM
Sam - noah from prague here...which is gorgeous by the way. For now, all we have are anectdotal reports. I actually asked Toes to write about what she has been seeing and where her deals have been happening. Your right though, one broker's business does not a whole market make. But your concerns, the data driven site, is exactly where my efforts have been for the past year in development. Soon you will see the actual data changes direct from the broker status updates from the sharing system, filtered properly to remove the noise/flaws, in order to get the good stuff out..literally, scrubbing to find the gold flakes in the streams or mud. was not an easy task but tells a very accurate story of our markets...so ultimately you will see the data, and hear the reports and draw your oiwn cocnlusions. youll love it..i just cant wait until its ready
peace!
Posted by Christine Toes
Mon Jun 7th, 2010 01:47 PM
Hi Lars, great question. My customer base is currently sub $3M. According to our office's weekly internal market reports (350 agents at Corcoran's largest office), ~80% of the sales btwn ~Sept 2009-~Sept 2009 were sub-$1M. In the fall, I saw the sub $2M market picking up (~50% of sales were sub $1M and 30% were $1M-$2M, last 20% were above $2M). Only since the beginning of 2010 have I seen the $2M-$3M market picking up. Will post on 2Q 2010 tomorrow morning.
Posted by Christine Toes
Mon Jun 7th, 2010 01:51 PM
Oops, of course I meant Sept 2008-Sept 2009 (not 2009-2009). Sorry about that!
Posted by coach handbags
Fri Aug 13th, 2010 04:47 AM
slightly over the asking price. Closing in two weeks. Note that this seller purchased one year ago, did not do any renovations to the apartment and is selling at a higher price. Bank actually gave us a hard time on that one because they were arguing that it was a "flip," but it worked out in the end.
Posted by realbench
Thu Aug 19th, 2010 07:49 PM
What I like the most about the Gross Rent Multiplier is that it tells me the number of year I need to collect rent to total the purchased price.
Good post
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