Average Listing Discount at the TIME OF THE DEAL

[Noah Rosenblatt]

This is one of my my favorite charts during this covid pricing. Other pricing charts like ppsf and med sale price will be all over the place, but this one does 2 things:

1. shows the true negotiability trend from orig ask price
2. is time shifted to show you at the time of the deal

#2 is the key element. Remove the lag of sales data and you see that the best deals of this covid cycle seem to be behind us at the moment

 

[nycnative]

Basically showing real time bid/ask spreads are narrowing?

 

[Noah Rosenblatt]

Yes and how we are off the lows hit earlier this year during the shutdown months

 

[nycnative]

Is there a way to control for average sale price, so you can show that the floor isn't moving downward and the bid-ask just moving downward with it in tandem (or does that never happen)? In other words, this chart and its excellent sibling in the other thread seem to be showing sellers are listing more realistically and buyers are willing to pull the trigger at those prices but what data help show that the bottom does not continue to drop in terms of actual price? (I guess the spread would just widen again as buyers are always going to be the leading indicator in that regard?)

 

[Noah Rosenblatt]

hmm, interesting...if im understanding right and I very well may not be, i think much of 2011 was like that...i wouldnt mix this chart up with this line tho, "seem to be showing sellers are listing more realistically and buyers are willing to pull the trigger at those prices ", not because i dont agree with it, only because it could be interpreted to think sales vol was at good/normal levels. In reality, in times of illiquid, fearful markets, like those peak rises there, the #s jump due to the fact that bid/ask spreads widen and that sellers that have to sell, may have hit a gap down bid, causing that prob. Or perhaps I missed your point

 

[nycnative]

No, you totally got it--you just showed me why it didn't work using the data! I was suggesting that perhaps we're finally reaching a meeting of the minds between sellers and buyers, but now if I'm understanding correctly, you're saying if that were the case, then sales volume would be higher (and given the enormous liquidity out there today perhaps MUCH higher)? But the fact is that sales volume is NOT at healthy/normal levels, which pokes a rather large hole in my theory.

 

[Noah Rosenblatt]

yes thats what Im saying. Cool, nice topic

 

[David Goldsmith]

If I'm understanding this discussion correctly:
The reason I think we still have a ways to go with price corrections is the while inventory is slightly off its peak of a couple of weeks ago it is still close to record highs. And while deal volume has picked up from a period of a governmental lockdown it still isn't at levels necessary to clear significant amounts of this large inventory (and note this isn't counting ?5,000? Units of new construction shadow inventory). I think if buyer's and sellers were closer in what their valuations were we would be seeing significantly more transactions especially since interest rates are about as close to zero as possible.

In most of the rest of the country things are booming because there are fairly extreme supply constraints. But here I think it's pretty obvious we have a supply glut and sellers aren't taking that into account in pricing. And from listening to interviews with brokers it appears there are tons of buyers out there who are expecting lower prices. I see the brokers characterizing these buyers as "unrealistic" but if there are tons of sellers, not so many buyers, these buyers largely are ready to buy but only at lower prices, and deal volume is low as a result then I'm not so sure that it's the buyers who are the unrealistic one's.

 

[David Goldsmith]

Here is an example:
I got an email today with a big headline "OWNER UNDERSTANDS THIS MARKET & ASKING FOR OFFERS! SAYS SELL NOW!"

Meanwhile they are asking the price they paid for it as new construction in 2016.

 

[nycnative]

As a buyer in the market for the last four years at the 4mm+ sector I can confirm that behavior, at least anecdotally. Also this one, “they just want to get back what they put into it.”

 

[David Goldsmith]

I don't think the psychological needle has moved much since the spring.

Stuck In Stage One

The Kübler-Ross model for dealing with loss and greif is fairly well known. https://grief.com/the-five-stages-of-grief/ I think there is evidence that the Real Estate market in NYC is stuck in phase 1 - denial. It's not simply that transaction volume is down tremendously ( April 2020 Manhattan...

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