Historical Supply vs Pending Sales for Manhattan

David Goldsmith

All Powerful Moderator
Staff member
Come to the Dark Side, Noah! Lol.

I also think right now Pending is overstated because ACRIS is still lagging and there's a lot of stuff which has actually closed but still marked as In Contract.

I think anyone who thinks prices are not heading down is in denial of Keynesian Microeconomics.
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
lol..funny. So acris starting to file at higher capacity last 3-4 weeks, so the system update slowdown issue is past I think. Now its just whatever is in the pipeline volume wise from last 6+ months. So thats one. Second, I must say, Im impressed with deal vol these last 6+ weeks. If we can stay in 800s for a bit, that is enough to push pending higher as well from the depths of hell we hit in shutdown

very fluid situation heading into a covid winter though

Prices - all the datasets I see show less negotiability today than during shutdown - so prices are def down, looks like we are bouncing a bit off June lows, but that can be beaten by lower lows quite easily when looking ahead the next 4-6 months of sales being recorded...in the field, def not as fearful or illquid
 

David Goldsmith

All Powerful Moderator
Staff member
All Signs Point To A Bottom- And Don’t Just Take My Word For It

November 27, 2020

I’ve been in residential real estate for nearly 20 years, and have both perspective and opinion on everything going on right now- yet I don’t expect you to take my word for what I say. Yes, I hope you will, but it rarely happens. One of the main reasons we have a market at all is two opposing forces- a price at which people agree that a property should sell, and different reasons why that price makes sense. So clearly disagreement is not at the heart of a problem in a market, but likely the driving force.
Our November Inventory Report, as I hoped and expected, is showing a drop in inventory in many cases, and in most cases, an increase in transaction volume. Check it out here. Much detail, and I’ve gone through this many times in the past. In short- The number of apartments on the market has been up 20-40% depending on neighborhood and apartment size, from November 2019. However, as the pace of sales picks up- and see below that it has- the “inventory level” is dropping, and relatively quickly. Expect that to continue.
Now, having friends across the marketplace is key. Conversations with these colleagues enable me to find out information that you can’t find anywhere else- and share with you. Often, these conversations also corroborate what I’m sensing more intuitively- and thereby give the more analytical of you out the numbers you crave. Grist for your mill.
I am at my most optimistic about the Real Estate Market as I’ve been in YEARS. And I’ve taken great pains to make my point.
So let’s get going. I have been stating, with growing confidence, that we are past the bottom. Everything that I’m seeing in my day-to-day business points in that direction. Having some excellent charts to share with you from my friends at Urban Digs is a boon. Thanks, Noah!
I spoke at a recent REBNY broker meetings where all of these charts were shared, along with my enthusiasm to learn of them! Enjoy along with my comments interspersed.
UD-page-1-300x232.jpg
This was the most compelling overview chart. It shows data from 2008 to today, showing the gap between overall inventory (in blue) and the number of transactions (in red). The gap has been widest when you expect it- during the worst parts of the 2008-2009 recession here, and during the March 2020-forward impact of the Pandemic. We’re seeing a peak in that gap. Data point 1.
UD-Page-2a-300x232.jpg

Next, we can see what really is going on in the market. The really important takeaways- you can see that the number of deals plummeted in the past 6 months. And you can see the closing price discounts have been meaningful. Combine the first chart with the flexibility we’re seeing- it means that many sellers got the memo, and are doing deals. You can expect that as we see more and more deals, sellers are beginning to price apartments and townhouses more in line with this new reality.
UD-page-2-300x232.jpg

Then, you can see the average price cut by price point SINCE the market reopened. This is a HUGE source of information. It shows that higher priced properties were likely already very overpriced and needed price cuts. It also showed that $2-3mm properties are seeing the least price reductions. This could be due to more accurate seller pricing, or buyer interest. We move on.
UD-Page-5-300x232.jpg

The picture really starts to come into focus. While $2-3mm properties were seeing the least discounts, the sub $1mm market is the most active. And $1-2mm price point is seeing a great deal of transaction volume. This lines up with what we’re seeing with our 25 listings on the market. The most interest, showings, and offers/deals is happening here, too. Below $2mm.
UD-Page-6_1-300x232.jpg

I’ll add that it’s interesting to note that only about 1/8 of all deals since June 22nd – again, when the market reopened- have been in New Development. This doesn’t bode well for developers, who have a lot to sell. It means more price flexibility in an area where there had not been enough reductions. So stay tuned here.
UD-Page-7-300x232.jpg

Adding more to the big picture. You can see that price discounts have been going up for a number of years, not just since March. TAKE NOTE! Yet we can already see that discounts are subsiding. And that jibes with what I’m seeing. Both more accurate pricing, and more demand from buyers.
Lastly, I’ll just say, anecdotally, and within my firm, that we’re seeing a pickup in open house activity (by appointment only), increases of roughly 15-20% over the past 2 months. This is another good sign. Pile on good news on the luxury front with my friend Donna Olshan continuing to point out solid deal volume north of $4mm every week. Each week shows evidence of a strengthening market.
In short, we seem to be finding a bottom.
So- buyers, if you’ve gotten here, take heart. Get educated, get confident, and start making offers. You may see more, or less, flexibility than you expect, depending on your purchase price range. And then you can make smart decisions from there. Have a great month! -
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
Nice! Received this today, thanks for sharing here David! Main points:
1. discounts are subsiding
2. activity is steadily rising
3. inventory is falling

Scott knows his sh*t, so love seeing this kind of statement from him.

John and I thoughts on this matter are all public on our youtube channel, as we agree with this position
 

David Goldsmith

All Powerful Moderator
Staff member
I'm sticking with my predictions. I don't know how that 1st chart indicates otherwise
 

nicolebeauchamp

Well-known member
Re #1 . In general yes, but as with most things very specific things depending on the submarket....and then there's the madness of the new development (shadow) inventory...but also potential opportunity within the shadows....
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
Nikki!! Love seeing you here. Re: new devs, Hmm, I wonder if bulk buyers/distressed buyers are scooping up deals as we speak. Has to be to some degree. Agree with opportunity within the shadows. Wish I had some distressed $$ to operate with
 

nicolebeauchamp

Well-known member
Some of my clients started asking these questions in the spring ,to seek the opportunity within the shadows. The answer to your wonder...is yes :) and I agree ! Same wish ! (I finally remembered to reset my password...I will try to not forget it now !)
 

David Goldsmith

All Powerful Moderator
Staff member
From what I can see there's tons of money being stockpiled to buy distressed assets but very few sellers looking to unload at distressed prices - at least not yet. And why should they with forbearance, foreclosures on hold, special servicing, etc.

Developers are getting inventory loans when the can't unload packages at the prices they want:

That said there are some recent bulk deals being done like 36 condominiums at 321 East 48th Street in Turtle Bay for $11.5 million and Glacier Equities acquisition of 255 apartments for $23 million through the purchase of unsold shares across nine co-op buildings in the Bronx and Manhattan.
 

David Goldsmith

All Powerful Moderator
Staff member
The Market for Distressed Assets Is Only Beginning
Peter Ballance at Stroock & Stroock & Lavan says investors are seeing opportunities to acquire properties for pennies on the dollar.

Opportunistic investors are already actively seeking distressed opportunities, but after eight months in the pandemic, many more distressed deals are likely to hit the market next year. This new wave of COVID-19 cases and new stay-at-home orders are only putting more pressure on businesses and solidifying what will become a thriving investment industry. Ready and well-positioned investors will be able to buy assets for pennies on the dollar, according to Peter Ballance at Stroock & Stroock & Lavan.
“In the short term, as the pandemic drags out and new protective orders are issued by state governments, many offices, restaurants, hotels, stores and other commercial spaces where people spend their time and/or money will remain either closed, or mostly empty,” Ballance, a partner at the firm, tells Globest.com. “As a result, many commercial properties are facing a combination of tenant defaults, no new demand for space and no readily available capital. For property owners that are unable to identify solutions to keep their assets afloat, defaults under their real estate financing are inevitable.”

These are opportunities stemming from the impact of stay-at-home orders and reduced activity, but permanent changes will also create distressed asset opportunities further into the future. “A longer-term change to the market will likely result from the pandemic driven acceptance of the work-from-home model,” says Ballance. “It has become clear that almost anyone who gets their job done with a computer and a phone can work anywhere, not just an office in a commercial building.”
Office owners aren’t alone. Retail owners will also have to adjust to long-term changes. “Digital retailers like Amazon have revolutionized shopping habits to the detriment of brick and mortar stores,” says Ballance. “As companies downsize their office requirements and retailers close up shop or move to an on-line model, the resulting decline in demand for office and retail properties will fall short of the pre-pandemic underwriting of the real estate loans secured by those properties, and again, loan defaults are inevitable.”

Lenders will have to respond to these changes as more owners face challenges with rent collections. “With an overstocked inventory of distressed loan assets and an uncertain road to recovery, a number of lenders are going to be looking to sell these loans,” says Ballance. “For cash-flush investors that are looking for a real estate bargain, this could presents a great opportunity.”
 

David Goldsmith

All Powerful Moderator
Staff member
Demand for distressed housing returning
Auction.com data on foreclosure sales rate and bids-per-asset at all-time highs
Auction.com‘s Distressed Market Outlook report for the fourth quarter shows a pick-up in demand for distressed housing, with a 24% increase in completed foreclosure auction volume in September. In addition, the foreclosure sales rate is at a seven-year high, and REO bids-per-asset are at an all-time high.
The report notes that widespread foreclosure moratoria in place do not apply to legally vacant or abandoned homes. The company said data from its platform and other industry sources shows a growing backlog of mortgages that are in foreclosure or delinquent but not in a mortgage forbearance program.
Daren Blomquist, vice president of market economics at Auction.com, estimates that foreclosures will grow to more than 1.1 million by the second quarter of 2021.
Blomquist said much of the distressed housing was vacant prior to the onset of the COVID-19 pandemic, with a smaller number becoming vacant during the pandemic.

“The longer homes sit in the foreclosure limbo created by the foreclosure moratoria, the greater the likelihood that they become vacant,” Blomquist told HousingWire.
States with an above-average share of year-ago foreclosure volume in September included Colorado (92%), Oklahoma (86%), Kentucky (56%), Arkansas (54%) and Indiana (49%).

States with a below-average share of year-ago foreclosure volume included New York, Oregon and New Jersey (all at 0%) along with Washington and Massachusetts (both at 5%).
The foreclosure sales rate increased to a seven-year high of 55.6% in September, with the average price-per-square-foot for third-party foreclosure auction sales dipped in the third quarter.
Steve Price, senior vice president of trustee operations at Auction.com, said this is likely because of the shift to vacant or abandoned properties that often come with more deferred maintenance – but the average price relative to estimated full market value increased to a 6.5-year high in September.
“Buyers are showing up in force at the live foreclosure auctions, both in-person at the auction venues and now also virtually, thanks to the Remote Bid feature on the Auction.com mobile app,” Price said. “Where available, this feature allows buyers to participate in real time at the auction from just about anywhere.”
Per the report, increased competition for online REO auctions helped to push the average price-per-square-foot to a record high of $87 in July.
“Buyers can bid, buy and close on online REO auction properties without leaving their homes, making this inventory particularly attractive to real estate investors and other buyers in this season of social distancing,” said Walter Skrzynski, senior vice president of online auction sales at Auction.com.
Blomquist confirmed that “strong demand” for distressed properties is tied largely to the strength in the retail housing market, which in turn is tied largely to low mortgage rates.
“We saw similar rebounds in demand for both vacant and occupied REOs a couple months after the pandemic declaration,” he said. “The demand for occupied surprised us a bit given the eviction moratorium, and that we require all buyers of occupied REO to sign a ‘Community Stabilization Pledge’ to abide by all eviction moratoria.
“It’s apparent that investors are very bullish on the long-term strength of the real estate market and are willing to take on the extra risk that comes with buying an occupied property in the midst of widespread eviction moratoria.”
 
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