Liquidity back to 2015, Resale pricing back to 2019 & heading higher

David Goldsmith

All Powerful Moderator
Staff member
I think the market is currently split into 2 camps: those who are willing to sell now at whatever price the market will bring and those who are hearing tales of how hot the market is and think that means they can get the aspirational prices they failed at over the past 5 years. That's why I think I'm seeing lots of stuff come on the market either at substantially below prior asking prices, or quickly being reduced substantially, and then going to contract quickly. The other side is those that aren't doing either of those and then going off market (we are still seeing huge numbers go off market compared to historical).

I am guessing what is happening is that plenty of agents are still "taking a shot" putting units back on the market at aspirational prices figuring they will have their "come to Jesus" meeting with the sellers after a month on the market and then tell them if the don't want to reduce the price they may as well take it off the market because everything which is priced correctly is selling quickly. The difference between the 2 flavors being whether that conversation occurs before or after the unit gets relisted.

This is a contrast to what was happening in 2013-14 where agents were taking aspirationally priced listings and waiting for the market to grow into them.

My evidence of this is that I'm still seeing plenty of stuff which was on the market in the last 5 years and taken off coming back on at 2013 prices (and some at 2008 prices) and selling, as well as plenty of stuff coming back on at 2019 prices and not selling.
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
I think the market is currently split into 2 camps: those who are willing to sell now at whatever price the market will bring and those who are hearing tales of how hot the market is and think that means they can get the aspirational prices they failed at over the past 5 years. That's why I think I'm seeing lots of stuff come on the market either at substantially below prior asking prices, or quickly being reduced substantially, and then going to contract quickly. The other side is those that aren't doing either of those and then going off market (we are still seeing huge numbers go off market compared to historical).

I am guessing what is happening is that plenty of agents are still "taking a shot" putting units back on the market at aspirational prices figuring they will have their "come to Jesus" meeting with the sellers after a month on the market and then tell them if the don't want to reduce the price they may as well take it off the market because everything which is priced correctly is selling quickly. The difference between the 2 flavors being whether that conversation occurs before or after the unit gets relisted.

This is a contrast to what was happening in 2013-14 where agents were taking aspirationally priced listings and waiting for the market to grow into them.

My evidence of this is that I'm still seeing plenty of stuff which was on the market in the last 5 years and taken off coming back on at 2013 prices (and some at 2008 prices) and selling, as well as plenty of stuff coming back on at 2019 prices and not selling.
Interesting. The come to jesus meeting after a month is something I am hearing more and more lately, anecdotally. I would think 2019 pricing would get it done, unless its in a smaller size sector or sector with a lot of sell side competition. Then again, I know of a seller trying to get 2019/late 2018 pricing in a solid nhood with little to no inventory, and seeing some resistance
 

David Goldsmith

All Powerful Moderator
Staff member
I think this is the sea change post-COVID:
Not that there is, or was ever really, any big "COVID Discount" but the reality that the market had been lower for a long time (5 years) and seller's resistance of that had created a huge drag on transaction volume for a long time. The big change with COVID was really brokers willingness to take a hard line with sellers on prices and the amount of sellers willing to listen because they had something to blame taking a loss on. Because everyone knows Real Estate never goes down there had to be some exigent circumstance to get a large number of sellers to embrace taking a loss.

If you'll remember I had been saying for a while the market wanted/needed to come down and there would be "some event" which would precipitate that. Then in February 2020 (before the "hit") I postulated that it was possible that COVID could end up being such as event.
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
good call on that. The key is remembering this market has been down for 5+ years as you mention. BTW, we spent a bunch of $$ creating a Price Index for Resale Manhattan market, its done and we will implement it in charts for Pro Full users soon. Its the orange line below, showing a 8-9% covid drop overall for resale. Obv higher for Luxury, new dev, etc

1630418821773.png
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
Awesome, Noah!
:)) ty so much! i lost the last few hairs i had on me head over last 4 months over this. emotional roller coaster, as recently as few weeks ago thought we may not pull it out. Cant wait to release and incorporate in our reports. More cool charts comning, and your rental ticker request too Im told, yay!
 

Sharon Held

New member
Your information and the Forum discussions are very insightful and helpful. It helps us all qualify and quantify what we experience in the market and need to impart to our sellers and buyers. There continues to be a disconnect with buyers (through they seem to be catching on) that although we experienced a very unique and disruptive market event, it did not translate into the discount they expect.
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
Your information and the Forum discussions are very insightful and helpful. It helps us all qualify and quantify what we experience in the market and need to impart to our sellers and buyers. There continues to be a disconnect with buyers (through they seem to be catching on) that although we experienced a very unique and disruptive market event, it did not translate into the discount they expect.
Thanks so much Sharon, love hearing this!! I agree, buyers expectations for a steep covid discount far exceeded what the market actually provided. The data shows we fell like 8-12% or thereabouts for broader resale market. Ofc luxury and new dev had their hits, and commercial,rental etc, the best deals were had during the shutdown last year when fear was highest and vol lowest
 

David Goldsmith

All Powerful Moderator
Staff member
If you look at my posts #2 and #4 in this thread, there is also the buyer's side cohort. For the almost forty years I've been doing this there are always buyers who think the market is going down, but want to buy anyway. So they want to buy at tomorrow's lower prices. But no matter what prices are you only get to buy in today's market - your only choice is not to buy or pay today's prices.

So you've got 2 sets of buyers: the one's who were/are willing to trade at whatever it takes to transact today (i.e. over the last 11 months) and those who want/wanted further discounts. Just like sellers a significant number left the market either because they bought something or gave up because they realized the market wasn't going to hit their price, and some are still around either hoping to find the impossible or doing price discovery as to where they can get a deal done.
 

inonada

Well-known member
David, I like your observation in post #4 that some sellers needed something to blame for taking a loss. I also get a sense that the pandemic marked an end to many a NYC RE investors’ adventures. After 5 years of price drops driven by nothing other than overpricing & massive development supply looking to profit on it, the pandemic was the nail in the coffin for them to give up hope and get out.
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
If you look at my posts #2 and #4 in this thread, there is also the buyer's side cohort. For the almost forty years I've been doing this there are always buyers who think the market is going down, but want to buy anyway. So they want to buy at tomorrow's lower prices. But no matter what prices are you only get to buy in today's market - your only choice is not to buy or pay today's prices.

So you've got 2 sets of buyers: the one's who were/are willing to trade at whatever it takes to transact today (i.e. over the last 11 months) and those who want/wanted further discounts. Just like sellers a significant number left the market either because they bought something or gave up because they realized the market wasn't going to hit their price, and some are still around either hoping to find the impossible or doing price discovery as to where they can get a deal done.
Love the observation David. I wonder, are there always these 2 sets of buyers, in all markets? its just that both sets are swelling and contracting at all times and we dont have the means to truly measure it?
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
David, I like your observation in post #4 that some sellers needed something to blame for taking a loss. I also get a sense that the pandemic marked an end to many a NYC RE investors’ adventures. After 5 years of price drops driven by nothing other than overpricing & massive development supply looking to profit on it, the pandemic was the nail in the coffin for them to give up hope and get out.
Agreed. I would add, I think the pandemic acted as an accelerant on so many levels for this market. Anyone looking for a reason to sell, has one. Or had one. Many chose to wait it out last year and pull the trigger this year, so many anectdotal stories cross my way I sometimes forget I need to focus on the #s more, not the stories, even tho the stories is what the #s are missing :))

I look at todays NYC re market and I see:

pros:
no bubble, in fact opposite..we fell as national markets surged
operating way under full capacity
commercial re still in down cycle
rental sector, while recovering, still generally down
Sales sector very strong, supply down
Price action early stages of recovery

Cons:
policy errors?
crime?
lack of foreign buyers, students, investors
commercial/ground floor retail still needs to see more recovery
school policies?
covid restrictions on city amenities?

Is it crazy to think this market is in the early stages of a mini secular bull run, similar to 2010-2015?
 

inonada

Well-known member
It does feel like the start of a mini bull run, spurred by:
  1. The return to the city
  2. The desire for more space
  3. Low interest rates
Also feels like a temporary overreaction of supply/demand because:
  1. The return surge will abate, and the permanent exodus of otherwise Manhattanites is real.
  2. Developers will develop. Current prices are profitable enough. They will get excited by the activity & mini run as signs of life. Besides, what else can they do: close shop? Some will continue chasing there shiny dollars of ultra-luxury, but I’d expect more targeting of mass-affluent price points.
  3. Fed will take the punch bowl of QE & 0% away as inflation heats up. The 2% Fed special interest rates spurred a lot of demand, as intended, with buyers paying little heed about what would happen if/when this goes away and becomes *gasp* 3% or 4%. Buyers seem to think rates will never move off 0%, mortgages will forever remain 2%, and no one ever actually needs to pay principal for the actual goods.
So it kinda feels like a redux of the 2010-2020 sideways decade. Up a little, flat a little, down a little. Maybe it keeps up with inflation this round. Maybe not.
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
It does feel like the start of a mini bull run, spurred by:
  1. The return to the city
  2. The desire for more space
  3. Low interest rates
Also feels like a temporary overreaction of supply/demand because:
  1. The return surge will abate, and the permanent exodus of otherwise Manhattanites is real.
  2. Developers will develop. Current prices are profitable enough. They will get excited by the activity & mini run as signs of life. Besides, what else can they do: close shop? Some will continue chasing there shiny dollars of ultra-luxury, but I’d expect more targeting of mass-affluent price points.
  3. Fed will take the punch bowl of QE & 0% away as inflation heats up. The 2% Fed special interest rates spurred a lot of demand, as intended, with buyers paying little heed about what would happen if/when this goes away and becomes *gasp* 3% or 4%. Buyers seem to think rates will never move off 0%, mortgages will forever remain 2%, and no one ever actually needs to pay principal for the actual goods.
So it kinda feels like a redux of the 2010-2020 sideways decade. Up a little, flat a little, down a little. Maybe it keeps up with inflation this round. Maybe not.
right right...rates, man, im so divided. I kind of think 10yr rises to 2%+ before year end, but then policy errors by fed (tightening) will trigger a reset in equities and cause a bit of an issue. Timing always tricky on these things (remember Alan G irrational exuberance speech a few years before the bust). Then I think rates get close to zero again for a while only to march up for the remainder of the decade. Some argue we could see our first real bouts of sustainably rising inflation since 40+years. Been in disinflationary environment since.

All I see when I look out there: risk is so mispriced, markets are manipulated, short term credit markets intervention by Fed is almost a given, Fed mopping up trillions in extra lquidity via rrp, speculative assets way overbought, massive search for any yield, HY is close to being lower than inflation...which is crazy to me.

not sure how this ends via speculative risk assets and how that may impact our markets -- or will NYC real estate be a safe haven of sorts having diverged from natl housing trends in last 18+ months
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
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