Still doing 1400+ deals a month..but for how long?

David Goldsmith

All Powerful Moderator
Staff member
I’ll be the contrarian and say under 680.
I predict we will finish October with the lowest Contract Signed numbers since 2008.
 

Savvy Consumer

New member
How do you have this big a drop in sales volume and not impact prices. 2023 is going to be the start of price corrections. Moody's, Goldman Sachs, Ivy Zelman, many more predicting housing market declines in the near future. Savvy consumers should beware trying to catch a falling knife ️
 

David Goldsmith

All Powerful Moderator
Staff member
I think the tough call is whether deal volume for October 2022 will be down under or over 50% from October 2021 levels. At this point I think there is little doubt by the end of the month we will have seen the slowest October in over a decade.
 

inonada

Well-known member
I'm hearing that a non-insignificant number of purchases are being financed not through mortgages, but on margin loans. If that's the case I would think both interest rates increasing and stocks significantly correcting would have a major impact on that kind of transaction structure.
I told you it’d be fine, what could possibly go wrong?



Peloton Co-Founder John Foley Faced Repeated Margin Calls From Goldman Sachs as Stock Slumped​

Former CEO had pledged Peloton shares once valued at $300 million as collateral for personal loans; ‘This was not a fun personal balance-sheet reset,’ he says

John Foley, the co-founder and former chief executive of Peloton Interactive Inc., faced repeated margin calls on money he borrowed against his Peloton holdings before he left the fitness company’s board last month, according to people familiar with the situation.

As Peloton’s shares slumped over the past year, Goldman Sachs Group Inc. asked Mr. Foley several times to provide fresh funds or additional collateral for personal loans the bank had extended to him, the people said. The company’s share price has fallen nearly 95%from its $160 peak in December 2020.
 

David Goldsmith

All Powerful Moderator
Staff member
Yes, an almost 50% increase week-to-week is impressive at almost any level. But with levels this depressed from average for October we will have to see where we end the month. Both inonada and I look likely to be disproven.
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
yep, your right David. We ended weak after a nice week and a half or so - Hm, historical back to 2008, has 885 deals in Oct, we are in low 700s -
i think this will be the new normal

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Upstairs Realty

Well-known member
I know I say this pretty much every time there's a slowdown, but ... rich people still have money. This year's bonuses are not going to be @ the crazy levels of the Pandemic, but they won't be bad, so there will still be some market participants who look at high rents and decide to buy instead.

The question is how far sellers will be willing/able to flex down to meet those buyers. I just heard one story of a nearly 20% renovation credit baked into a transaction, to get the transaction price from "what the market was going to clear the property at" to "a print that would be acceptable to the board."

If that's the situation going forward, then the mismatch between the potential buyers, most of whom are not very co-op savvy or working with agents that are, and the sellers will be too great, and very little will trade, most of it on the lower end.

However, some properties will still trade, so I look forward to a next twelve-months of chat room variations on "but why aren't they cheaper?"
 

David Goldsmith

All Powerful Moderator
Staff member
Black Monday was October 1987. Transaction volume slowed but we really didn't see much price action start until 1989. Market didn't hit bottom here in NYC until 1992.

I keep hearing about how "no one needs to sell" because they are locked into low rate mortgaged.. This ignores that as we enter recessionary times some people will be losing their jobs and won't be able to meet debt service even on those. It also ignores that you can't stop marriage, birth, death, divorce, retirement, job transfer, and other factors that historically pushed transacting property regardless of how good or bad the market is.

As a result I believe we will see what has happened in several downturns I have been through. Sellers will resist as long as they can. And that will cost them. In the 1990s we had a loft listed on West 17th Street listed at $649,000. The owner turned down an offer of $625,000. They lowered the price to $625,000 and turned down a $600,000 offer. They kept chasing the market down and ended up at $225,000.

I think people in NYC have a somewhat provincial view of Real Estate downturns because of what happened here post GFC. There was a major shock to the system and price corrections, but here in this area it was extremely short lived. I believe that was because the $780 billion federal bailout largely benefited Wall Street and that was a huge support for NYC Real Estate. Elsewhere in the country prices didn't get back to where they were pre-crash until very recently (and some still haven't).

Net, net what I'm trying to get across is that if mortgage rates remain elevated and the economy goes into recession I think sellers should cut their losses and get whatever price they can get today unless they want/have the ability to hang onto these properties long-term into the next up cycle which could potentially take a long time to get back to current levels.
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
Give it a little time.. Inventory low, new listing activity low, pushing pulse higher as well

But deal vol is way way down.. Can't deny that. Very illiquid market that sellers don't seem to want to be a part of, yet
 
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