West Village a trend is taking form

I've been looking at the West Village and Greenwich Village for a while as well - sellers are definitely not in touch with reality and I'm a bit surprised you're only trying to bid 10% below ask. Prices are generally still well above $1,000 psf and that needs to change. At least 20% below that level seems a lot more defensible. I agree with your general takeaways and I'm noticing the same thing. Units are being pulled.

Think like this -- you don't know who they are, but there are, out there, some sellers who are either needing to sell for some reason...or perhaps fearful of further declines. If you don't make low-ball offers you won't get the benefit of that...and you should...because all these people (by and large) have benefitted from dumb luck bubble or bought at the top (and you don't need to bail them out)

Heck I was even verbally abuse by a stupid broker that told me that my offer 7% bellow their ask was not even going to be considered, how about that. Honestly I don't do major low balls because I do bid in places I like to purchase. Still some of the sellers attitude is getting to my nerves. Is not my freaking fault that they bought on the peak, is not my fault that they spent 75K~100K fixing a one bedroom place and honestly is their double mistake.

Now a buyer is offering what he believes its a fair value, if sellers don't want to sell and clearly a lot of them feel entitled to treat buyers like they are doing us a favor well take your unit off the market, but honestly don't make us waste our time.

Would it be unfair to categorize the WV seller as being more out of touch relative to, say, the UWS seller? I was scratching my head over this odd little gem today. I guess some take their properties off the market, while others wallow in never never land, month after month. Empty, no less.

http://www.streeteasy.com/nyc/sale/384715-coop-288-west-12th-street-west-village-new-york

yeah I saw that place too price went up it seems, I guess it means that the owner doesnt want to sell. I think that these games sellers are playing will last for a while, still at some point the crude reality will sink in. Prices are not going up and nope we are not coming out of this recession quickly enough that if you hold your breath for one year u will be able to sell at your desired level.

I've heard GV/WV owners refer to their neighborhoods as "bluechip". I think in their minds, it goes something like this: uptown, the Upper East Side (meaning not Yorkville) is bluechip property, so there must be a downtown equivalent, and we're it. And, of course, bluechip somehow means that prices skyrocket in up markets, but don't fall at all in down markets, because they're "safe". Childish.

Dragons last forever, but not so little boys.

There are a few examples of West Village declines here, and a substantial number of Central Village drops:

http://www.streeteasy.com/nyc/talk/discussion/7613-if-you-can-demonstrate-market-movement-with-comps-downtown-edition?last_page=true

Blue chip is the last thing you want to be these days.... the stats say the high end isn't selling at all.

Better to lower your price under a million and pretend you're a value stock...

if you wait you will likely be rewarded by far more than a 10% dip....

I hate to sound like a bull on the real estate market (I'm not), but isn't this what happens in every downturn, especially when you don't have forced sellers? Sellers take nice places off the market & wait for next up-cycle when they can't get a decent price. Manhattan is not like Florida and Arizona with tons of over-leveraged, forced-sellers out there. That's why you won't see West Village apartments going for $800/ft in 2009 or 2010 or 2011.

Yeah, more like $600/sf

I just can't resist commenting further -- no, what we have is:

- my friend the lawyer who got laid off from Alliance Capital and is now living off her 6 mo severence
- my friend the asset manager from US Trust who has been unemployed for 6 mos and cant find a job
- my friend the star analyst laid off from RBC who's living off savings
- my friend the IT specialist who is now unemployed from a data security firm

And ALL of these people USED TO make healthy 6 figure salaries and either own their Manhattan apartments which they may not be able to afford soon or have totally given up on the idea of buying since they're more concerned with feeding themselves.

But no, the WV is different, it will be COMPLETELY UNAFFECTED by the fact that half the freakin financial services industry is now unemployed. Oy Vey!

i've been looking a bit further uptown (flatiron/ chelsea), but i'm shocked that you are only bidding 10% below ask and even more shocked that that they take offense in this market. are you looking in the sub $1m range, where there are more buyers and its easy to get a mortgage? I've been bidding (unsucessfully) on a few places in the $1.5-2m range well below 75-80% of ask and the vibe i got from the seller's broker was that there was a deal to be done if i upped my price by 10-15% (which would appear to be the range of your bid).

Clearly there is more current and upcoming supply in the chelsea area, so this could explain why WV owners are holding out even in the face of the increasingly bad news on jobs, housing suppply and rent prices.

I think people should take a step back for a second here. Most people, especially sellers, are unaware that manhattan inventory is now about 2 years, say 24 months. that means that in any given month, only 4% of apartments will sell. and given that absolute levels of inventory keep increasing, if you are not in the best 5% of value of apartments out there, you will not sell. this is exacerbated by the fact that the 4% of apartments that actually are selling are heavily biased towards lower priced studio/1 beds. and not GV or WV 2bd/2bath, etc. It's not surprising to me at all, that with these figures, 80-90% of sellers out there are simply not pricing at realistic levels. Some are in the camp of not needing to sell or testing out the waters. They will waste their time and effort and come up empty handed. The people that need to sell will pound down prices in an attempt to reach that top 10-15% of "value" that will be needed to sell an apartment over say a 6 month period.

And remember that nationwide, prices are down almost 30% from peak with only 10-11 months of inventory AND the vast majority of those sales qualified as conforming or FHA, which greatly increases a buyer's ability to finance.

Special_K, the nationwide mkt is full of forced sellers on resetting interest-only mortgages, minimal down payments, and foreclosures. Neither of these conditions is a large factor in Manhattan. Many sellers can afford to wait; otherwise you'd see 30% price falls.

The Northest is different
No, New York City is different
No, Manhattan is different
No, Downtown is different
No, the West Village is different
Next up: WV prices sink 40%, BUT, West 12th Street, now THAT'S different!

downtown, half of apartments sold at the peak were condos, and the vast majority of those were new construction where at most, you needed 10% down and paid a teaser rate. very few people who purchased in the past several years in manhattan use 30yr mortgages. they are almost always arms, and in many cases i/o arms at that. what makes you think we won't get forced sellers here? where do you think unemployment is going in nyc? as for foreclosures, i think you will start seeing a pick up there as we have clearly lagged the rest of the country. however, i agree it probably won't be quite as bad as CA since we are a recourse state. but it very well may with the tens of thousands of new construction that is coming online.

west34th, well argued...

Special_k - I agree that we will see some forced sellers here...we have to.

West34 - In some ways your sarcasm is actually accurate. RE has always been local and in NYC it is street by street, building by building and floor by floor.

"the nationwide mkt is full of forced sellers on resetting interest-only mortgages, minimal down payments, and foreclosures."

1. 60% of new development was purchased with adjustable-rate jumbos.
2. Many with 0% - 10% down.
3. Foreclosures in NY take a year or longer; in other states they're done without court intervention.

"Neither of these conditions is a large factor in Manhattan."

1. Really?
2. What about Wall Street layoffs?
3. No bonuses?
4. Advertising dead?
5. Publishing dead?
6. Fashion dead?
7. Incomes falling?
8. Unemployment rising?

"Many sellers can afford to wait"

How do you know?

"otherwise you'd see 30% price falls."

According to Miller Samuel, we're almost there - and the decline is just starting.

The analogy has been used many times before -- right now most Manhattan sellers are like Wylie Coyote -- there's no more desert under their feet but they're still running, still thinking they're safe, but sooner or later they'll look down, and realize they have no choice but to start falling.

"But they don't have to sell!" you say "They can sit on the sidelines!". Oh really, like steve said, and consider the other jobs (sub-industries from steve's list) that are getting killed in NYC right now:
- commercial photographers
- art directors, stylists, digital retouchers, etc
- architects
- interior decorators
- IT specialists, programmers, web developers
- sales reps of all stripes

This is broad-based and will be very painful. These are your neighbors with their $3,000-$10,000 monthly mortgage payments. Oh, wait, I forgot, the West Village is different -- only really really rich people with recession-proof jobs live there!!!!

Another friend of mine works for one of the big food supply companies -- he's a top sales guy -- and just told me their orders are now down 30-50%!!!!! Think about it -- restaurants are only ordering HALF the dollar value of raw materials they were ordering last year. That is how badly the food service industry is getting hit.

I can rent a decent 1BR with elevator, doorman, etc, in the west village for $2400-$2800. Lets say $2600. That same apartment would currently list anywhere between $550-800k. Lets say $600k. Now, brokers aside most of can agree that prices to both rent and buy are going to continue dropping for the short to mid term.

Using the ol' new york times rent vs. buy calculator and plugging in 5% rent increases and 3% appreciation it makes sense to buy-- but that won't happen until maybe 2012, and even then appreciation will only match inflation, because (bubbles aside) housing simply doesn't beat inflation over time.

Alternatively, if the apartment cost $400,000, an ADDITIONAL 30% price decrease, and rental costs started increasing again, say 5% per year, the numbers start to add up and it would be worthwhile buying vs. renting after only 5 years.

The very important point here is that while prices to rent AND buy are dropping, you'd have to be crazy to buy because it's nearly impossible to value property without stable rental fundamentals to compare to. The best you can do is get 1999 comps and adjust for inflation, but that's not really accurate as the city was very different 10 years ago.

Anyway, long story short, I'm not buying until we hit $600/sqft.

i don't buy that there are no douchey wall street types who bought in the west village and are now underwater. they are all over that neighborhood now.

West34 & SpecialK: You're driving by only looking at the rear view mirror. Everyone knows the current conditions are terrible. No one is looking at that; people are looking fwd and wondering what 2010 will be like. That's why the SP500 is +20% over the last 3 weeks. People are thinking maybe we will see the worst of the GDP downturn in H109 and then 2010 will be better (stimulus kicks in, easy comps on poor 09 numbers, etc.). I'm just putting this on record so in Summer 2010 when everyone is scratching their heads about why they weren't able to buy anything great at $800/ft (or $600/ft), this is why!

I've seen posts just like downtownsnob's on a daily basis since 2006, when I started seriously looking at the market. Ever since the downturn began, every single day someone calls a bottom. No matter if it's tuesday, wednesday, or thursday, TODAY is always the bottom, TOMORROW is always going to be an upswing, and BUY NOW OR YOU'LL BE PRICED OUT FOREVER!

Gosh.

I think I'll pass.

but downtown snob,

to buy something 'great' in the west village right now you would have to pay over $1500 per square foot. i think the point is not that absolutely every apartment will fall to $600 square foot or $800 per square foot, but rather that many will. a truly great apartment may only fall to $1000 per square foot, and some magnificent apartments may even bottom out at 1300 per square foot. But that could still be over 60% below peak.

i'm a downtown snob too, and i don't expect the sort of apartments i am interested in to fall to $600 per square foot. take, say apartment 8D at 1 5th avenue, a nicely renovated 1200 square foot apartment on a decent floor in a wonderful building in a great area. this apartment is unlikely to fall to $600 per square foot i agree. maybe it will even sell for $1000 per square foot.

but the apartment is currently asking $2.6 million, or $2,166 per square foot. i think the economy may be turning a corner, and i am even bullish on the long-term prospects for new york city. but none of that justifies paying over $2,000 per square foot for this apartment--a prime candidate for a fall of more than 50% from what it currently asks.

And lest you think this is unusual, there are apartments priced like this all over the village.

Hehehe

downtownsnob, gosh as much as you want about the DJIA up 20% (while barely scratching 60% of its former 14K points of Oct 07), but the truth is that we will only hit the forecast 10 to 12% unemployment by 2010, so for real people with real possibilities of buying, 2010 isn't lookin so rosy, is it? 2010 will be "distressed recently unemployed seller" year. Ditto for 2011.

Happyrenter and Schizo: Happyrenter, I agree with you completely. I'm not saying the market isn't weak & you won't see further declines, but if you're waiting for <$1000/ft in the West Village, dream on. Totally agree that $2000/ft is insane. Also just trying to make the point that great investors are contrarian and buy when the data looks poor and there is blood in the streets. Schizo: You didn't see a post like mine in 2006 or 2007 because I'm advocating a contrarian buying style. Buying in 2006 or 2007 wouldn't have been contrarian: it was what everyone was doing!

Yeah, the Village is immune. It's different. Not like all those other neighborhoods. :-)

happyrenter -- you and I will probably be bargain hunting in the same buildings next year.

It was not contrarian back then, but the substance was absolutely identical. They all pulled quotes directly from David Lereah's well-thumbed phrasebook.

"Buy now, or be priced out forever!"

"Manhattan is special!"

"They aren't making any more land!"

"We're a 'premium world city', even if the local market tanks, foreign investors will keep pricing it up!"

"Housing is a safe investment, it always goes up!"

"Rates will never be this low again!"

"Think about the monthly nut, not the total cost!"

All of these things are WRONG. Housing was bubbled nation-wide, and actually manhattan IS special in one very particular way-- the world's finance industry was based here, and that industry was effectively destroyed.

Manhattan still has a long, long, way to go. I'm not calling a bottom at $600/sqft-- I think it'll overshoot, possibly significantly. That's just the point where I'm going to start seriously looking to buy. Maybe I'm too optimistic, I'm no Nostradamus. But I've been right so far!

Schizo: Let's revisit this topic on 6/30/2010. Please check this discussion then and let's discuss how many offers you were able to get accepted at $600/ft in the West Village. Only the future will tell, but I know it will be ZERO.

Schizo, I disagree with you. I think you underestimate the amount of cash that has been sitting on the sidelines since late 2006 just itching for a downturn in Manhattan so that they can buy at a reasonable price. Though "reasonable" is subjective, for many people with buying power its very relative. My point: there are many people with money that are interpreting this recent fall in manhattan prices as an opportunity and they will likely keep the mkt far above $600/ft.

"...if you're waiting for <$1000/ft in the West Village, dream on."

That's very funny, downtownsnob. I just ran a search here for Greenwich Village and West Village properties under $1k/sf and as of today there are 152 of them.

http://www.streeteasy.com/nyc/sales/nyc/ppsf%3A-1000%7Carea%3A116%2C157

In fact, there are 73 under $900/sf. Yes, I'm sure brokers are lying about square footage and in a few cases stretching neighborhood boundries, but your comment is simply wrong, and we still have much further to fall.

"I'm not calling a bottom at $600/sqft-- I think it'll overshoot, possibly significantly."

If you think the WV is going to trade at $400-500 sf I think you are mistaken. Too many people would jump in way before that, as they see an opportunity to get a nice apartment in the Village when they couldn't afford to previously. They won't risk losing this chance just to let the market go down a touch more.

Williamsburg...that's another story.

That's right, current prices are between $800-$1100/sqft for decent 1BR apartments in the central village/west village/union square areas.

I'm one of those people waiting since 2006, and I won't buy until it's cheaper than renting in a reasonably projected 5 year timeframe.

tenemental: I should have been more specific when I said 'a great place': No Greenwich Village-NYU-infested crap--West Village only. And no crappy walk-up, co-op buildings. I meant nice apartments with decent floorplans, lots of access to light, and up-to-date kitchen & bath finishes. These will not be going for $600/ft or $800/ft.

downtownsnob: look at all the 'contrarians' (bill miller, et al) who bought financial stocks and blew up since. being early is what all contrarians do, and not all of them are successful.

1sttimer: some people might indeed be sitting on cash but whether they will pull the trigger until 'things stabilize' (prices, employment, taxes...) is a different story.

downtownsnot... trust me... I'm an anonymous poster living in Idaho... the apartment you live in right now is $800psf.

FYI, in mid 1990's I did a lot of condo flip/investments at $300psf. I'm a buyer at $500 to $750psf on prime CPW7... I'm getting paid $30K/month to wait the next 2 years... vs my rent of $5K. Trust me, again as I sit in my parent's basement typing away... your apartment right now is worth $800psf... just look under the rug in the foyer.. the price tag is attached.....

this whole argument has become absurd. downtownsnob, if you think 2000psf is absurd then how can you think now is a good time to buy when most of the truly great apartments are still priced at that level? 'contrarian' investing doesn't mean that you are automatically right because you disagree with other people. it means you have the courage of your convictions even when the aren't popular, which is great, but doesn't make you right.

it's silly to debate whether an apartment at 1 5th avenue should sell for 1000psf or 800psf or 600psf when it is currently asking 2200psf. we are ALL bears if we think that the current prices are out of line.

w67th you have lowered your price target? 500 for a prime central park west classic 7? that would be, what, a 75% decline peak to trough? bold.

happyrenter... my friends who are in finance are dropping like flies. These were my "peers" and they would've been bidding against me for this apartment 1 yr ago.... now no matter how big the pat in the back was this bonus season, I don't thinkz it's a currency a seller would accept.

bold, you should see the size of my coconuts :)

To clarify a bit and avoid future strawmen, when I say $600/sqft I'm talking about coop 1BR 600-900 sqft doorman/elevator buildings in the central village, west village, and union square areas. The apartments that are currently selling for $800-$1200/sqft. Not classic 6s on high floors overlooking CPW.

Looking only in West Village, not Greenwich Village, I still see 39 listings below $1k/sf, and Street names like Barrow, Perry and Horatio. I don't know about a unit just as you described getting down to $600, but below $1k is a no-brainer.

http://www.streeteasy.com/nyc/sales/west-village-manhattan/ppsf%3A-1000

As for the Central Village, if you look at the comps thread I linked earlier, there have been some pretty shocking declines in prime buildings that do not cater to college kids.

It just absolutely amazes me that although GV apartment prices ACTUALLY plummeted in the 1970s*, and ACTUALLY plummeted again in the 1990s*, people will argue until they're blue in the face that they POSITIVELY CAN'T plummet in the 2010s!

*Chart 7 in the 9/04 Miller Samuel Real Estate Bubble Report:
http://www.millersamuel.com/pdf-tank/1096034424rIMRe.pdf

I don't think people believe they cannot fall, just that they believe they will fall less than most other areas. Just because you don't agree with them doesn't mean they are not correct. GV is much different today than it was in the 70's and even in the 90's. Much of the charm has been peeled away, but a lot of the negatives (crime, garbage, drugs, etc) is also gone.

Well, I think I'm right too!

For example, the apartment linked below should cost around $400-450k. That's around a 33% drop. Nice building, not ultra-luxurious, a little small, but a convenient location, in a young area, and just fine for me.

http://www.streeteasy.com/nyc/sale/398655-coop-60-e-9th-st-greenwich-village-new-york

There will be some that go quite low.

Also,I wouldn't exactly call 60 East 9th the WV and I believe there is a recent thread that talks about some negatives with that building (thin walls, lots of noise, etc). You can easily find it. The information is from someone that lived in the building recently.

I'm also looking in central village and union square areas.

I have a friend that lives in 60E9th. I know the building well.

I used to lived just a few blocks from there. I think it's a great neighborhood....a little too much NYU at times, but overall, I liked it a lot.

Schizo - If you're really interested in the building, take a look at that one, or one of the dozen other units on the market. If not that one, then wait for another to come on the market. Get a pre-approval for $450K for the bldg, and stand by with your down payment in the bank. You can shop yourself to the listing agents in the building, see where the soft spots are. You might find them without having to wait till asking prices come down.
Tina
(Brooklyn broker)