Summer Market Heats Up

I was mostly being snarky, because I had stated that exact same thing when people were using the few months of complete inactivity as their point of reference for how there was 4 years of inventory. I stated that you needed to take a larger snapshot to get an accurate read and severl people shot back that you only needed the actual last 30 days numbers since it was real information.

Of course I thought that was ridiculous at the time, and think it was ridiculous in my example. I just wanted to see if some of those same people would keep their logic going the other way...

waverly, I should have known better! Totally agree.

bjw, done...okay note to self: please add bjw to the self centered, sell their mother for a profit, upside down, f'ed up list.... :)

that's self-centered, make sure you get the full title.

please add me to the list as well.

why is it "selling your mother?" because it benefits someone else and not you?
if real estate crashes and burn i may be able to buy myself a better place AND pick one up for dear old mom!

steveF, that's a load of hooey. When you see bread on sale at the supermarket, do you purposely not buy it? I can't speak for everyone, but I have no desire or need to see anyone suffer financially - I don't think I even intimated as much. But that doesn't mean that every cheap sale is an exercise in ego, profiteering, and being "f'ed up." There's a little more nuance than that.

sniper, declining real estate values is DIRECTLY related to unemployment. The fact that you want price depreciation means you want unemployment. Simple dude. Either you just didn't realize that or you are f'd up. I think you realize the unemployment thing but don't care as long as you get what you want. You still want to be on the list?

the unemployment is happening whether i want it or not. i know that i sure would have a lot more disposable income if my housing nut wasn't so much every month. i would be blowing that cash all over town...and i think if my neighbors and friends were blowing a lot of cash all over town too then business might need to start hiring again to keep up with all our demand.

unemployment is a small part of the story; it affects relatively few people (high single digits fraction of the population currently; far from all of them real estate owners)

bigger part = all the bursting bubble stuff - banks no longer making no/little money down loans, change in buyer mindset that real estate always goes up, speculators/flippers out of the market, etc., etc.; these affects a much greater segment of market participants (nearly all). There is no reason to mourn the passing of any of this and no implication that wanting air to come out of the bubble is the same as wanting people to lose their jobs.

Do you "want" price depreciation? If you do, then you not only "want" but you "need" unemployment. There is no spinning it.

SteveF - To assume the causation (and your level of certainty that it exists) implies that you believe someone looking for a better deal is mean spirited. In my experience someone who is so eager to see such a mean spirit in another is usually hiding one themselves. Perhaps you are one who decried the "bitter renters" in the past?

Need? Not at all. Change in sentiment, which we've had in spades (although apparently not in your case), is more than enough to bring prices way down.

Prices were arguably irrational in 2007, but if there is a rational explanation it would be a prevailing view that Wall Street would continue to run and employment and comp would continue to grow rapidly, allowing the market to absord the huge supply of new development attracted by high prices. Flat or even flattish employment and compensation would have been more than enough to unmask that con game and pop the bubble. You are right that higher unemployment adds to the decline, but it's a contributing factor, not the main story.

I have been thinking of the discussion here. Essentially the argument is that "Sales are increasing so prices won't be dropping." What if you turned that around; "sales have increased because prices have dropped." Wouldn't that imply that there is a strong possibility that sales pace will only continue if prices continue to drop? As an example, look at the So. Cali market over the last year.

(This reminds me of the argument one can have over causality in NYT headlines that always said "Crime statistics down despite record prison population".)

"I just wanted to see if some of those same people would keep their logic going the other way..."

waverly - a hypocrite trap. nice. too bad no one went for it. it could have been entertaining.

when i was typing my response to your post I was wondering why you were posting nonsense, as i thought you were a sensible poster in the past. now it makes sense

You guys don't need statistics from me - that's Noah's department. I'm the emotional one, remember?
Tina
(Brooklyn broker)

I agree that deal volume has gotten stronger, but it isn't anywhere near strong enough to clear inventory. Since we're basing this entire discussion on UD's numbers, the one thing that hasn't been emphasized is that those same numbers show more listings coming ON the market, on a daily basis, than going into contract.

So ... (slightly) declining inventory has two parents - 1) contracts; 2) listings being pulled.

There is still NO pressure to buy unless you really want/need to. Again, according to UD, Manhattan inventory has doubled in the last two years. Since its peak around 11,000 in April/May, it's now down about 450 units (4%) during the hottest selling period of the year. Not great evidence of a lively market.

From my subjective vantage point - the only places I see going into contract are asking at least 15% below what they could have asked a year ago. Other places are being pulled. Others are just sitting there. I think that my market (prime Brooklyn 2 BRs) has locked in about 15% off-peak prices, and still shows little chance of stabilizing or recovering.

Maybe the summer won't be slow, but if this is a 'hot' (or sellers') market, then people have really lowered their standards in the past couple of years.

Oh, and SteveF, stop making your moronic argument that anyone who's happy about falling prices is either bitter or morally bereft. Real estate isn't a moral issue. And even if it is in some respects, there are as many winners as losers in a declining market, so prices - whatever they are - are morally neutral.

I think you're a greedy criminal for wanting your condos to hold their values. By your morality-based analysis of real estate, if you were a good person, you'd donate them to charity.

sls - haha...and thanks for the kind words!

The big point (today) that SteveF is missing is that what he calls "crash and burn" is just return to reality. We had a bubble, and now things will return closer to where they should be.

Sure, folks will get burned, but thats the fault of the bubble, not the correction.

Things getting back to where they should be - including an affordability factor for most of the city - is not it itself a bad thing.

And, in terms of trying to judge other humans....
SORRY, SteveF, but hoping an artificial bubble continues so YOU can profit isn't really something to hold as the moral high ground.

I regret bowing out when I did. If I can, lets return this back to the original point...

Look at the 6 month contracts signed graph on UD for a moment.

The prediction that summer sales will drop off a cliff has yet to materialize. The daily trend for the last 6 months is one of solid sales GROWTH -from an average of 10 contracts per day to over 40 today. Couple this with sellers pulling out for good and the trend is undeniable. Inventory still needs to get tighter before we return to anything resembling a normal market, but make no mistake about it, this is not just spring exuberance as we've been led to believe.

> The prediction that summer sales will drop off a cliff has yet to materialize.

Who predicted that? Sounds like a strawman argument.

You can't fall off a cliff when you're already at the bottom....

> The daily trend for the last 6 months is one of solid sales GROWTH -from an average of 10 contracts
> per day to over 40 today.

As pointed out, going from near zero to a little better than near zero doesn't mean a whole lot. We're still way below last year's pace.

keep pumping UWSmynabe...

10022 - You are kidding right? Its right from the bear playbook. You want to stick your head in the sand? Fine with me. And by the way, last years data stopped having any relevance to this year when the bomb went off and killed the steady upward trajectory.

"Couple this with sellers pulling out for good"

What's the proof of that? There certainly seem to be sellers pulling out for now, but there's no way to know if they can afford to stay off the market for a long period of time. Many of them can't. When they finally NEED to sell, guess what? Inventory continues to stay high.

Deals are happening, sure, but properties are coming on the market at a faster rate than contracts are being signed. It's right there on the same chart you keep returning to.

But, you're definitely right, there's no 'spring exuberance.' There's something quite a bit little less dramatic going on ...

God of Cash Flow has much more sway with "OWNERS"...., renters not so much....

The "bomb" being Lehman?

How about for a change we consider that Lehman might not have been some freak accident that turned the world upside down but the inevitable result of mismanaged overleveraged investments in overvalued assets? Anybody paying attention to the government meetings on the B of A/Merrill merger? Guess what, if the government had saved Lehman, Merrill would have been next. Do yourself a favor and start realizing it was when, not if.

Now I'm sure someone else will thrash you on the irrelevance of last year's data.

JKB- Of course I'm only guessing about seller sentiment and the pulling out for good line. But you have to wonder about those that have languished on the market month after month without any reasonable drop in price. You have to ask yourself if they were ever serious about selling in the first place.

Is it your contention that these people are waiting for further deterioration before re-entering the market?

UWS - you have to look at the sales numbers with both eyes wide-open. Yes, they have increased, but they have increased from the gutter. Improvement...yes. A significant shift in the market...not so much.

Look, I an in the staffing industry and I can tell you that from my own personal experience things have picked-up in the past month (at least in my niche) and they appear to be gaining some real traction for the first time all year. This is good news, don't get me wrong. But don't think for 1 second that I am considering the recession over or that I am expecting sales numbers to be close to "normal".

> 10022 - You are kidding right? Its right from the bear playbook.

Yes, it was right from the bear playbook like a year ago.
Then it HAPPENED. Probably more so than anyone predicted. Massive volume decline.

Then, as I said, we're now at the bottom of the cliff. Can't fall again.

Yet you are here saying "see, we didn't fall off the cliff after all" because we didn't fall off a second time.

Is this really what you are arguing?

> You want to stick your head in the sand? Fine with me.

Not realizing we ALREADY fell off a cliff would be sticking your head in the sand. Try again, though.

> And by the way, last years data stopped having any relevance to this year when the bomb went off and
> killed the steady upward trajectory.

Let me get this straight... .its irrelevant that we already fell off the cliff in trying to determine whether or not we can fall off the cliff we already fell off?

Really, dude, what are you smoking?

Ok malthus, I'll bite...

What's the relevance of last years average sales figures to todays market? What secrets are lurking in the numbers that will help us understand what's happening today? I honestly want to know because from UD on down people continue to reference YOY data.

RE is a slow beast... sometimes it takes Lovers years to realize the relationship should've ended before the stalking and craziness... yes, there are plenty of "sellers" in complete denial... hoping against all hope, that their $1,500psf will suddenly re-appear... like a love gone.... the listing is nothing more than a random phone call for three rings and hearing no answer, hanging up before the "truth" of an answer is risked...

This is simple supply and demand folks. With price as the Y axis and quantity as the X axis, the demand curve is downward sloping. That's a fancy way of saying, as price declines more quantity is demanded. So as apt prices have dropped, more people are interested and more apts sell. But the issue is that once the set of buyers willing to buy at say 20% off peak are taken out, prices will have to drop to 25% to have the next set of buyers be interested and so on. So it doesn't surprise me that volume has picked up significantly from jan/feb. We've got seasonality, record low rates, and much lower prices. But to be honest, that it took a 20-25% drop to sell 1,000 apts/month during peak season with record low rates is not bullish. it's bearish.

Listen 10022 if a 6 month upward trend in sales growth is that meaningless to you, fine. It interests me.

Nice Special_K. Good post. Are you suggesting we should expect a plateau somewhere before the next shift down?

Waverly - I understand that from what you say that there is finally some movement in the recruiting field. Can you tell us more? Are salaries staying the same? What about promises of bonuses? Is the pool of people growing or shrinking? In your firm are there other parts of the industry that are doing well/worse?

"Are you suggesting we should expect a plateau somewhere before the next shift down?"

I think sales will continue to be relatively brisk at the current price level (broadly speaking). UD has commented on this repeatedly and I couldn't agree more. He uses more trader speak and words like consolidation at these levels and a countertrend in a larger bearish downtrend. Basically it just means that volume will be intact and prices flattish until the buyers willing to buy at current prices are taken out. At which point, volume will go down again and we will need to see another decline in price to increase volumes. And so on. The catalyst to change this downward cycle is months of inventory. When that inventory gets small enough, we will see prices start to stabilize and eventually go up.

I think the biggest wildcard in all of this is sellers willingness to play. The rise in numbers of those who HAD to sell in the wake of the financial storm may already be behind us. We are seeing a huge number now just dropping out.

"Is it your contention that these people are waiting for further deterioration before re-entering the market?"

No. There are many different kinds of buyers and sellers. Those sellers whose properties sit on the market with no price drops, then get pulled, can have many reasons for their behavior:

1) they have no real need to sell and they were just casually listing in the off-chance they'd get their exorbitant ask (as you suggest)

2) they've been delusional the entire time it's been sitting on the market, and they continue to be delusional thinking that if they wait a few months, prices will rise.

3) broker games. They're pulling a stale listing now hoping that if they publicize it later, it will appear 'fresh.'

There are sellers who are doing all of those things, many hundreds in each category (and probably some others I didn't think of). In Nos. 2 and 3, their properties are, in effect, still unsold inventory. Just delayed.

I have trouble with your implied connection between deal volume and decreasing inventory. Deal volume may be keeping inventories from rising as fast as they would without it, but I'd contend inventories are effectively still rising, despite the recent increase in contract signings.

I have also spoken to a fair number of people who had to move but have pulled or didn't list at all because they are gambling that prices will come back up next year. In the mean time, they are more likely than not losing money by renting their current places, but reason that they will take small losses for the next year to avoid big ones now. They may be right.

But they are playing against most economic indicators, market predictions and historical context and IMHO are truly the ones burying their heads in the sand.

well...in the sense that anything can happen, of course they may be right. as they say, a brick might fall on my head but its pretty unlikely.

"Do you "want" price depreciation? If you do, then you not only "want" but you "need" unemployment. There is no spinning it."

That is just plain crazy. The price/rent and price/affordability ratios for NYC and most of the major cities in the US got way out of whack - even when compared to previous full employment periods. Prices move up and down based on a number of factors, and unemployment is one of them - but the ratios were closer to historical norms in the late 90s when the employment picture was similar to 2007, so what you say is demonstrably false.

A glut of unsold homes will keep prices depressed even when we return to full employment in many cities, at least for a while. THere is a thing called supply and demand. look it up.

AvUWS - I would prefer to keep my specific specialty private, as it is a small world. The legal division of our firm has been decimated and does not look like it will recover anytime soon. Many of my clients are financial service firms and some are beginning to hire and pay fees to find talent. Offers are restrained. Fees are discounted. But, most of our competition is out of business, so that does give some balance to things.

As for bonuses, still too early to tell, but I would tend to expect a similar bonus to Jan '09, maybe a touch better (maybe not).

No sign-on bonuses for candidates. No relocation assistance for candidates. And if you are on a visa and unemployed, you better have a plan B, C and D because there are so few companies than can/will hire you right now. It is more than likely that you will be out of status.

"I have also spoken to a fair number of people who had to move but have pulled or didn't list at all because they are gambling that prices will come back up next year."

Another category of de facto inventory that's only temporarily off the market. I wonder what these sellers' threshold is for prices coming 'back up'. If they're expecting some kind of buyer feeding frenzy to create bidding wars and bring back 2007, I think they'll be waiting a lot more than a year. And many of them will eventually just bite the bullet and sell rather than wait longer and longer in a depreciating (at best, stagnant) market.

Waverly - Sounds like you are painting a decent if not rosey picture for your world (I am not interested in proprietary info, just the kind of data you did add, thank you).

That said you didn't paint a very rosey picture for the job market. All those extras offered to candidates have been a given for a good number of years now. And that your business is picking up sounds like it is attributable to the combination of "some" hiring vs the "no hiring" and the fact that you have less competition.

Goldman may be doing well, but sounds a lot like that has more to do with the government bailout of AIG than a resurgence on wall st.

"Goldman may be doing well, but sounds a lot like that has more to do with the government bailout of AIG than a resurgence on wall st."

And the fact that the competition has essentially vaporized in a number of Goldman's businesses. Goldman may end up to be the BIG winner in this entire mess. Get ready for financial firms making political strategy a pillar of their business strategy. Goldman seems to have played this perfectly, and, in many cases, it had nothing to do with providing a better (or smarter) service than its competitors. It was just negotiating more favorable treatment by the government.

AvUWS to your comment "Essentially the argument is that "Sales are increasing so prices won't be dropping."" - in Las Vegas the number of closings has gone up month over month for 10 straight months yet at the same time prices have fallen 10 straight months on a month over month basis. Clearly more sales does not mean prices will rise - in fact the opposite seems to be true - more transactions seems to mean prices will fall or are falling.

agreed. when those head-in-the-sand sellers see that sales are, in fact, happening but wonder why there is no interest in their home they might finally realize "it's the price, stupid!" and start to bring their prices down closer to where deals are actually happening.

"more transactions seems to mean prices will fall or are falling." - or maybe it's falling prices mean more transactions, a.k.a., basic microeconomics at work

"Home Resales Up From Previous Month, as Prices Fall
WASHINGTON -- Existing-home sales rose a second month in a row during May, but prices again fell sharply, threatening a delay to a housing sector recovery.

Home resales increased by 2.4% to a 4.77 million annual rate from 4.66 million in April, the National Association of Realtors said Tuesday. The NAR originally reported April sales rose 2.9% to 4.68 million....

...The median price for an existing home last month was $173,000, down 16.8% from $207,900 in May 2008...."

http://online.wsj.com/article/SB124576565682441751.html

But, you see Manhattan is like totally different. Prices never, ever, ever go down. Ever.

Clearly more sellers are getting with the program. I also agree with the idea that some will let their listing run out and stay where they are having never made a real attempt at pricing for the current market. And comparing NY with LV just doesn't compute.

This thread is funny.
2 months ago, the streeteasy bears have been hammering on the idea of a continuing crash of NYC housing prices with the 'slow' summer months ahead of us.
Fast forward to June 25th and inventory continues to move and what does the bears do?
They use 'improving' data points (unemployment, jobless claims, gdp, inflation, higher rates, etc.) as the argument for the next leg down.

Flame on!!!

jason1000..... A 17% drop in median prices from a year ago is a given. Any data there on the previous month?

what the bears are NOT doing is buying in LIC. enjoy.

this bear is about to head to Harrod's, which has the cutest bears of all.

how's that internet cafe, ericho? comfy chairs?

AR...have a great vacation..

thanks, Julia. so far I am, and I haven't even got to the really good parts (Nice, Bonnieux, and Paris). no time to do any serious hunting for your ONE BEDROOM, but i'm seeing some very promising signs. now, Harrods calls.

"very promising signs"

On one hand you are seeing promising signs, on the other you state you won't buy until at least 2012 because prices will potentially collapse 40-70% more.

...got my popcorn here....

"This thread is funny.
2 months ago, the streeteasy bears have been hammering on the idea of a continuing crash of NYC housing prices with the 'slow' summer months ahead of us.
Fast forward to June 25th and inventory continues to move and what does the bears do?
They use 'improving' data points (unemployment, jobless claims, gdp, inflation, higher rates, etc.) as the argument for the next leg down."

GDP is improving? Do you know what the definition of "recession" is?

As for unemployment, thats improving? Huh?
http://blogs.reuters.com/felix-salmon/2009/06/18/unemployment-datapoint-of-the-day-3/

I love how going from falling to falling a bit slower (or even faster) is "improving"...

"AvUWS to your comment "Essentially the argument is that "Sales are increasing so prices won't be dropping."" - in Las Vegas the number of closings has gone up month over month for 10 straight months yet at the same time prices have fallen 10 straight months on a month over month basis. Clearly more sales does not mean prices will rise - in fact the opposite seems to be true - more transactions seems to mean prices will fall or are falling."

Of course volume will rebound a bit off of humongous declines. Of course. But saying that means prices are coming back... wow, thats a stretch.

ericho, idiot. julia and i are looking in VERY different markets. and i'm not really looking, except for Julia. the ONLY reason i might buy in 2012 is for estate planning purposes, to gift something to our daughter.

AR,
Let's TAAAANNNNGO!
Cha cha cha!
Cha cha cha!

wouldn't dance with you. ever.

It appears we are almost back to late 2008 inventory levels. What an astonishing level of spring and summer of activity. Economic sentiment slowly gaining positive momentum will further bolster sales.

Below 9000 by Labor Day?

i think inventory may indeed go below 9000 but if you look at the numbers new listings continue to outstrop contracts -- they have all along, so the reason inventory is dropping is because listings are expiring and are not being renewed
very interesting that this is goinf this strongly
Wonder if that means that the sellers are just going to sit and carry the costs or if there are opportunities to approach them directly w/o a broker involved

joedavis:
You nailed it exactly. Contracts signed is not keeping pace with new listings. Not even close. Listings are expiring and simply being pulled. Look for a massive uptick in new listings after Labor Day.

Net result is the same whether the drop is the result of sales of buyers giving up.

Any belief that sellers will be back en masse, having already failed at achieving their price, are fooling themselves. They're staying right where they are for a while and will not sell at a loss.

should read: or buyers giving up..

UWS: Close but not quite accurate. I know 5 people trying to sell their apts. Three pulled them for the balance of the summer while wife and kids are vacationing. They each said they will relist with a fresh listing when everyone comes back to the city.

2010 is going to be a hot year lots of increases all around. 2011 will be flat to lower YOY. Late fall 2009 will see 10-15% increases YOY.

RE didnt crash 40-50% like the bears dreamed for.

NYC10022 will continue to rent and be a day trader for the next 10 years all the while hoping to become part of the ownership class and growing day to day more resentful of his failures.

Me I will read NYC10022's vitrol filled rants calling me a moron from my boats either the one on the Atlantic or the one on Lake Mead and probably soon the one on Côte d'Azur all paid for by my market timing renter wannabes.

So patient09, 3 out of 5 of your friends are coming back into the market -are they coming back at a fresh (lower) price? If not, what makes them think they will have better luck in the fall? Clearly the summer has been unusually strong and if wife and kids are out of town why not continue showing? Doesn't compute.

Petrfitz: "[A]ll paid for by my market timing renter wannabes."

Indeed. Your two dozen LES tenement apts are paying for all that. Nothing to do with the heiress wife and child gaming empire. I see.

You are an infinite source of hilarity.

Because they are frustrated. Hoping prices will stabilize. Bring it back on as a fresh listing, "new" listing to generate interest. Ask UD why seller psychology works that way, I have no idea. It clearly is a seasonal trend we see every year in the second half of summer.

Parkside I'm about to sell the latest gaming co. 5th successful exit. How many do you have?

pf your citation of all spells one thing to me

L O S E R

yours truly, donald trump

> 2010 is going to be a hot year lots of increases all around. 2011 will be flat to lower YOY. Late
> fall 2009 will see 10-15% increases YOY.

This coming from the moron who told us 2008 would be up 15%! And who bought property in vegas, bragged about it, and then it went bankrupt!

> RE didnt crash 40-50% like the bears dreamed for.

It ABSOLUTELY crashed the 20-30% bears were predicting. Only one out of 50 even claimed 50%.

Either way, 30% or 50% down is 100x more accurate than your moronic "up 15%" call!

Dufus.

> NYC10022 will continue to rent and be a day trader for the next 10 years all the while hoping
> to become part of the ownership class and growing day to day more resentful of his failures.

Perfitz, I'm sorry you are jealous that I was right and have profited, while you lost a ton.... but I TOLD YOU SO!

> Me I will read NYC10022's vitrol filled rants calling me a moron from my boats either the one on the Atlantic or
> the one on Lake Mead and probably soon the one on Côte d'Azur all paid for by my market timing renter wannabes.

Perfitz, we've known you've been lying for years. Whatever money you did ever make, you clearly lost with your moronic "investments".

You can post all you want about me, but your idiocy and horrible investments are well documented.

Petrfitz, I have never had to work. I am however educated, and can spot when people are lying. You may indeed have an heiress wife and a gaming company. That's wonderful. But do not state you made all your money off "renter wannabes" when we all know that (if you are telling the truth) it is only a small portion of your income.

Perhaps the difference between us is that I do not look down on those less fortunate than myself, while you have made it perfectly clear you find everyone less wealthy than yourself to be beneath contempt.