Bidding Wars Resume

Read the article carefully my friend. the only way they are creating bidding wars is by under pricing the units well below actual market prices - almost 40% below market.

With the caveat that they're priced at "2009, or even 2010". The story makes the perfectly reasonable point that if you price it to move, it very well might.

Where's steveF to back me up on this?

I agree with this approach. The broker in the article even aknowledges that two-third of the 4000 apartment listed in Manhattan are priced too high for the current market. That's scary though. imagine the price of more than 2500 units is dropped by 40% - That would cause a huge downward shock to the city's RE market.

It was Jonathan Miller, not a broker, who said two-thirds are priced above market. I'm sure brokers would agree with him, though. If it sits for months, it's above market.

"of the 4000 apartment listed in Manhattan"

4,000?! Try 10,000 listed, another 10,000 shadow.

I still have to say that 50% off looks less and less likely, Steve. Like it or not, people do seem to be buying.

I wouldn't be in any hurry to jump to any conclusions just yet.

We'll see. My current guess is another 10-15% down and then kind of bumping along there for a while. Lots of potential factors, though. For the low end the declines may be over, and I'm strictly a low-end potential buyer.

"For the low end the declines may be over, and I'm strictly a low-end potential buyer." What do you define as low end?, and where?

This article will help those who buy comforted by the greater fool theory (they know prices are still nuts but accept it as that special nyc thing).

jim, I define low-end as under $600K. That's about what I'm comfortable paying, and for that I want a good-sized 2-bedroom or large convertible-2 with reasonable maintenance in a good area - doesn't have to be super-prime, but my spouse is not going to look at fringey areas, period. Those apartments are still asking $800k, although many are simply sitting on the market.

People always buy. The just don't buy as fast as new inventory comes online.

evnyc that is what I am looking for as well but impossible to find in the $600k pricerange....unless u r looking in lic brooklyn roosevelt island there are some developments there where you can find a 2 bedroom for that price but im not sure you would consider that good area

Steve, inventory has been hovering above 9,500 below 10k for a while now; when it passes 12k, get back to me on inventory. I'm not holding my breath. I keep hearing these promises of 50% off; they have yet to materialize.

Nina, good is subjective. No Roosevelt Island for me, and LIC is off the table. I like Brooklyn Heights, possibly the UWS, probably not the UES but not outside the realm of possibility. I quite like BPC in spite of the land lease issue, but am hesitant to buy there because of it. I have some specific buildings I watch closely, and if some of the sellers start coming down I might be able to convince my spouse to make an offer. I watch the financial district pretty closely, though not the new development. I have no interest in that.

I'm a low end looker also. I guess 400-600 for a one bedroom, but I won't buy if I think prices are still nutty, and most of what I see is still nutty in my humble view. Unfortunately, the apocalypse is taking a while to unfold, if ever (and actually that would just be a return to semi-sane prices, not a true apocaplypse).

how many people would you guess have lost their jobs or will lose their jobs who for whatever reason have not listed their apartment for sale yet? for what its worth, crain's is estimating 110,000 jobs lost so far. i don't think we've seen the result of those losses hit the real estate market yet.

I seem to remember the apocalypse happening about a year ago. If that wasn't enough to bring down the absurdly lofty bubble prices, I have to wonder if what is out of line is my opinion of the pricing. I really did not think that I would say anything of that nature last fall. I was quite emphatically on the side of things crashing. They did, just not here, or at least not as much as I had expected. There may have been some truth to the bulls' arguments after all, even if they were/are collectively a pretty silly lot.

evnyc, for someone who just spent some time ranting on the fha thread you're taking a very narrow view here. the lower end has been grossly propped up. usually prices collapse first at the bottom. this time is different. they'll be compressed when mid-level properties need to lower their prices.

do you honestly think that the shitshow of development that is and will be in harlem, fidi and parts of brooklyn won't affect prices here? we've only begun to see the fall out from excessive development of condos. patience, my pretty. if you can honestly say in three years that there hasn't been additional significant reductions mr. and ms. AR are buying you dinner. anywhere.

Real estate takes a long time to deflate. Auctions and foreclosures already in the outlying areas, like Long Island City and Riverdale. Just wait.

Yes the auctions are starting but I havnt seen any in LIC yet a do you guys kmow of any? What happened with the riverdale auction?

Evnyc, you make a good point. It is what I have been trying to tell all the doomsday bears for the last 6 months. Just because you think it's overpriced doesn't mean the average buyer will.

What the bears don't seem to realize is that Manhattan was and always will be an ivory tower for many people. Owning a piece of the island, no matter how small, is a dream and goal for many.

When prices dropped 20% a huge influx of buyers swooped in and purchased. I saw it and reported it and all the bears, in particular, aboutready and urbandigs, ridiculed me.

The bears can be out of touch with the average Manhattan person. Instead, they think what they value applies to everyone.

Very true - I shouldn't rant. But AR, considering that the political leadership here has made the decision to prop up prices and extend this out for god knows how long, who's to say the shitshow is ever going to really happen? I mean, it seems as though we are taking the Japan route: slow and steady depreciation. They compounded their problems with other fiscal policies, but we don't have a lot of other realistic options either. In that context, if we manage to stop the decline and then continue devaluing the dollar, it makes very little sense for me to be saving my devaluing cash in hopes that RE will become more affordable. I don't think that there's any rush to buy, mind you - just that the big, significant declines are done. But hey, I've been wrong before. Maybe the commercial RE market will tank like everyone is saying it will and all that new development will be belched onto the market. So far things seem shockingly orderly, though.

It just seems to me that you can be mad at policy all you want, as I unfortunately was on the other thread, but fighting it doesn't often get you very far.

Qtip, keep in mind that even the NYT shills say that two-thirds of the market is overpriced. It doesn't mean you were right, only that you made one or two statements that ended up being correct despite the flood of ridiculousness you and your bullish friends flooded the board with.

"Huge influx" being one example of that silliness. Inventory did go up, and there's a lot of free money sloshing around right now. "Huge influx" would have implied rising prices, but last I checked they're still down.

who said anything was wrong with ranting? not my point. we will not manage to stop the decline, we will only manage to slow it down. fundamentals are what they are. to the extent they reinflate a bubble, it is likely only to be more painful the next leg down. not a particularly propitious time to be tying yourself down to an apartment. just think of how amazing it is that prices fell to the extent they did, given all the upward pressure that's being put on real estate prices.

your dollar will be devaluing in terms of certain things, but not real estate. not unless you can honestly foresee wage inflation. i can't. if we have commodity and price inflation, continued unemployment, increased taxes, forced retirements, what do you think those factors will do to real estate prices? and when the Fed is finally forced to raise rates, now that should be hugely fun.

these things take time. last time NYC took about 5 years for the real estate market to deflate.

And there are still alot of unfinished and new condos sitting empty especially tr fringe markets they are not moving unless significant price cuts are made

Everybody hold my hand, on the count of three let's jump off this cliff. It'll be so fun for the first 20 seconds, then WHO cares?

The prudent monkey waits to see how the first group ends up.

Yes, they seem bound and determined to not do that, however. Inflation makes my down payment nut even smaller and more pathetic than it already is. And New York remains an international city; at some point the devalued dollar is going to start bringing back foreign investment. That may stem the decline more than some expect, even if it is not good news for the aspirational owner set. Then again, there's the looming pension obligations dogging the state and the city; they may be forced to raise taxes significantly to offset those costs.

There are so many things that could and are happening, I don't feel comfortable predicting how they will all play out for a relatively small market like New York. On the broader national level, I agree with you 100%. New York just seems peculiarly frothy. I really can't figure it out.

May you live in interesting times... ;)

The deflation may actually take a bit longer IMHO. We had a run up to 2000 that should have corrected but, whose correction was stymied by Uncle Allen's feel good wishes for the RE market in the early Millennium. So now we are confounded by a double correction or, at least a correction and a half. It just takes time. We say it all the time, RE is a Glacier, it's only started getting hot enough to melt about a year ago. Relax, get a cold drink, put on your shades........it's gonna be a long hot one.

This story about bidding wars.... I'm from Missouri so you'll have to pardon me

Foreign investment? If you think we've got potential problems, just wait until the bubble in china real estate bursts.

all caused by our weak dollar policy.

This is right - last time it took 5 or more years to reach bottom with little bounces along the way. Expect more of these articles. Remember NYC was the last to start it's decline and will probably be the last to regain. This propping up of prices is just more stupidity by the gov't. Anyway $8K isn't much in NYC so I don't think it really affects us at all.

we are not primed for another real estate bubble. For one the mortgage market is not there to support it.

Evnyc, you can split hairs about what the definition of "huge influx" means. I was there at the open houses in the spring and summer. The amount of buyers walking through the doors, in the price range I was looking at, was overwhelming.

I follow the market closely and not from a computer looking at past closed sales, which in my mind, mean very little because they are 3-6 months lagging indicators.

Inventory dropped significantly over a short period of time. Anyone who went to open houses then and experienced this, would not have been surprised.

The bears see the market through their own narrow lenses. They have a pre-concieved theory and by golly gee, they are going to find data to support it and ignore everything else to the contrary.

And I am, contrary to your assertion, not a bull. I am a realist. This is the difference between me and many of the bears (and bulls).

and a real estate broker?

Nope, not a real estate broker. If you read my past posts, you will know that I am a buyer. For that reason, I am on this website. For the life of me, I cannot understand why so many perpetual bears are on a real estate BUYING wesbsite.

There are some cash buyers throwing spaghetti against the wall bidding on multiple properties below market and hoping for steals. I could see how this could create the perception of more demand being out there than really exists.

hilarious...first you were knocked to the floor by the flood of buyers....and you discount closed sales over anecdotes because well....not exactly sure why you do. and finally, now this is a site dedicated to buying real estate. only real buyers like you are allowed.

Riversider, it is general, far reaching comments like that which confounds me.

How the heck can you make such a broad statement like that? What is the basis of your claim?

riversider is an ardent viewer of youtubes whence all knowledge springs.

Qtip: "The bears can be out of touch with the average Manhattan person. Instead, they think what they value applies to everyone."

Q, I think I am an average Manhattan person. I value sanity which has been a scarce commodity in NYC RE over that past few years. As a middle-aged household in mid-upper income bracket, I worry about rising taxes and about job loss. I think very few Manhattan households are immune to that particular fear --unless you are a trust fund baby which exempts you from the 'average" category.

I actually found this article comforting. I have been telling everyone that asks that I have been looking for months and everything seems overpriced. People look at me like I'm deranged since everyone knows the market has fallen 25- 30%. I have been looking for a classic 6 sans view of brick wall on UWS. I have never, ever seen one priced at 1.1mm. I would feed on that with a frenzy also. But this very misleading headline will be trumpeted by every broker for months. Cue the lemmings. I'm moving to the sidelines.

columbiacounty, check out my "ancedotes" from 6 months ago. What happened a few months later? Inventory dropped significantly.

yes, I discount lagging indicators in this volatile market. I don't care what people say about real estate not being very fluid. These are extraordinary times and hence, all bets are off.

I have to sign off now which is a relief because once again the bear attacks are (*sigh*) getting old quickly. And I'm not even a bull!

Oh and everyone have a good weekend!

Pass me a cold one falco.

"all caused by our weak dollar policy."

You still don't get it, do you, RS? It's impossible to control both interest rates and exchange rates at the same time. It's like trying to control both bond prices and their yields: one determines the other, although with currencies the link isn't quite so direct.

W67: What would be the perfect lemming cocktail? It would have to be "on the rocks", wouldn't you say?

FLMAO. so every dick and jane with a $1MM in cash shoots their wad... ya think therez enough WAD to absorb all the RE gravy? Lemmings w/ cash!

ON the rocks with lots of bitters.

you too Qtip.

Apt23: what about 522WEA, sponsor 6, closed at 950k.

"Buy when there's blood in the streets" (Warren Buffett). If instead there're still bidding wars and buying frenzy, then the time is clearly NOT to buy just yet. Unless one doesn't mind losing one's shirt in a few years.

If these properties were priced 'under value' as the article indicates, then I'm not terribly impressed with the outcomes. We've said all along that a well-priced property will move in any market. Remember, just because the economy's in a trough doesn't mean there aren't lots of folks out there itching to buy a 'home'. They'll jump in when they see the right thing at the right price, as this report illustrates. Price it low and watch them dive from the sky like seagulls over a garbage barge.

Wake me up when bidding wars result in contracts above value, a la 2006 and 2007. Then we might have something to write home about.

"ON the rocks with lots of bitters"

yeah baby...that how u make a manhattan..love it

Lemming Juice Cocktail....

3/4 oz sweet vermouth
2 1/2 oz bourbon whiskey
1 oz freshly squeezed lemming
1 dash Angostura® bitters
1 maraschino cherry
1 twist orange peel

Combine the vermouth, bourbon whiskey, and bitters with 2 - 3 ice cubes in a mixing glass. Squeeze lemming no matter how loud they scream. Stir gently, don't bruise the spirits and cloud the drink. Place the cherry in a chilled cocktail glass and strain the whiskey mixture over the cherry. Rub the cut edge of the orange peel over the rim of the glass and twist it over the drink to release the oils but don't drop it in.

VARIATION: No bitters. Substitute a twist of lime for the cherry and orange. Hold the lime twist in a lighted match over the drink and then drop it in. The heat really zips up the lime flavor and makes the lemming scream loader.

At my new Indian Restaurant/Bar we have two new drinks
Windy Hindi (special ingredient is broccoli)
Bourbon Turban
Siek Yabooty

louder..........sorry

(special ingredient is broccoli)

Yum.

Sign me up for a Windy Hindi; I'm vegetarian.

"If you can honestly say in three years that there hasn't been additional significant reductions mr. and ms. AR are buying you dinner. anywhere."

AR, missed this earlier, but you are on! :)

It's impossible to control both interest rates and exchange rates at the same time.

.I don't agree with zero zero fed funds policy.

If I were to start a bidding war, would shoot for an 800 sqft apartment for around $10k a month

If this story follows the Japan story line with zombie banks, perpetual low interest rates, lost decades, etc, I don't think there is any hurry to buy falling assets.

I'm a Manhattan residential real estate bear.

That said, there is an interesting article in today's Wall Street Journal by Jason Zwieg, "Ignoring the Yes-Man in Your Head."

"In short, your mind is like a compulsive yes-man who echoes whatever you want to believe. Psychologists call this mental gremlin 'confirmation bias.'"

"A recent analysis of psychlogical studies with nearly 8,000 participants concluded that people are twice as likely to seek information that confirms what they already believe as they are to consider evidence that would challenge those beliefs."

A warning to all of us bears.

I do try to challenge myself. Why might my belief be wrong?

The NYT is an interesting article. I did hear Jonathan Miller on the radio today and he was certainly far more "measured" that Dottie Hermann...who did seem like an unsophisticated broker-shill (albeit presumably very successful).

Should read, "Jason Zweig."

I see plenty of signs of things really picking up on the high end. Check out 92 Charles, went into contract after only two weeks on market at a very premium price (more than $2500/sf I think!)

does plenty include any others?

Smugly still sitting on sidelines. Sometimes it's difficult. Yet, still on sidelines. Thanks, bears of SE. Hang tough.

How to hang tough? Stay plugged into the market. I try to keep abreast of my limited market segment. You may not be able to pick the absolute bottom but you will know when the wind changes.

I am managing a bidding war right now. I am not having any fun, it's not in my DNA to create frustration and disappointment in nice people. I can't wait until this is over.

I was really encouraged to see that NYT article and it makes me feel better about how I'm handling it from a management standpoint. Looks like I'm doing everything right, or close to it. But the stress for me is real.

The bidding war took me by surprise, I didn't expect it. The apartment was priced slightly above market, but only very slightly, at the time of the listing. It was by no means a fire sale price!

What I failed to appreciate is that buyers are exquisitely sensitive to monthly charges. I don't know if it's because of the price point of this place or because of the economy in general, but the excellent monthly payment in a great building is what's driving the bidding.

Paperwork wise, it's tough for me to handle. People tell me they are "not interested" in raising their bid, they're out, and then they call me 10 hours later with a higher bid anyway. And they got the money.

A great point made in that article is that there is pent-up demand for apartments. Demand for nice housing never went away, people still want this in their lives. Now that the Lehman dust has settled, that demand is coming out and looking and making offers. I have been incredibly busy, and the agents I've interacted with all seem super-busy, too.

{Manhattan real estate agent.}

Fluter, a dealer of lemming shots should not be taking the drugs themselves, rule 1 of crack dealer.

2) aren't you the borker that said when you need to chant or take drugs before anything major in your life, like iud or pill?,
3) r any units in 'bidding' war, more like two gay teenager slap fest if u ask me, above 2007 prices?
4) do you think NYC re will be higher lower or same in 1, 3, 5 years or is that not in your DNA?, or did your parents give you the genes of being a nervous ninny and just the 'where is my lawyer, I didn't get my 6% gene?

Um, let's see...

no; I don't know; and it's not just genes that matter, it's also environment ;)

{Manhattan real estate agent.}

"Evnyc, you make a good point. It is what I have been trying to tell all the doomsday bears for the last 6 months. Just because you think it's overpriced doesn't mean the average buyer will."

Except that seems to be EXACTLY what the average buyer thinks. Why didn't you actually read the article before you responded?

And, if you have been saying it for 6 months, sounds like its time for you to admit you were wrong, doesn't it?

Apparently priced to move and got multiple bids: http://streeteasy.com/nyc/sale/418230-coop-25-east-86th-street-carnegie-hill-new-york

06/05/2009 Listed by Brown Harris Stevens at $1,575,000.
07/15/2009 Listing entered contract.
11/24/2009 Sale recorded for $1,715,000.

Nice prewar, a block from the park, 2 blocks from the express train, nice corner apartment 2 bed 1 bath with a big terrace.

I figure thats the kind of apt that sold for over $2...

Dead cat bounce. Prices have further to fall for a variety of reasons. Many apartments are listed for more than their value. Even if I miss a couple of good things, I'm waiting. I'm sittin' pretty in my sale/leaseback. My opinion is that it is very dangerous to buy ahead of knowing wall street bonus figures and that is not the only one reason to wait. There is a serious realignment of the work force occuring and I think it's best to see how that shakes out.

I agree that the apartments that are moving are those that are underpriced. The pricing stimulates demand and the seller likley ends up with a fair price anyway.

Everyone is talking their own book. Talk doesn't create fundamentals. Listen to the original poster and you'll be wishing you jumped off a cliff the first time he said it.

Just this evening I had a qualified buyer client get outbid despite offering full price. Place was a steal, to be sure. But the difference this time (as opposed to those mind-boggling bubble days) is that we know there are other great deals out there. So losing this particular battle doesn't feel bad - just whets the appetite for the chase to come.

Just because there is competition for well-priced property doesn't mean it's not a buyers' market. So I chafe a little at the facile association of the original Times article with the senseless mantra "buy now or be priced out forever!" It strikes me that you're the one making that connection - not the current crop of buyers who are patient, prepared, knowledgeable, and not easily fooled.

Tina
(Brooklyn broker)