are bidding wars back?

i told you, im not crazy when I state things like this on Urbandigs.com...buyers are out there, and bids are coming in. I had a credit suisse corporate HY trader contact me the other day saying her old Sothebys friends are not seeing any improvement in bids since March of 2009. That what I was saying is bullshit.

well, your out there and I assume you are not lying about this?

Sorry to hear zooey. Some people are advising to wait for a couple of years and that what has been happening since last spring is really an anomaly. Rents are much cheaper btw so at least that's a good news story. I'm guessing everything should settle down in a few years and you'll be able to go in with reduced bids (1999ish prices) then.

i think it will be sooner that that spinnaker1...take what I say as a real time report of the market, not as a prediction this market is on a new sustainable upward path for years. I say it lasts a good 3-4 months, because inventory is tight after the surge in sales volume for past 6-8 months or so. But once higher taxes, higher rates kick in (who knows perhaps a late 2010 thing), that could stifle affordability a bit - especially if bids slightly improve another few quarters as the race for quality products priced right continues. Not sure we get to 1999 prices though, that basically erases the entire move up and puts us at levels down what, 50-60% from peak? Not sure I see that, at least with info available right now.

Zooey: It depends on your definition. The way I see it, if you don't exceed the asking price, you aren't engaged in a bidding war. Even above ask, competitive bidding isn't necessarily a "war". It may just indicate an asking price that was set low to spark interest.

There are a few pockets of the UWS market - especially right around the $1MM mark - where demand currently outstrips supply, and the competition among buyers for nice properties is fairly active. It's hard to say how much of the 2009 decline has been recaptured, or whether any bounce would survive a reduction of the "jumbo conforming" loan limit. The ability to borrow $729K at historically low rates has emboldened a lot of $1MM buyers. If the GSEs pull back and portfolio lending and private securitization don't fill the void, I'm not sure where the $1MM buyers are going to find funding.

Noah - I was just taking my turn at the RE wheel of misfortune. Sorry if I sounded overly sincere, that wasn't my intention ; )

Not a million dollar place. Not on the UWS. Have no idea the direction of the market near term, but this place appears to have sold at about a 12.5% premium. Looks like there may have been a bit of a bidding war here.

http://streeteasy.com/nyc/sale/475814-coop-108-pierrepont-street-brooklyn-heights-brooklyn

Bidding wars are isolated to cash buyers and under priced properties. To have a bidding war environment we would need easy credit and lax underwriting standards. The current appraisal process and lending environment effectively limit the bidding war phenomenon.

oh no worries...as to W81st comment, i can see how the term 'bidding wars' are misleading as that gives the impression it is over ask...in my situations I just went through, I guess the better terms would be 'multiple bidding situations' to describe it.

One went over ask, the other did not. But in both cases there were multiple acceptable bids, and a best & final deadline placed, a third one had multiple bids but the seller negotiated independently until getting their price. These are the situations I am seeing out there, when product is desirable and price is close to where it should be.

I disagree with riversider that bidding wars are a function of easy credit and lax lending. Sure that environment can intensify the number of aggressive buyers out there and enhance affordability and how far one buyer can stretch for any one property. But with todays tigher underwriting and not so easy credit as say 2-3 years ago, I still see multiple ready willing and able buyers out there fighting over one property that happens to scratch the itch of more than one buyer that is ready to pull the trigger to get it.

I can name a property that is not underpriced, in the just under 3M range, that received multiple bids and has a contract out now, unfortunately not my client. This was a case of a lack of quality product in that desired hood with features that this property offered - buyers looking for that special place, in this price point, couldnt find anything. So when one came avail, multiple buyers stepped up and Im told the accepted offer right now is over ask...Ill disclose the property once I see its actually IN CONTRACT...broker tells me they are close as I have to keep checking in to see if deal falls through.

riversider -- i know of at least three cases in Morningside Heights (~Broadway to Amsterdam between 109 and 114th) where bidding wars erupted on high floor, renovated pre-war 2 br apts priced close to 1.1 million ~$900psf. These were not cash buyers. My friend pre-empted the situation on the next one she liked and made a full price offer on the spot at the open house on a place she liked. There were 10 other buyers waiting for the open house to start, when she got there.
Maybe rabid lemming behavior, but it is out there.
So, I agree with West81st's observation that at that price point there is quite a bit of action, and not enough decent supply.
1999 prices for a 2-3 br in the Morningside Heights area were $500 to 750k. Right now, it is hard to see that happening in this pocket. Even with the decline since 2007, there is not much decent in this area in the $1 to 1.5 million price range. So, with a more constrained lending environment, which is quite likely, one could see a push down to 750 to 1 million, but hard to see a cut down to 500 to 750k. If it happens, then the possibility of a strong rebound to recent prices in a longer term scenario would exist, and if you can wait, you may profit substantially from it.
The fact is that there is no real need to compete and buy today -- on the other hand given the current rates if you can get an assumable loan and can find a place you like, you could get the process over with since the difference in the equivalent loan value for the same monthly payment is about 40% if rates rise to 8% (this is quite possible) from the current 5%.
The FHA loan with 3.5% down payment is an amazing choice if you can work it. Current rates are under 5% for a 30 year loan, and it is assumable, so your downside exposure on equity is limited to your down payment, which is small. The monthly payment determines whether or not the rent-buy equation works for you. If prices fall dramatically, and you don't need to sell, the question is moot. If you need to sell and the prices have dropped, you can let someone assume your loan and you'll be competitive with the market as long as prices have not dropped by more than 40% (the equivalent monthly payment the person would have to come up with).

I already published where they said the EXACT SAME THING in 1990. Took another 8 years. We've seen a quick drop of 25% in asking prices. Natural that there would be demand then. But prices are still way, way higher than comparable rents. That is an unnatural situation that can't (and won't) last forever.

It's hard to argue with the pricing war observations however it's equally hard to see how the banks are agreeing to loans if they come in above appraisal and how the market is punishing high ltv loans.

https://www.efanniemae.com/sf/refmaterials/llpa/pdf/llpamatrix.pdf

sorry -- meant MH = Riverside to Amsterdam not Broadway to Amsterdam
In 2000-2003 I felt that the 1996-2000 rise in prices was unrealistic and there should be a correction. It took 4 more years to start.
Looking at Steve's post above, I agree that the key point is that the + and - runs in real estate here seem to be almost decadal events and go faster as you approach or recede from the peak.
The overall trajectory stays up (even adjusted for inflation, as there is urban renewal), but with peaks and valleys that likely will have higher amplitude as the base price increases, even on a % basis. Wonder if there is a long time series one can download of a fixed type of real estate asset in Manhattan.

many apts are still overpriced, I was making a simulation rent Vs own yesterday and it does not make any sense to buy now. I expect another 20-30% down, may be more if rents continue to decline and expenses to increase.
I don't see how a bidding war could happen in this scenario unless the broker under priced the property to create some interest.

"I already published where they said the EXACT SAME THING in 1990."

Was that what the article I was supposed to read said? Can you re-post?

So - when we are looking at places on UWS, how much lower than the ask are we supposed to offer if we really like the place? are there any formulas people are using? certain amt per sq foot, shave off this much for one bath or for only a half bath, low floor, high floor, etc.

Oh no i missed the boat? Again?

FYI my in laws' apt that she is renting is being foreclosed. The rental broker kept saying all along the LL was 'rich' and vacationing in paris, and wouldn't 'we' want to be owners! Flmao. Reminds of the saying 'if you love something, you should let it go'

f'n lemmings. 3.5% down 5% geitner juice..... That's like a hummer buyers buying cause of the 0% financing rigth bf gas started hitting $6/ gallon. Don't worry there were a lot of hummmer salesppl saying the 'mkt' is GRT! Lemming hummer buyers meet lemming 'home' buyers. Flmao.

Your gonna make millqt cry.......

I agree with Noah that eventual higher RE taxes will cause prices to decrease and that scarcity of quality product leads to bidding wars. Also agree with W81 that jumbo conforming loan limit of $729 has emboldened $1mm buyers.

It's a mixed bag, but if apt is desirable & well priced, bidding wars can ensue. Nonetheless, I think that rising RE taxes may well cause price drops.

Libor Forward curve is very steep. To those that think higher rates will kill housing, well the market is very clear it expects higher rates.

Zooey. Just come over the top. Call their bluff, hell why not. It's not your money anyway, if it's the worng bet you can put it back to the bank.

Don't know if bidding wars are back but any reference to stabilization or the ultimate SE heresy that prices may climb...is met with the broken record response seen on this thread. must be comforting to be able to project the future direction of this market

Riversider: You are overestimating the effect appraisals have on the Manhattan purchase market. If a property cannot appraise out because of a bidding war, not sure how that would derail a coop purchase. Most coops require significantly more than 20% down. If an appraisal is short, the difference is usually covered by the larger down payment.

Besides the required down payment by coops, checking on ACRIS on several recent purchases (coops and condos), I see most buyers putting even more down than the minimum coop requirements. (Got this from comparing recorded sales price versus the amount of mortgage lien placed on the property.)

If I had to guess, for coops, buyers are trying to ensure board approval with larger down payments. But just a guess.

"Can you re-post?"

Search.

Good point qtip. Maybe this is a coop situation.

moxieland, that Brooklyn Heights sale is a good example of effective pricing. They got the punters in the door and more than one of them wanted the place. Even at the +12.5%, it's still less than presumably-similar places have gone for in that building.

Great staircase, BTW.

That staircase is out of an Escher print. I'm guessing coming home drunk is a bad idea.

Don't they have 'bidding wars' during foreclosure auctions as well?

If the winning bid is close to yours, that just means you'll have to learn to bid smarter and/or present the case why you can close faster with less chance of the deal falling through. If your bid is way off and you already hit your budget limit, then take a break and wait for the market to drop more.

"Search"

No. I want you to re-post it for me. My time is valuable.

Have been looking for a pied a terre co op for over a year now (UWS, Park Slope) - personal observation - quality apartments in quality buildings don't come around that often. Now that "bubble buying" is a thing of the past (easy credit, high impulse), buyers are apt to be much more selective. If something special comes on the market, multiple bids are not uncommon leading to some competition.

Forgive my cognitive dissonance here, but could someone reconcile all these claims about bidding wars with actual data about the Manhattan marketplace on the Miller Samuel website???

If you look at the chart for Manhattan Coops/Condos at the following link, it shows the HIGHEST listing discount on record for Manhattan in 4Q09 (since the start of data series in 1997.) If bidding wars are breaking out all over, as I understand it, the listing discount should be declining rather than increasing...

http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1168395277jOVLU&Record=4

sisyphean - there is a big lag in the data, UD talks about this all the time. 4Q closing data reflects late summer contracts. Man on the street reports, although anecdotal and of limited scope, gives color to what's happening now. Correlate these reports with real time contract and inventory numbers and you can see trends emerge before the lagging data confirms it.

To me, the term "bidding war" frenzy. If the apartment is priced low enough, ok multiple bids show up, there are still plenty of units languishing. Still believe the market finishes 2010 about where we are now, plus or minus a few percent.

Bidding Wars can occur in this market, generally under these conditions:

1. The Property must be priced either on point or a little under-value

2. The Property will most likely have no major flaws or the price will be adjusted to compensate

3. The Property is located in a highly coveted area or building where there is a lack of available quality inventory. This is the case in Brooklyn Heights where often supply falls short of demand.

Buyers right now for the most part are very educated on the market; many of them have been waiting it out, doing their homework and know a good value when they see it so when a good property is well priced there is often going to be a lot of interest.

Zooey if you keep getting outbid it may be that you are not properly accessing the value of these apartments. I know a lot of buyers just base their offers on average price per square foot determined by the recently closed comps but there are many factors that determine price/value of an apartment. You may think these apartments are not that great but they may be perfect for many other people and a good value as well.

Oh, I can see why there would be alot or premature equity ejaculators right bf bonus season. Well it seems to me the lemmings that have any money and or have not gotten burned in NYC re are the 2nd/3rd tier buyers who kept getting out bid by bankers in 2002-2007. The media screeching 'record' bonuses probabaly makes this set of lemmings twitch nervously.

I Getz it, they are so spooked they are in effect bidding against themselves cause your 'i banker' competitors will never show up in this mkt. Flmao.

zooey, can i ask, what size place are you looking for?