Pulse on the Market

the market is very active right now..im seeing it and my clients are seeing it. one of my clients was a day from signing contract, with deal from week ago, and all cash offer over ask comes in and we lose it..that exemplifies this market for properties priced right and with quality features

UD: I presume that you are only working with your buyers on well-priced apartments?

So, is the "universe of actively trading apartments" smaller than the overall apartments on market? That is, is all the activity concentrated in only those that are priced well? Within this narrower universe, you would expect to see competitive activity.

This is a very different claim than there is activity across the board and a very different indicator of overall market volume.

The "right stuff" is selling quickly (many times to my own surprise). That said if an apartment does not have "the right stuff" (and there are plenty) prepare for a long slow, frustrating trudge.

That is what I am experiencing "now".

The right stuff at the right price will always sell. The problem is as been alluded to here; not enough right stuff and definitely not at the right price. Sellers and brokers who are smart about pricing will move their properties.

but what about further declines in the market....noah/others...is that no longer happening or expected to happen?

@eastside wish I new the answer to that, no one does, we'll just see who's guess was most accurate a year from now. My 2 cents; further declines...but that's a conversation to have over coffee.

Eastside - I think we're in a bit of hangover stage of this cycle right now. When the market was heated people put less weight on the negative characteristics of a property with a reasonable expectation that the market would compensate for any hasty/poor decisions. Today people are more conscious of making a decision that could cost them so they're sticking with the safe bets -2003/4/5 price, good location, good condition, good light, layout, school zone etc. The properties that don't rate highly in the key categories will need to adjust further if they fail to sell, as I doubt the market will rise to meet them anytime soon. With that being said I believe there are opportunities with estate condition properties where all other aspects of layout, light, location are positive. I think its even money that we'll see further declines on those properties with desirable characteristics -especially if they continue to sell as they are.

the property just needs to NOT be overpriced or priced at peak levels + have something desirable to it: i.e., nice light, good location, somewhat renovated, good school zone, etc..dark, unrenovated units priced high are not moving.

But with surge in sales sustained for about 8-9 months now, there is not alot of these well priced quality properties..so when one comes out, multiple offers are coming in as buyers are frustrated and emotional..i dont expect it to last much longer, but this is what I see out there.

Yes, only work with buyers and both my clients and I usually know the market well enough to be able to focus our attention on the higher quality products that are priced realistically

eastside - to me, this market is in a mini-euphoric state now for properties under the category I described above, but starting from a adjusted lower level in price action.

its not fear out there now. its frustration on buy side amidst competition for good properties. in these situations you see some crazy things, like gap up bids. Wait you will see closings over ask start to occur: 35 bethune, 205w89, 15w72, etc..

here is one higher end example signed 3 months ago, and IMO, the markets got a bit tighter and crazier since:

http://streeteasy.com/nyc/sale/462842-coop-90-riverside-drive-upper-west-side-new-york

I honestly think the lagging quarterly reports will be compared to worse reports a year prior for the next 2-4 quarters as what Im describing and the progressive improvement in bids with time is captured at a big time lag...and you know what, people will mis interpret the reports as REAL TIME when they come out later - its not! it already happened. Who knows, the market may be cooling off when those reports hit later on. If what I am saying is right, you will see qtr-qtr improvements in price action and eventually see y-o-y price gains, when you start to compare to deals captured when market was filled with fear last year at this time. crazy market, all I have to say. I just dont see this nuttiness as sustainable for much longer, yet lagging reports will at some point start to reflect what Im saying

btw - more action in sub $2m market

Congrats spinny on hockey. Go Canada!

WTF is so hard? smart/Good stuff sells at 2004 prices, 90% of mkt is priced too high. When good stuff finally closes, do you think mkt says good stuff +10% for the bad stuff? No f'king way. It's good stuff minus 10% to unload all the box apts. Meaning 2003 prices.

Now I ask you will interest rate and credit underwriting get harder with fed not buying 99% of mortgages in a year? Now does that increase demand in a yr? Okay so where do we go from here?

This is a multiple year downward price spiral. The bubble in NYC re was ground zero. It's like the pet rock bubble, that euphoria went away now we use rocks as god intended (use your imagination).

btw, i wont deny my bigger picture and longer term concerns..they are well noted for over a year now on http://www.urbandigs.com

just telling you what is happening out there now and therefore, what you are likely to see in future lagging quarterly reports that capture these closed deals and eventually compare to a much more distressed market in early 2009...Ill let you guys duke out the other details

Yeah? Ud? Weren't you the one splanglishing about how rates r about to go up? How private mkt would not be buyers of mtgs at these rates with this low loss reserves? Look I understand you need to make a living, and if there is lemming money out there you'd like to be part of it.

But hesus h Christ, you are way too smart to NOT know what is about to happen to NYC re, but that is par for the course. It's like a car salesman telling a live one, if you wait till the end of the month my manager will take off another $2k.

More action in sub $2mm. I guess that $2.3mm in a few more months of carrying $30k/month might just toss in the towel and price at $1.99mm. Yeah and I'm sure some lemming who got into a bid war for a nicely priced $1.8mm unit and pushed themselves to $1.99mm won't regret their decision when all those $2.5mm priced units drift down to $1.99mm. Oh well. Flmao.

We're in contract downtown now & here's how it went:
We'd been looking for over a year and saw many overpriced apartments, I've kept them on my watch page & none sold until they took some MAJOR chops (92 Warren 5E, for example, which I posted about the other day). Many are still on the market or have just been delisted w/o selling. The places that we saw that were fairly priced to what would have been considered a good deal kept selling, but most of them were very "quirky" spaces & just weren't right for us.

The place we ended up with has been on & off the market since 08. It has taken a big chop in price since it went on the market but the ask came down closer to earth so we bid since it is exactly what we wanted in the perfect location and we didn't have to make any concessions. After negotiation we ended up in contract for 400K below their most recent asking price, which was over 1M under the original asking price. We just had two appraisals done and one came in just above our price and one came in just below, so we feel pretty good about our deal (though, I do realize that the whole appraisal thing is a total scam, since they wouldn't even schedule it until they had a copy of our contract). ** If you are getting a mortgage, make SURE you get a financial contingency in this market!!!**

We're in this apartment for the long haul, so there wasn't any reason for us to wait to buy anymore and we're comfortable with the outcome. We didn't use a broker b/c we didn't want to be rushed into anything, which is definitely do-able if you have the time and are patient. Streeteasy has been an incredible resource. I can't even imagine going through this process without it.

I agree w/spinnaker that making good decisions was more important to us b/c of hindsight in the market. We walked away from 2 other equally great apartments because either light/location/other quirks made it much less of a sure thing if things went bad & we had to sell.

Noah - what is the "nuttiness" that you don't see sustainable? Current prices, or the amount of activity/volume, or the multiple bid situation? Just beginning to learn about re here, so honest question :)

multiple offer situations where one buyer gets emotional and gets too aggressive to 'grab' the deal. Ive lost 4 such situations in last 4 weeks alone in 1.2m - 3m price points. Usually that doesnt last for too long, maybe a few months. Doesnt take much negative outside forces to turn things around from this kind of environment..im just seeing it in price points that have scarcity of well priced quality products, like 2BR/2BTH markets in UES and UWS

west 67th - "Weren't you the one splanglishing about how rates r about to go up?"

Yes, and I still believe that. but timing it is impossible, who knows when the market drives rates higher and when bond auctions may start failing or when the market deems one global event as worthy of causing a disruption in regards to credit risk

"How private mkt would not be buyers of mtgs at these rates with this low loss reserves?"

Dont recall that one? Did I write a piece on that on UD? I recall commenting on the much higher risk to buying mortgage paper these days.

thx wannabe : ) that wasn't easy.

On this further decline deal, these 2.3mm's ain't selling because they are comp'd with the 1.89mm's that are. Sure they'll drift down to the market eventually and get gobbled up just like the others if they need a deal. Can't you see that stressed out sellers sweating their carrying costs have been doing deals for over a year now? People will continue to find their sweet spot in your hypothetical multi year downward spiral -even you I suspect. The only problem is the downward spiral has been stalled now for months -arguably since last summer. Even through record Feb snow our run rate is still a rock solid 800 contracts/mth. Ah but the spring will surely bring the predicted hell -or maybe after Labor Day, or possibly the dead of winter will push it over the edge... (this is beginning to sound familiar) ITIPIMMILSH!

btw, my real time system shows 1,076 contracts signed in last 30 days - 34 yesterday, and so far 29 today and we still have 3-4 more updates throughout the day left

spinny I really liked the squirrels with those large front teeths in the closing ceremony... awesome canadian humor!

Here is a quote from over the pond.... U.K.... somehow I believe this is relevant to NYC RE....and I quote.
"“This is a ticking time bomb,” said Nick Hopkinson of Property Portfolio Rescue, a company that assists overleveraged homeowners. “There are over 400,000 people who are in arrears with their mortgage rates the cheapest they have ever been. When rates increase, a lot of people will be tipped over the edge.”"

So grt, FWIW i believe almost 90% of the population doesn't understand how mortgages are calculated nor the nuances of the economy. That Shong mortgage guy put up a youtube video on how "money" is created through the banking system. That DUDE works for a bank... doesn't leave much hope for the lemmings looking at Bubble -25% and jumping in... but that's what makes them lemmings.

@Mack... yep, What A DEAL! $1MM off crazy insane ask, $400K off final less crazy insane ask! WTF do I care if I can rent the identical upstairs unit for 1/3 carrying cost! Gotta be in it to WIN it. But I guess if you looked at the last 3 months of WWII, it would look like the Americans, Frnch, British decided to gang up on a poor little Germanic country... cest la vie...

Euphoria is the word I'd use to describe the market right now, too.

We're looking in the sub-$1m range in Chelsea, and I can't believe the number of properties we've watched that have gone into contract over the past two to three weeks. Some were on the market only weeks; some were on the market for 8-9 months. Open houses have been mobbed, and we've even passed numerous people on the streets holding real estate flyers on Sundays. Brokers are strongly implying that stuff is going into contract for close to asking (< 5% off), and the stuff that has closed seems to back that up. Their line is that Q3/Q4 '09 closings cannot be considered "true comps" because the banks weren't lending, and the stuff we've seen recently seems to suggest they're pricing well above that.

All of sudden, it's like boom times are back again... which is sounding major alarm bells for me. I just don't believe the market fundamentals are strong enough to warrant the activity we've been seeing -- even though, in small pockets (like the one we're looking in) -- the own-to-rent ratio is pretty favorable after tax savings based on Q3/Q4 09 prices.

We'll see. We have somewhere between 30 and 60 days to find something and get into contract before we need to make the call to renew our lease and commit ourselves to another year of staying in a too-small, less-renovated-than-we-would-like rental. Whereas the activity in the market started out as reassuring that we're not crazy to think of buying, it has nearly reached the point of irrational exuberance for me. We can't run the risk of buying during a temporary uptick of a down market.

I would have preferred to see O'Hara blowing up one of the inflatable mounties instead of the pissing in the snow slide show, but that's me.

It feels hot in the sub -- $1mm range (like a lot of agents, I got out of the $1mm+ range when the banks stopped lending).

Lad, we're in your market -- I work for a Chelsea-based firm, and just closed a sale at 420 West 23rd -- and honestly, I'd advise you to renew your lease and wait 120 days and then house-hunt again. You'd be running some interest-rate risk, but that might be better than the certainty of chasing too few apartments.

And it's worse in the Village, bidding wars everywhere on fairly "standard" apartments.

ali r.
DG Neary Realty

so its not just me Ali!

The view from Brooklyn: Still plenty of serious activity, relatively well-attended open houses, well-priced properties moving at asking prices. Multiple bidders on the better located townhouses, and some new listings coming on at what seems like peak pricing.

I think the impending expiration of the homebuyer's tax credit is cooling things here, though. I'm guessing it's less of a factor in Manhattan, where many buyers' incomes exceed the qualifying limit for that incentive. But out here, it feels like the buyers are slowing down a bit after the late 2009 to early 2010 surge.

I expect we'll see prices here drop a bit as interest rates tick up. Duh. So I've been advising my cash buyers to stay liquid and wait for the next shift downward. But for those needing low rates - esp. those shopping for FHA loans - now might be the right time.

Tina
(Brooklyn broker)

depressing.....everyone on streeteasy was saying to wait it out from last year....and now i feel the buyers are screwed again...last summer was the time to buy here in nyc.

In late 2008 I got into an elevator and some well-dressed guy I had never seen before looked at me wild-eyed and said, "Sell all your stock!!"

I took that as a sign. I immediately went home and increased my position in a market-wide mutual fund. :)

I didn't catch the exact bottom, which came a few months later, but it's worked out pretty well so far.

When the biggest talkers on this board are most adamantly against buying that may be a sign that it's a good time to buy. ;)

That said, the housing market could go up and down and up and down for years to come. (So could the stock market, for that matter.) So bide your time, look around, and eventually, if you feel so inclined, buy an apartment you can see yourself living in a long time and that you can easily afford. Don't worry so much about timing the bottom.

And know that you're never going to accurately time the bottom by listening to these people, almost by definition.

Eastside, I bought last summer, and I was on these boards screaming that the plunge wouldn't be as bad as many bears said ...

if that gives me some credibility (and it really shouldn't, because NO ONE has a good enough crystal ball to predict prices) ... I'd say prices will stay flattish throughout this year. If you wait, you're risking a rise in interest rates, but I don't think you're risking a rise in prices.

ali r.
DG Neary Realty

Ali, appreciate your honesty! We loved 420 W. 23rd except for the common charges. Surprised it went for < 2% under ask, but it was a niche apartment for a niche buyer. (We'd have been that niche except for the CCs.)

We're going through the mortgage prequalification process now, and the other thing that blew me away is how much the banks are willing to lend. According to the bank, we can increase our budget by 50% (yes, fifty percent) AND do a 15-year loan instead of a 30 year. I made the mortgage rep go over the numbers again because I thought she added a zero somewhere, but there was no mistake. Would we eat pork-n-beans and not save anything for retirement? I thought those days were over? PLEASE tell me we as a country have learned from this mess.

Eastside, Gosh, I hope you're right, although I'm sorry if it's true that you missed out. We closed end of summer '09, paid what we felt was a fair price for the times and a great opportunity for us. Saw the gloom and doom here on SE, but our stance was/is that as long as we can afford to hold for five years, it's a safe bet. And we absolutely love our place and our neighborhood. No regrets.

"depressing.....everyone on streeteasy was saying to wait it out from last year....and now i feel the buyers are screwed again...last summer was the time to buy here in nyc."

That's what you get for listening to a bunch of noise posted by people that have been proven wrong, over and over and over again. This site has become a left wing conspiracy for the hopelessly uniformed and the wishful thinking. Not to mention the grossly inaccurate and financial illiterate.

"I bought last summer, and I was on these boards screaming that the plunge wouldn't be as bad as many bears said ..."

That's exactly right Ali, you timed it pretty well. I remember that some gave you a hard time for your decision and I'm happy to see that it worked out for you. Good call. That said, I'm not sure it gives you "some" credibility since you have always had lots of it.

They say you cant fight city hall...I am working with 5 buyers at the moment and the ones bidding on the "right stuff" are missing the mark, but happy to walk if they have to. Two others are bidding on outlier properties making appropriate offers on otherwise delusional ask prices, so far no go;delusion prevails(sometimes for 6 months+).

I like what sisyphus has to say.

@juiceman, yeah it may be "noise" now, but I can assure you my clients that I (luckily?) advised in 2006 to put off a purchase and rent or stay put are pretty happy with the outcome. It's not always "buy,buy,buy!"

There is still a lot of economic uncertainty out there, I'm no economist wiz kid but its pretty clear we are not out of the woods yet. Those that are buying now are speculating that we have seen the worst of it, perhaps(I hope) we have. But buyers need to be especially prudent today considering all the headwinds and uncertainty that lies ahead. I was in New York in the 80's so perhaps that has made me a bit more cautious, I watched it get much worse than what has happened to date this go around.

"depressing.....everyone on streeteasy was saying to wait it out from last year....and now i feel the buyers are screwed again...last summer was the time to buy here in nyc."

FLMAO
So buy now! With the next 10 year run you'll make a fortune! Sell in 5 years,before interest rates go up!

lad, can you do a co-op? I have something that will come on in about six months that you might like.

Also, are you coming to the SE thing tonite?

ali r.
DG Neary Realty

i think someone else got a new handle. eastside, you weren't looking in Murray Hill, were you?

ali, all it took was 0% interest rates, a trillion or so dollars of mortgage purchases, huge amounts of stimulus to NYS and NYC, and a misguided tax credit. wonder what it would/will take going forward?

lad: I think what "we as a country have learned from this mess" is different from what the banks have learned from this mess. If you keep your own counsel on this point, you can avoid personal disaster while benefitting from low interest rates and the banks' willingness to lend.

I bought in Summer 2007, at peak pricing for my neighborhood. That said, I was able to put down just 10% and score a type of loan that (for good reason) no longer exists: a 10/1 interest-only ARM. Sounds scary, right? But as an experienced buyer with a very specific set of needs, it was the right choice for me. I couldn't rent a comparable apartment for less than my mortgage payment, and the money I put down wouldn't buy me much in this lending market.

I'm a prime borrower with a sub-prime loan in a difficult to comp location with an unusual house. Summer 2007 was the right lending climate for me. For many people, late Winter 2010 is the right climate. For people with cash, it's gonna be a bluebird day, every day, for the foreseeable future.

Tina
(Brooklyn broker)

thanks to the phenomenon of the internet, mob mentality got us into this and mob mentality will get us out....

Ali, we can do a co-op (and probably will). Can't make it to the StreetEasy event tonight, but may be in touch if we decide to renew our lease and put off our search. There is one new listing that has us fairly excited and may actually work if the floorplan dimensions are anything close to reality....

Tina, believe it or not, I'd love to do a 10/1 interest-only ARM with the goal of paying off the apartment in 10 years while having the flexibility to keep monthly payments lower and pay off large chunks off at bonus time. Worst case scenario, we have a couple of years at an adjusted rate that's 1% or 2% higher or have to dip into our savings when the mortgage resets.

I understand there are proper uses of even sub-prime mortgages. What has me perplexed is the sheer amount of money the bank is willing to lend us. Regardless of what mortgage we use, it would be way, way, way too much money to borrow.

Yeah, I love my loan. They don't make 'em like they used to.

lad, Citi was willing to let us borrow up to 45% of our gross income. I thought it was just insane.

ali r.

We're mammals, not reptiles. We have to learn to self-regulate. Don't borrow what you can't repay. It's cold out there.

Our debt-to-income is staggering, but it helps us hang onto more of our money each year. And because our home is not appreciating noticeably, I'm happy my interest-only loan allows me not to contribute a single dime to my already low equity investment. Weird but true. For us, home ownership is not an investment, but it is an effective money management tool.

Tina

how does having a lot of debt help you (or anyone) hang onto their money? you have effectively eliminated the only way to possibly rationalize this by noting that the underlying asset is not appreciating. isn't this simply a case of living beyond your means and hoping that something unexpected doesn't tip you over financially?

how does having a lot of debt help you (or anyone) hang onto their money? you have effectively eliminated the only way to possibly rationalize this by noting that the underlying asset is not appreciating. isn't this simply a case of living beyond your means and hoping that something unexpected doesn't tip you over financially?

CC -- if she's truly paying less on her mortgage than it would cost to rent a comparable place, what more rationalization do you need? She can rent, or . . . effectively rent for less.

Mack 123- unless you hire an appraiser on your own, an appraiser doesn't normally go out and do appraisals for people that feel like getting one. They are independent getting assignments from various lenders.

(though, I do realize that the whole appraisal thing is a total scam, since they wouldn't even schedule it until they had a copy of our contract). ** If you are getting a mortgage, make SURE you get a financial contingency in this market!!!**..um, ok