Massive Price Drops - Manhattan Market Slowing

Went to 5 open houses this weekend in Bkln (PS, FG). 1 that was brand new to the market was busy, 1 had "moderate" traffic of 6-7 parties, 3 were dead as a doornail (i.e., we were the only ones there). Nice properties all. Checked all the sign-in sheets and they were very light, but in the case of the busy OH, we were early so I suspect that had decent traffic.

And I understand that Bkln open houses have been busier than Manhattan open houses.

For what it's worth.

While it would be nice for me (as a buyer) for this to happen, I have yet to see "massive" price drops, although I think there is a little more bnegotiating room on less desirable and/or mis-priced (viz, wildly overpriced) properties.

If every renter was waiting for a massive price drop than every renter will be bidding on same apt when the massive price drop occurs. Therefore driving up the price of the apt.
I see a massive build up of renters who are waiting for the massive price drop. If this is occurring then one can expect a build up the supply of renters to create an increase in rents.

Everyone that I know who is a renter are looking at properties around $400-500k. Everyone seems to be waiting for that big slump. But I doubt there will be a clear slash. Most of the sellers are worried but not effected by subprime. The ones that I have talked are either taking their property off the market and waiting till next spring (where they suspect most of the renters will convert in to last call buying mode)

There are few places where I have been some discount but they are sold with in few weeks with slight bidding war.

Sitting, waiting and watching is the game for everyone.

Colgin - I don't think you can expect "massive" price drops. If open houses continue to be slow or even slow further, you'll have some additional leverage with sellers as you've yourself noted. The only thing that will create significant list price reductions is if inventory build-up outpaces sales.

I think open houses on the weekend of Sep. 30 will be a good indicator of the mood, as it's after Yom Kippur and Rosh Hashanah weekends as well as the Fed and brokerage earnings. At that time, Wall Street will also start to have clearer expectations internally as to what bonus season will be like.

Finally, no "massive drops" but I have seen that properties in blue-chip Bkln that have closed in recent weeks have virtually all been below ask, ranging from 4% to 9% discounts off ask, so there appears to already be some return to normalcy. Based on this observation, if the market stays at this pace or slows, it wouldn't be crazy to see deals at 10-15% off ask (unless, of course, sellers lower their asks).

I went to 4 open houses in Park Slope and each had a steady flow of buyers or just looking folks. All the sign-up sheets had over 10+. I expected this because there's just not too many people selling. The ones who are selling are asking a lot and you still need to put $ in it. I wish there was a downturn so I can pick soemthing up now.

That's what the consensus is. Damm owners in Manhattan would rather wait or take their apartments off the market until the market is strong again. Not saying the market right now is weak but you have some savvy Manhattanites would rather just wait it out. After all for the most part they can.

Hence what may occur is a rental population (who are waiting for a sell off) build up forcing rents to move higher. maybe the best time to buy is when others are to scared to. After all why would you want to buy in Manhattan when everyone else is and let me tell you every renter is probably waiting for this massive price drop. If this price drop occurs trust me their will be other people in addition to the renters that want to get a good deal as well.

Colgin - the other thing to bear in mind regarding the 4-9% discount-to-ask I mentioned above is that those are pre-credit-crunch signings!! This suggests the market was softening or buyers had increasing leverage even BEFORE the credit crunch.

The post-credit-crunch signings have not yet closed (or are just starting to). The data should be VERY interesting.

Have you done a similar analysis in the Manhattan markets you're targeting? Would be curious to see.

yournamehere,

I agree with you. I was trying to imply that (while it would be nice) I did not really expect "massive" price declines. My wife and I have our eye on a couple of properties. If we bid, we would probably bid around 5-8% below ask. However, if we could not get that kind of discount we will probably stay on the sidelines a bit longer and see how things shake out (economy, inventory levels, credit availability, etc.).

Colgin

Colgin - I would go in at a much lower discount than 5-8%. That is where you might start out in a strong sellers market. But with the way things are going now I woudl go in at 15% belwo ask - you can always come up.

Stealth, Colgin,

If a seller put his/her place up for sell and priced it reasonbly and close to a discount you will still ask for more of a discount?

My philosophy is to always start as low as you reasonably can without "pissing off" the seller. You can ALWAYS come up- but it is a rare circumstance when you can come down. Sometimes you are pleasantly surprised - you never really know what the seller's situation is (divorce, re-location, bankruptcy, foreclosure ect.)And I can assure you that neither a buyer nor sellers broker will give you the "real deal" regarding the seller.In fact they will always tell you "he is in no rush to sell". You have to bid enough to get them to take you seriously (barely enough). Then its anyone's game!