Where's the market now relative to the bottom?

What is your price range?

Streeteasy has a very nice condo index, which shows that so far, we reached a bottom in January 2010. The prices perked up in the spring/summer 2010, peaked in August and have been going down slowly since. I also like to look at the median condo listings to give me an indication of the current broker community consensus; the median listings were down about 1.1% from November 1st to December 1st, which tells me there is still downward pressure, but nothing dramatic going-on. December has been pretty much stable so far.
It's only for Manhattan condos, but I think it's as good a measure as any.

Bramstar, much of that is covered here:

http://streeteasy.com/nyc/talk/discussion/21856-data-causing-the-screams-declines-by-category

In short, we're still at the (quarterly) bottom in some apartment sizes, particularly the smaller ones. And larger sizes took the biggest hit overall. And each size down 20% at least as of last quarter.

> Median per category:
> Current Median vs. Peak Quarterly Median
> Studio - 24.8% down from peak (lowest point since peak)
> One Bedroom - 23.3% (lowest point since peak)
> 2 Bed - 24.2% (hit 28% down Q1 10)
> 3 Bed - 37.6% (hit 38% downQ2 09)
> 4 Bed - 50.0% (hit 89% down Q2 09)
> Overall - 10.8%

> Studio - 18% off peak current (25% off peak at last trough)
> 1 bed - 20% (21%)
> 2 bed - 24% (29%)
> 3 bed - 40% (48%)
> 4 bed + - 61% (90%)
> overall - 12% (21%)

I want to bring up a very important point..that bottom is based off the SALE DATE, not the contract signed date. So understand that in reality, the bottom was earlier and when the market was really pressured and sellers were hitting low ball bids out of fear when strong bids were non existent. In my world, the deal is done when contract is signed but in the charts the deal is represented by when the transaction closed and got recorded by public record, which could be at a 3-6 month lag in total

So, Noah, in your opinion, when was the bottom and where is the market now relative to that? I know you're also spoken about premiums assigned to park and/or river views, so obviously that has to come into play in our calculation if we opt for that feature. What comps should we be looking at to determine today's pricing?

i would say the bottom was contracts signed between Dec 2008 and April/May 2009..a few months after the failure of Lehman (took a few months for everyone to realize and accept that this market adjusted)..

these guys likely closed between mid 2009 and late 2009 as financing shut down during this time and I know of many deals that were rejected by boards because price was too low. Although verifying and quantifying this will be difficult if not impossible. I went through one myself.

We reflated starting around April/May 2009, but it was slow to start and progressive in nature..starting under 1m units then gradually going to higher price points.

Well it's been interesting to see that some units I've looked at have gone into contract very quickly after hitting the market (395 RSD 15B, 440 RSD 82, for example) while others (the several A lines at 300 RSD) continue to linger.

How much do you think the market has regained since the effects of the Lehman collapse?

> which could be at a 3-6 month lag in total

Noah, if we go with the 3-6 month lag, thats still 2 quarters... putting studios and one bedroom bottoms at Q1 or Q2 2010...

Co-op rices roughly down 25% then back up 5%; of course digs' data is the best...

but if W81st is here, he and I can get into a spirited discussion of whether UWS follows general pattern or not.

Hubby and I bought in the West 90s in 2009, closing in July, so by digs' numbers we perhaps called the bottom perfectly.

If you want to continue to trust to my predictive abilities (disclaimer that if they were perfect, I wouldn't be here), I'd say prices will be up another 5% this spring on lowish volume.

ali r.
DG Neary Realty

PS: I think the medians are less reliable, and they're probably going to shoot up again (falsely) in 4Q as a we see a mix change with some higher-end closings.

Hey bram, listing prices for condo studios were down about 20% for a 5 month timeframe from Oct 2008 to March 2009. Then the stock market recovered and it has been a steady climb higher. The last 6 months prices for my comps have improved dramatically. My comps are now off about 5% from the highest they have ever listed at. Also, inventory has been cut in half.

btw, why the seriousness to buy now? What was the catalyst?

depends on price point...and its so individual that you really shouldnt get married to these estimates..but I would say..

<1m -- reflated 7-10% from down 20-25% to down 13-15% from peak or so
1-2m -- reflated maybe 7-10% from down 20-30% to down maybe 13-20% or so
2-5m -- reflated maybe 8-13% from down 25-35% to, u get the idea
>5m -- reflated maybe 10-15% from down 25-40% to, u get the idea

The higher price points got hit the hardest percentage wise and took the longest to reflate, but reflate they did from fear trades back in early 2009..so as you go to higher price points, the range has to expand a bit..

hard to pinpoint exactly, so these are my best guesses..take it for what it is..

Thanks to ALI! I generally dont like to use whole market or even submarket median or average sales price because of wild swings that come with timing of closings and types of properties that close. You can have 2 months where most closings are <3m and then 2 months where lots of 3M+ closes and you will see huge swings of 10-15% in median..does that mean market just rose 15% in 2 months, NO! Rather, look at in building trades and come up with a fair market value range using 5% range for time adjustment from the when the comparable was signed..sorry I dont want to go further, as this is why my clients use me and Im sure why buyers use their hired buyer agent to guide them

Noah and Ali, how do you explain the lower prices in October/November? Just a little seasonal dip, or slipping towards a new low?

of this year?

Hi Ali. I pretty much agree completely (sorry to disappoint). In Bramstar's product class, the bounce seems to be a bit bigger than 5%+5% for really nice spaces with excellent views - e.g. 395 RSD. Overall, though, I think your numbers are about right.

The problem at 300 RSD - aside from a glut of product - is that ALL of those "A" line apartments are priced too high for what they are. Views are great, but a classic six needs closet space. The market is around $11-1300/SF, depending on elevation and condition. #13A set that market nine months ago. (The price there is slightly misleading because it incorporated a brief lease-back, but the true price was still under $2MM.) #2A confirmed the sub-$2MM price point (lesser views, but a nice renovation). Even after recent reductions on #9A and #11A, the neighbors are seeking close to 2007-2008 prices for what their apartments are.

Likewise at 440 RSD, price determines time on market. #82 was priced to move, so the views and value overcame the shortage of bathrooms. #41 was priced out of bounds for the building, and so it sits.

strange, my other price points reflation numbers didnt come out in the post

Noah, yes, October/November 2010. The curve from August 2008 seems to be steep curve down til April 2009, slower but still down until October 2009, reflation til August 2010, and slight curve down to now.
i just read Ali's last post, it seems she is predicting more reflation from the bottom in the coming spring, so I can infer her answer to the slight dip of September/October is a seasonal weakness, not indicative of a second leg down.

maly, I think there's close to ZERO confidence out there. Potential buyers who had the contrarian in them bought; potential buyers who don't are waiting for a second leg down.

They see aggregate national stats, which are lousy, and they don't want to buy at all.

The ones who did Oct.-Nov., only did if they thought they were getting great properties (anything really good and decently priced in Tribeca is moving) or deals.

***

So why do I think prices go up in the spring?

* Rising interest rates (which are a good "fear factor");
* Rising rents (which make not buying one notch less attractive);
* A little bit of bonus money (which makes buying one notch more possible),
and * Additional inventory (the usual seasonal pattern).

Throw in some general buyer fatigue (as of January, we'll be 18 months post-Lehman) and I think some bears will capitulate. Notice I say "some" -- I don't think volume will be great.

& I do think the buyers will be howling all the while. Forgive the sexism, but I think there's going to be a lot of "I'm buying because the wife made me do it."

ali r.
DG Neary Realty

395 RSD is interesting because I believe it went into contract at ask ($2.1M) if not a bit higher (there were apparently several strong offers right away). We looked at the apartment when it came onto the market--views are indeed glorious, which should be factored into the price, obviously, though the unit needs a full gut, including kitchen and bathrooms. That's likely another $500K + if done correctly. Nice top floor location with sweeping views west and north though ceilings not as high as, say, 355 RSD 10WN which traded at $2.6 or units in 417 RSD. Higher ceilings definitely add oomph, especially when paired with great views, IMO.

West, you're correct about the A-line units at 300 RSD. The dearth of closets is really a problem. The lack of split bedrooms is also not terribly desirable, and in the case of 11A they've essentially turned the unit into a glorified 1-bed. The views are incredible, there's no denying that but the layout is small and lacks sufficient storage.

By the way, to answer SteveF's question about why we're interested in buying now... the short answer is the building in which we've been happily renting for the past 5 years has just been sold and market rents are being jacked up to shake folks like us out for a massive reno job. The fire has been lit under our proverbial butts. The long answer is we've frankly been looking to buy since getting married in '06 and just feel like it's 'time'.

i think market forces (the see saw effect) are still at play and will continue to be for another year or two..it all stems from severity of the hit, the fierceness of it and how fast it all played out.

I think thats the problem with following these median price charts since late 2008...so lets see: peak --> HUGE swing down --> inevitable reflation swing up --> milder swing down after the swing up peaks out???

Which such swings, the tops and bottoms will see pressure to the opposite direction for a bit until things stabilize at the new lower level from peak.

I think Ali is dead-on. She offers a considered, temperate weighing of factors that sound right. From what I see in the Village, particularly in the $750K-$1.5MM units I look at most, things remain unsettled with some recent sales setting low comps for their buildings, while other recent sales are up a bit from comps a year ago. I do not see prices dropping. Rather things as a while seem flat...kind of like the tide when it is turning from high to low or vice verse--the waters are all churned up, but they aren't getting noticeably higher or lower at the moment. Motion but no clear movement in any direction.

Thanks Ali and Noah! It's always interesting to have considered opinions from experts.

Kyle--interesting analogy of the tide. Perhaps no discernible movement at certain points in the process, but movement nonetheless. Question is, in which direction?

> Hey bram, listing prices for condo studios

Listing prices, hillarious.

SteveF... another post, another chuckle.

bramstar, to throw in my 2 copper-plated coins, I think you can tell from a quick perusal of this message board that there is a LOT of noise on both sides of the fence (bear/bull, to be needlessly reductive). I think any way you slice it, there's no rush to make a huge purchase (unless you're very concerned about interest rates, but I don't see that playing out the way some do) since the market seems a lot more stable than it once was. At the same time, it's pretty clear you don't need to chase insane asking prices and tip-top valuations to get a home at this point. If you're ok with flatlining prices for a few years, and the chance of a smaller second leg down, I doubt you'll truly regret buying now. And you won't necessarily be kicking yourself for waiting it out either. My terribly long-winded way of saying "don't worry."

I think the SE index is the most reliable metric here since they use same-home resales. As has been discussed elsewhere, even the ppsf metric shows a lot of skew due to higher-quality sales over the years (which you can figure out by comparing SE's index against Miller Samuel's).

Using the SE index, sales bottomed Aug 2009 through Jan 2010 at levels in the 1760-1770 range. That means bottom deals were probably done mid-Q1 to mid-Q3 2009. As of October, we were at 1840 which is about 5% above bottom. That data is now six months old, however, because it represents deals that were done in June or July. I'm sure FP/UD can comment better, but sentiment seems flat to marginally down since then.

UD: Compared to SE's data, you sensed the bottom happening earlier, the drop being larger, and the reflation being larger. The data is what it is, and your impressions are what they are, but I'm wondering what's the source of the difference there. Could be perception-related (dropping vs. flatlining market), could be differences in datapoints. What are your thoughts?

inonada, what was the initial decline (that preceded the 5% bounce) in your numbers?

definitely could have been perception. I just dont like the idea of 1 index for all of manhattan that meshes together studios and townhouses and 4BRs and 1brs, etc..Manhattan is HIGHLY SEGMENTED and if you are seeking a 3BR/3BTH apt in prime mid/upper Manhattan, chances are your segment behaved differently than the studio market downtown

"Manhattan is HIGHLY SEGMENTED and if you are seeking a 3BR/3BTH apt in prime mid/upper Manhattan, chances are your segment behaved differently than the studio market downtown"

Definitely, and that's not even including the Brooklyn and Queens segments, obviously. Which is why swe's post on the price declines from peak for the various segments was rather helpful. Obviously, there are plenty of issues with that data (closings lag real-time activity, the somewhat arbitrary timing of measuring quarterly, the blending of so many different neighborhoods, etc.), but I think that's pretty good considering the difficulties in getting solid data (although urbandigs 2.0 is doing a LOT to remedy this).

"definitely could have been perception. I just dont like the idea of 1 index for all of manhattan that meshes together studios and townhouses and 4BRs and 1brs, etc..Manhattan is HIGHLY SEGMENTED and if you are seeking a 3BR/3BTH apt in prime mid/upper Manhattan, chances are your segment behaved differently than the studio market downtown"

Of course.... but then if you segment too much, the data isn't statistically valid either. Nothing is going to be perfect.

I was extremely surprised to see the difference in the overall median vs. the by size, which seem to tell a very different story.

Fking worry. Be very berry Fking worried. Hahahjaaaaaaaaaaa. The 2nd leg down isalready upon us. 75bps up, 50 bPs up, 25bps up 75bps up.

Let's see where nyc re ends. Flmaozzzzzzzz

In the end, though, I think the difference by size is vastly more important when trying to look at an overall market. 4 bedroom shoppers uptown are more likely to look for a 4 bedroom downtown than they are a studio.

Most of the folks I know renting or buying are neighborhood flexible south of 96th, within reason... but few plan to change the apartment sizes.

"Most of the folks I know renting or buying are neighborhood flexible south of 96th, within reason... but few plan to change the apartment sizes."

It's a great point - though I'd guess for family-sized apts, people are even pickier on neighborhoods due to school considerations and staying close to where the kids' friends/activities are. But you're also right that there are far too few transactions to really segment the way we'd like to.

SWE, it's not my numbers, but rather SE's, so credit where credit is due. Their numbers indicate just under a 20% drop from peak-to-bottom (March 2008 to Jan 2010) and a 15% drop peak-to-nowish (Mar 2008 to Oct 2008). Both the peaks and the bottoms were plateaus that lasted 12-ish and 6-ish months respectively.

UD, I hear what you are saying on a single index, but without combining the data that broadly, you just cannot form a proper index (not enough data to overcome the noise).

a side point: there's been recent brisk movement in the ultra-high-end market (unfortunately, not my market). Those 4-BR numbers should pop big in 4Q/1Q though.

ali r.
DG Neary Realty

swe - very true on getting too granular..I find myself explaining that to brokers who subscribe to my platform and then are upset that KIPS BAY is not its own submarket. Getting more data by sacrificing the smallest neighborhoods to get a better representation of that 'area', is the right play. Id rather look at Murray Hill + Kips Bay trends together than Kips Bay trends alone as a representation of trends in Kips Bay. But Im sure some will disagree.

Inonada - True, but you can slice Manhattan up into submarkets knowing in advance that you cant get too granular. We are working on this problem now and have some very cool ideas for sales trends in the works for release in 3-4 months

"Manhattan is a very fragmented market". ALL real estate markets are. And they are all fractal distributed too. That's why the national CS vs NY CS index are all relevant to analyse NYC or even Manhattan.

Also it seems to me that what everybody's referring to is the NOMINAL market, which, indeed HAS bottomed (within 10%) between 2009 and 2010. That's a given that most RE investors know.
But on a real basis (inflation adjusted)the bottom is not in. Monetary inflation hides it.
It's crucial to calculate IRR on a post inflation,post tax basis which is really what matter.

Like everybody else I bought recently

Wondering how lower bonuses relative to 2009 (say 15% down total comp) are going to impact the real estate prices. Mortgage Rate up 50-75bps off the bottom already.

If we're talking the established premiere neighborhoods/buildings in Manhattan then the downside is very limited. Upside is inflation rate + one or two percent per anum. The emerging neighborhoods have much more downside risk.
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And buying less than perfect will not be a good strategy(first floor bad view, etc).

Also low price studios languish as well as units above 3 mill)(the more over the worse)

My favorite thing about this thread is that there aren't streams of snarky posts claiming we're nowhere near the bottom, sky is falling, buyers beware, renters are inherently more virtuous than buyers, etc etc etc.

And, having closed Aug 2009, breathing a tiny sigh of hopeful relief that the worst may have passed?

"Id rather look at Murray Hill + Kips Bay trends together than Kips Bay trends alone as a representation of trends in Kips Bay. But Im sure some will disagree."

No, you are absolutely right. To give that kind of granularity infers and accuracy that just isn't there. Far more differential within each of those neighborhoods than across those two.

I'm not saying I wouldn't like to see valid data like that, it just that kind of data wouldn't be statistically signficant.

" we're talking the established premiere neighborhoods/buildings in Manhattan then the downside is very limited. "

Uh, thats exactly what Juice and many others said before those neighborhoods went down with the rest of the market.

I just don't buy it. Will they cost more than other neighborhoods? Probably. But they have more to fall. Pretending they are a protected class was proven nonsensical months ago.

Bottom line, today's prices, generally, are equal to what year?

one or the other. you decide