WSJ Article re Manhattan Housing Softening (4/2/08)
Started by KISS
over 18 years ago
Posts: 303
Member since: Mar 2008
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Can't post a link since it's for subscribers only, so here's the text: Housing Slump -- in New York? Manhattan Loses Bulletproof Luster As Home Sales Fall By MICHAEL CORKERY April 2, 2008; Page C15 Long insulated from the gale-force winds buffeting most U.S. housing markets, the New York City market is showing signs of softening just as Wall Street layoffs could put a further damper on demand.... [more]
Can't post a link since it's for subscribers only, so here's the text:
Housing Slump -- in New York?
Manhattan Loses
Bulletproof Luster
As Home Sales Fall
By MICHAEL CORKERY
April 2, 2008; Page C15
Long insulated from the gale-force winds buffeting most U.S. housing markets, the New York City market is showing signs of softening just as Wall Street layoffs could put a further damper on demand.
Manhattan has been one of the hottest housing markets in the country, with prices of many homes more than doubling since 2003. But real-estate agents agree that tightening lending standards and eroding consumer confidence -- which have crippled housing markets across the country -- are starting to slow the New York City juggernaut.
"I don't know anyone in the industry who can say that their business was the same as it was last year," says Doug Heddings, a senior vice president at Prudential Douglas Elliman, who runs a sales team in Manhattan.
Just how much of a slowdown, though, is a matter of debate. Sales volume of condos and cooperatives in Manhattan dropped 34%, to 2,282 units, in the first quarter from a year ago, an unusually sharp decline, according to Miller Samuel Inc., an appraisal-and-research firm that tracks New York real estate. But a separate report issued Wednesday by Halstead Property LLC, a Manhattan-based real-estate firm, showed a 1% decline in sales in Manhattan when compared with a year ago.
Unlike many cities, New York doesn't have a multiple-listing service for homes, which can complicate efforts to calculate sales information. Analysts often use data from individual companies in the industry, which can at times show discrepancies.
Not all the news is bad. Miller Samuel and Halstead agree prices are rising. The median price for Manhattan homes rose 13%, to $945,276, in the first quarter, according to Miller Samuel. Halstead said the price increase was partly driven by sales at the ultrahigh end of the market, including two homes that sold for more than $40 million each.
But slowing sales volume, not lower prices, can be an early sign of a weakening market. Meanwhile, many brokers agree that the number of homes for sale is rising and buyers are becoming more tepid. "We are not looking at a robust real-estate economy going forward," says Jonathan Miller, president of Miller Samuel Real Estate Appraisers.
Mr. Heddings, of Prudential Douglas Elliman, says buyers have been backing away from sales across the city, from the Upper West and East Sides to Lower Manhattan. "People are nervous," he says. "More and more people are backing away at the 11th hour, just before signing a contract."
Signs of waning sales come as New York's economy prepares for a wave of job losses on Wall Street. But real-estate agents say it could be six months to a year before the housing market feels the brunt of Wall Street job cuts.
In Harlem, agent Klara Madlin says banks are requiring buyers to put more money down. "Instead of loaning 90% they will give 80% because they think prices are likely to go down," says Ms. Madlin, president of Harlem Homes Realty Inc. So far, she says, there have been price discounts of 1% to 2%, mostly by developers who agree to pay the closing costs to quickly move a new condo, but there have been no drastic price cuts.
While it is common for inventory to rise before the spring and summer selling season, Mr. Miller says the current supply "seems on the high side."
Another cause for concern is the number of condominiums being built amid the slowing market. This year, developers are expected to complete 10,200 condos, more than double the 4,100 that were built in 2006, according to REIS Inc., a real-estate research firm.
Agents aren't anticipating the sharp drops in prices that hammered New York real estate during the Wall Street collapse in the late 1980s and early 1990s, when about 100,000 people lost their jobs, according to Moody's Economy.com. The research firm estimates about 33,000 people will lose their jobs amid the current financial stress.
Several factors may save the city's real-estate market from distress. For one, there has been far less speculative building than before the last crash. Secondly, Manhattan has largely skirted the subprime-mortgage debacle that sank markets in Florida and California. That is partly because many co-op boards require sizable personal assets and an average down payment of 35%, says Mr. Miller.
Also helping New York sales are wealthy buyers from Europe, Asia and the Middle East who are taking advantage of the weak dollar to snap up multimillion-dollar condos and townhomes as second and even third homes.
While two-bedroom apartments and studios have been selling briskly, "one-bedrooms seem to be on pause," says Alison Rogers, an agent at DG Neary Realty in Manhattan's Chelsea neighborhood. "They are popping into contract and popping back out again."
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Response by dco
over 18 years ago
Posts: 1319
Member since: Mar 2008
It's going to get rough. Lending will continue to tighten and will require more money down. You have to seriously re-consider waiting until you see hao far we are going to go down. Just wait and you will save yourself a lot of money in the long run.
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Response by Jerkstore
over 18 years ago
Posts: 474
Member since: Feb 2007
Besides, I guess, pea pods or western shirts with mother of pearl buttons, why is housing the only thing that gets "snapped up"?
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Response by cleanslate
over 18 years ago
Posts: 346
Member since: Mar 2008
That's what I'm doing, wait and see. There is no shortage of units, so there is no rush for me. I can wait till the end of the year, and see if the prices become more reasonable.
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Response by KISS
over 18 years ago
Posts: 303
Member since: Mar 2008
cleanslate,
Waiting till the end of the year could still be too early if you're trying to catch the bottom (if you're not, and it's a long-term play go for it). Here's a quote from the WSJ piece:
"Signs of waning sales come as New York's economy prepares for a wave of job losses on Wall Street. But real-estate agents say it could be six months to a year before the housing market feels the brunt of Wall Street job cuts."
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Response by tenemental
over 18 years ago
Posts: 1282
Member since: Sep 2007
KISS/cleanslate: along those lines of thinking...
For me the approach is to guage the trends and "feel" of the market. Is time on market increasing? Is inventory going up? What's the mood at open houses? Do brokers seem anxious? How are sales prices faring relative to asking relative to comps? If in 6 months all this is still clearly moving in the direction of the buyer, assuming you don't have an especially specific requirement for your purchase and you have a stable rental situation, it seems smart to keep waiting.
Towards the end of 07 I posted here that I was waiting until Q108, and of course I got some shit for it. Q108 is here and I'm very glad I waited, and all indicators tell me to keep waiting. What's the biggest risk? If the bottom turns out to be -20% and I miss it and wind up buying at -15% I'll still be very happy.
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Response by KISS
over 18 years ago
Posts: 303
Member since: Mar 2008
tenemental,
My thoughts exactly . . . much more downside risk than upside right now and for foreseeable future.
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Response by cleanslate
over 18 years ago
Posts: 346
Member since: Mar 2008
Yeah, we need a new place by the end of the year, so I'm good for roughly about 6 months. We were planning to get a new place early this year just to get things in order and stuff, although we actually need the place much later on in the year. In light of the current housing market, things seem to be working out better by waiting. I will be avoiding having to pay twice monthly since I am still committed to my current place till the end of the year. And on the flip side, the one-bedroom condo that we're settling for to buy and which will force us to sell within the next 2-3 years may become a two-bedroom, in which case it will enable us keep the place longer.
It's been disheartening looking at the prices shoot up for the last few years, and knowing that by time you're actually ready to get a place that you'll end up settling for less because they'll be so overpriced. Then what do you know? I may actually have picked the right year. :) Timing is everything!
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Response by ccdevi
over 18 years ago
Posts: 861
Member since: Apr 2007
tenemental:
"Towards the end of 07 I posted here that I was waiting until Q108, and of course I got some shit for it. Q108 is here and I'm very glad I waited, and all indicators tell me to keep waiting"
don't get me wrong, if I was in the market right now, I'd wait too, unless you have some reason for needing to buy why not wait until things settle down. That said I find your quote interesting, you were waiting until Q108, but now you're going to keep waiting. When do you stop? When does the fact that you're waiting to do something you apparently want to do, outweigh the price decreases. Some people have been waiting for years and years, people have been predicting the popping of the bubble for a long time on this board. Maybe we're finally there, but for those who waited, was it worth it? Not only because of the wait but in terms of price, if you had bought more than what 2 maybe 3 years ago you would probably would have been just as well off.
This whole thing reminds me of the television market, which I'm kind of a geek about. Up until a couple years ago, flat panel TVs were really expensive. The best and biggest will always be expensive. Ad people obsess about when to jump in. Now its not a perfect comparison as here technology changes, but people end up waiting seemingly forever, never able to pull the trigger, always waiting for the pefect deal but then when it comes, a new and better set is out and then they wait for that and so on. Several years ago I jumped in, paid 6700 for a set that 2 years later would costs half or less and would be better. But I enjoyed it for those 2 years. Again I understand the limitations of this comparison, but I still find it interesting.
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Response by cleanslate
over 18 years ago
Posts: 346
Member since: Mar 2008
ccdevi, it's like buying PS3 that has blu-ray at 600 bucks last year, or wait a year later to get it for 400 bucks. And in the meantime, maybe you just get the wii. :) It pretty much boils down to how much are you willing to pay for an overpriced product? And whether you'll still feel good about it after its price drops. I bet people who bought PS3 right away are still okay, but people who waited a year and who could wait I bet felt much better getting the deal.
I don't really know how you can compare buying at way over the price so you can enjoy it now, and waiting and then getting a deal. I'd say I'd rather wait and get the deal :)
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Response by ccdevi
over 18 years ago
Posts: 861
Member since: Apr 2007
"I don't really know how you can compare buying at way over the price so you can enjoy it now, and waiting and then getting a deal. I'd say I'd rather wait and get the deal"
well again it depends on how long you wait and how much the savings is...and of course you're assuming there will be a "deal" to be had, you never know.....I just got a ps3 a few months ago, so i saved some bucks, but I'm not a big gamer, I play a game here or there and I wanted the blu ray, but if I was a big gamer, I definitely don't think a couple hundred bucks would be worth the wait.
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Response by tenemental
over 18 years ago
Posts: 1282
Member since: Sep 2007
ccdevi, maybe I didn't make it clear, but when I said in late 07 that I would wait until Q108, I meant I would wait to reasses in Q108 (I believe I used the word "reasses" in that post), not that I would definitely buy. Yes, I'm looking forward to owning, and yes it will be nice to get back some of the time I spend researching the market, but it's also a fascinating study and I find I'm helping out a lot of friends by sharing what I've learned here and elsewhere, so it's time well spent. Though I was looking earlier, I didn't have 20% plus something left over until 07, so it's not like I was gun shy in 03 and missed a great opportunity. Since the time I've been able to buy something other than a 10% down sponsor unit, the market (or at least my part of it) has softened, and I feel both encouraged by the return on my efforts and frankly lucky that no one accepted my offers when I was feeling the frenzy. If I get what would have been a $600k 1br in 2007 for $540k in late 08 or 09 (10% seems perfectly reasonable, possibly conservative, in my part of the market), I will be very happy. Not just because the monthly nut's a little lower, but because I have a very long time horizon, and that 60k may be a nice fat amoritized 6-figures I get to keep in my retirement. It's not just a monthly carrying cost; it's real money to me.
In the meantime, I enjoy life in my rental. When I was feeling the frenzy and worried about being priced out, everything I didn't like in my apartment, my neighborhood, my commute.,etc., was amplified. I hated everything and a new apartment was my big fix. I snapped out of it. I'm looking forward to a nicer, bigger place, but my neighborhood is great again, I love saving money each month and I'm enjoying being a Manhattanite. As long as I feel my part of the market is trending in my direction (I do, and I think it will be swinging bigger), I keep looking but feel no pressure. If someone's "getting out of dodge" or has a stale listing that I can get for a really good price, I'll buy it next week. If things start trending away from me I'll have to get more aggressive, but I really don't think I have to worry about that anytime soon.
It's going to get rough. Lending will continue to tighten and will require more money down. You have to seriously re-consider waiting until you see hao far we are going to go down. Just wait and you will save yourself a lot of money in the long run.
Besides, I guess, pea pods or western shirts with mother of pearl buttons, why is housing the only thing that gets "snapped up"?
That's what I'm doing, wait and see. There is no shortage of units, so there is no rush for me. I can wait till the end of the year, and see if the prices become more reasonable.
cleanslate,
Waiting till the end of the year could still be too early if you're trying to catch the bottom (if you're not, and it's a long-term play go for it). Here's a quote from the WSJ piece:
"Signs of waning sales come as New York's economy prepares for a wave of job losses on Wall Street. But real-estate agents say it could be six months to a year before the housing market feels the brunt of Wall Street job cuts."
KISS/cleanslate: along those lines of thinking...
For me the approach is to guage the trends and "feel" of the market. Is time on market increasing? Is inventory going up? What's the mood at open houses? Do brokers seem anxious? How are sales prices faring relative to asking relative to comps? If in 6 months all this is still clearly moving in the direction of the buyer, assuming you don't have an especially specific requirement for your purchase and you have a stable rental situation, it seems smart to keep waiting.
Towards the end of 07 I posted here that I was waiting until Q108, and of course I got some shit for it. Q108 is here and I'm very glad I waited, and all indicators tell me to keep waiting. What's the biggest risk? If the bottom turns out to be -20% and I miss it and wind up buying at -15% I'll still be very happy.
tenemental,
My thoughts exactly . . . much more downside risk than upside right now and for foreseeable future.
Yeah, we need a new place by the end of the year, so I'm good for roughly about 6 months. We were planning to get a new place early this year just to get things in order and stuff, although we actually need the place much later on in the year. In light of the current housing market, things seem to be working out better by waiting. I will be avoiding having to pay twice monthly since I am still committed to my current place till the end of the year. And on the flip side, the one-bedroom condo that we're settling for to buy and which will force us to sell within the next 2-3 years may become a two-bedroom, in which case it will enable us keep the place longer.
It's been disheartening looking at the prices shoot up for the last few years, and knowing that by time you're actually ready to get a place that you'll end up settling for less because they'll be so overpriced. Then what do you know? I may actually have picked the right year. :) Timing is everything!
tenemental:
"Towards the end of 07 I posted here that I was waiting until Q108, and of course I got some shit for it. Q108 is here and I'm very glad I waited, and all indicators tell me to keep waiting"
don't get me wrong, if I was in the market right now, I'd wait too, unless you have some reason for needing to buy why not wait until things settle down. That said I find your quote interesting, you were waiting until Q108, but now you're going to keep waiting. When do you stop? When does the fact that you're waiting to do something you apparently want to do, outweigh the price decreases. Some people have been waiting for years and years, people have been predicting the popping of the bubble for a long time on this board. Maybe we're finally there, but for those who waited, was it worth it? Not only because of the wait but in terms of price, if you had bought more than what 2 maybe 3 years ago you would probably would have been just as well off.
This whole thing reminds me of the television market, which I'm kind of a geek about. Up until a couple years ago, flat panel TVs were really expensive. The best and biggest will always be expensive. Ad people obsess about when to jump in. Now its not a perfect comparison as here technology changes, but people end up waiting seemingly forever, never able to pull the trigger, always waiting for the pefect deal but then when it comes, a new and better set is out and then they wait for that and so on. Several years ago I jumped in, paid 6700 for a set that 2 years later would costs half or less and would be better. But I enjoyed it for those 2 years. Again I understand the limitations of this comparison, but I still find it interesting.
ccdevi, it's like buying PS3 that has blu-ray at 600 bucks last year, or wait a year later to get it for 400 bucks. And in the meantime, maybe you just get the wii. :) It pretty much boils down to how much are you willing to pay for an overpriced product? And whether you'll still feel good about it after its price drops. I bet people who bought PS3 right away are still okay, but people who waited a year and who could wait I bet felt much better getting the deal.
I don't really know how you can compare buying at way over the price so you can enjoy it now, and waiting and then getting a deal. I'd say I'd rather wait and get the deal :)
"I don't really know how you can compare buying at way over the price so you can enjoy it now, and waiting and then getting a deal. I'd say I'd rather wait and get the deal"
well again it depends on how long you wait and how much the savings is...and of course you're assuming there will be a "deal" to be had, you never know.....I just got a ps3 a few months ago, so i saved some bucks, but I'm not a big gamer, I play a game here or there and I wanted the blu ray, but if I was a big gamer, I definitely don't think a couple hundred bucks would be worth the wait.
ccdevi, maybe I didn't make it clear, but when I said in late 07 that I would wait until Q108, I meant I would wait to reasses in Q108 (I believe I used the word "reasses" in that post), not that I would definitely buy. Yes, I'm looking forward to owning, and yes it will be nice to get back some of the time I spend researching the market, but it's also a fascinating study and I find I'm helping out a lot of friends by sharing what I've learned here and elsewhere, so it's time well spent. Though I was looking earlier, I didn't have 20% plus something left over until 07, so it's not like I was gun shy in 03 and missed a great opportunity. Since the time I've been able to buy something other than a 10% down sponsor unit, the market (or at least my part of it) has softened, and I feel both encouraged by the return on my efforts and frankly lucky that no one accepted my offers when I was feeling the frenzy. If I get what would have been a $600k 1br in 2007 for $540k in late 08 or 09 (10% seems perfectly reasonable, possibly conservative, in my part of the market), I will be very happy. Not just because the monthly nut's a little lower, but because I have a very long time horizon, and that 60k may be a nice fat amoritized 6-figures I get to keep in my retirement. It's not just a monthly carrying cost; it's real money to me.
In the meantime, I enjoy life in my rental. When I was feeling the frenzy and worried about being priced out, everything I didn't like in my apartment, my neighborhood, my commute.,etc., was amplified. I hated everything and a new apartment was my big fix. I snapped out of it. I'm looking forward to a nicer, bigger place, but my neighborhood is great again, I love saving money each month and I'm enjoying being a Manhattanite. As long as I feel my part of the market is trending in my direction (I do, and I think it will be swinging bigger), I keep looking but feel no pressure. If someone's "getting out of dodge" or has a stale listing that I can get for a really good price, I'll buy it next week. If things start trending away from me I'll have to get more aggressive, but I really don't think I have to worry about that anytime soon.