Where are the sellers?

KFL:

1. there is a parallel phenomenon going on right now in the rare coin market
2. the reason there: people who've bought in recent years are long-term investors
3. with the result that inventory which has sold in recent years is now off the market for many years
4. there might be something like that going on in NYC right now

5. also, with prices expected to still rise a lot
6 and nothing to invest sales proceeds in
7. WHY SELL

a) when fear is high and prices are perceived as falling, the seller pool will swell and many will be selling out of fear, for financial reasons/margin calls, or just those that think the market is going down and dont want a depreciating asset. Right now fear is no where to be found.

b) trade up buyers are stuck right now. There is such tight inventory in the 2br-3br+ markets, that those sellers that would normally trade up to a bigger place know there are no options and are choosing alternatives.

These 2 reasons alone make a lot of sense why the there might be a smaller seller pool given current conditions.

@rb - yeah. Where do you go with the proceeds? Even if there isn't a ton of upside left in this market (despite contrary argument) where do you put your money? Trading up in NYC isn't feasible for everyone. Sink that profit in stocks and trust that recent trends will maintain? Stay safe on the sidelines with .005% treasury returns? I think rare coins may be the ticket.

We have looked at a couple of apartments now where the sellers want a lease back. They want someone to buy so their investment is released, while they rent their old apartment from the new owners, and they take their capital and try to find something to buy....over the next 6 months, the hope.

We've walked away from a couple of apartments because we decline to become NYC landlords.

The difference between coins and real estate is that coins don't have babies, die, get transferred to L.A., get pregnant with twins, or lose the ability to comfortably walk up stairs.

When prices were poor, people in those situations wouldn't sell. Now as prices are going up, some of them will sell, and will ride the market up during the time their property is on the market.

In the USA people tend to move every 7 years, historically.

Fear not, equilibrium will return. It always does. Mortgages are much easier to get than they were a few months ago, new units are coming on market soon in a lot of areas.

turbandigskharby2:

1 the real significance of imbalance in the coin market, whichs has also heliumized
within the last 12-18 months, is that purchasers who have bought within the last
fews years are different from those that bought before them: a larger percentage
than was historically true intend to hold long-term, which has reduced the amount
of inventory flowing back into the market for new putative purchasers

2. in my opinion both TP and Urbandigs have cited reasons why this market is different
from all other markets that have passed over New York City: inability to trade up
after selling one's current apt for 2x what it was bought for, and absolutely nothing
that makes sense to invest in, period

3. furthermore, since NYC real estate is probably poised for another sharp run up in
value, and many alternatifve investments such as bonds, REITs, NNN leaaes, TICS, and
stocks present real and substantial risk not only of earning zero yield but also of
large capital losses, it makes little sense for many apt owners to sell now

Also, because of the lack of financing for investors and the owner-occupied
policies of NYC coop boards, a larger percentage of post-Lehman NYC purchases
have probably been to buyers who want to live in their apts for a long time -
which reduces turn-over and thus inventory replenishment

I've never heard of real estate getting pregnant with twins. Never.

>I've never heard of real estate getting pregnant with twins. Never.

Coins have heads and tails.

I think the last point by rb345 is a good one. At any given point in time prime NYC real-estate is ccupied by people who view it more as "home" or "an asset". If this were measurable I think right now we might see we are at maximum on "home" and minimum on "asset".

- In the past (>10 years back), it was common for people to move to burbs creating a natural supply but these days it is more common for both husband and wife to have a busy job in the city. This means that there is a bigger demand for 2-3 bed rooms in the city and it is only going to grow despite poor/expensive schooling choices in the city.
- The demand tapered off a bit for a couple of years but now with the economy better and bankers deferred comp starting to vest, the demand is strong again.
- Supply is coming in form of high-end condos but construction was slow in the last few years. It will take 2-3 years for new supply to hit the market.

so your theory is that as of 2003 and before people with 2 and 3 br prime apartments sold them and moved to the burbs? doesn't that feel like a crazy stretch to try to explain the current phenomenon?

Yes cc. I see far more women in senior position in banking now than I say back in late 90s. There are many more female law firm partners as well. People I am sure have read articles about how girls are out-performing boys. Bigger percentage of woman in college than before.

Also, I am not saying this is only explanation. I listed a couple of others and other posters are adding their take.

High end condos in a few years will do very little to ease the overall supply issue. Most people in NYC do not make $1mm+ a year. This is why there is such a crunch around affordable 2-3 bedrooms because the bulk of Manhattanites seeking 2-3 bedrooms make a few hundred thousand a year and do not make goldman sachs MD money. If you have millions you have plenty to choose from. Anyway, ny wife and I made decent money and live in a one bedroom downtown which is currently listed for sale. However we may take it off the market because as Urbandigs pointed out, there is nowhere "up" to go -- we are trying to get into a two bedroom but there literally are so few for sale that meet our needs with respect to size, schools etc, and are also affordable. So since we cannot trade up it makes no sense to sell. Two years ago we looked into doing this and there were so many options, but we did not yet have our child. Maybe we should have done this two years ago but hindsight is always 20-20.

So catguy, it's someone else's fault?

Well, I think we've got it all figured out now.

Not that it helps if you're looking to trade up.

I still think the coin analogy only goes so far, because housing is a human need and collectable coins are not.

I also disagree that no investments in real estate around here make sense. I have no trouble finding things that would make good, relatively safe real estate investments. We just can't find a two bedroom to live in.

Anybody reading happen to know what the commodity futures market is doing?

IMO, welcome to the new normal in NYC real estate. The gap between rich and poor, in financial terms has grown substantially. The NYC prime Manhattan market, similarly. Even more than before, prime Manhattan will be an area of wealthy resident/owners and serviced by commuters from outlying areas. Wealthy people are warehousing their apartments, as pied a terres and second homes. Why sell when you can afford to hold?

So, higher real estate taxes, lower income taxes, greater subsidy for MTA?

I'm not following greensdale. How does my comment lead to your your conclusory statement? Please re-state your comment. Thanks much!

It was just a policy thought/question, that's all.

Agree. More taxes. From a city fiscal point of view, real estate taxes are are great source: it doesn't move. People do! Move a half mile from Riverdale to Pelham or Yonkers and NYC loses its income tax revenue. But bottom line: taxes will only go up and no doubt higher than the general rate of inflation and average increase in earnings!

the government is blocking foreclosures, thus supplies are far less than normal

obama/bernanke are printing so much money like crazy, people got to be hiolding on to their houses because of fear