Inventory Spike Signals 'Cash-Out' Mentality

Inventory Spike Signals 'Cash-Out' Mentality By CANDACE TAYLOR, Staff Reporter of the Sun June 26, 2008 A recent spike in real estate inventory is a sign that a growing number of New York City homeowners are seeking to cash out before prices fall, brokers said. The number of condos, co-ops, and lofts for sale in Manhattan jumped more than 12%, to 7,320 in May from 6,526 in March, according to the... [more]

Inventory Spike Signals 'Cash-Out' Mentality By CANDACE TAYLOR, Staff Reporter of the Sun June 26, 2008 A recent spike in real estate inventory is a sign that a growing number of New York City homeowners are seeking to cash out before prices fall, brokers said. The number of condos, co-ops, and lofts for sale in Manhattan jumped more than 12%, to 7,320 in May from 6,526 in March, according to the latest data available from the appraisal firm Miller Samuel. Inventory has increased 23.5% since January. "The market has been flooded with properties," a managing director and executive vice president at Barak Realty, Antonio del Rosario, said. Sellers "want to get out before the market gets worse." Inventory has been swelling for some time, as new condominiums constructed during the boom of the last few years come to market, but the numbers now are increasing at an even faster pace, as sellers rush to place their homes on the market before prices drop further. The result is a slowdown in sales activity, as the disconnect widens between sellers holding out for high prices and buyers looking for a bargain. The result, the president of Miller Samuel, Jonathan Miller, said. said, is a widening disconnect between sellers holding out for high prices and buyers looking for a bargain. "There's a 'cash-out' mentality," Mr. Miller said. "You have a lot of stuff on the market that's overpriced." A real estate broker for Barak Realty, MaryJo Grimer, said she was searching recently for a one-bedroom apartment for a client when she was startled to discover some 26 suitable properties in his price range. "That is a lot," she said, adding that normally she would expect to find between six and eight appropriate properties. "I was stunned." One of Ms. Grimer's clients, a family, is hastening its plans to sell its Manhattan apartment and relocate to the suburbs. Before the nationwide housing slump, "they had intended to sell, but they weren't in this much of a hurry," she said. "People are trying to work both ends of the market." Some homeowners are becoming "panic sellers," a vice president at Prudential Douglas Elliman, Leonard Steinberg, said. "When they see a slight shift in the market, they sell instantly." Others, intrigued by fluctuations, are testing the market, an executive vice president at Prudential Douglas Elliman, Dolly Lenz, said. "A lot of people toy with selling. 'What if I could get $4,000 a square foot?' They play that game." A high-profile example, she said, is the owner of a duplex at 15 Central Park West who recently put the unit on the market for $90 million, just a month after purchasing it for $30 million. Ms. Lenz said she and many other brokers often won't work with homeowners who aren't "real sellers" because the presence of their homes on the market can inflate inventory artificially. "It's bad for the market because people watch stats," she said. The increasing inventory has some positives for buyers, an executive vice president for Prudential Douglas Elliman, Jacky Teplitzky, said. "You don't have to make a decision after you see five apartments," she said. "You can see 15." But ultimately, more choices for buyers leads to fewer deals being made. The mix of sellers unwilling to lower prices and buyers expecting bargains "creates frustration," Mr. Miller said. "The perception by buyers is doom and gloom, and the perceptions by sellers is the stats in New York are really high." As inventory climbs and sales continue to stagnate, Mr. del Rosario said, "it's a bit of a standoff." [less]