Sky is not falling!!

"I will guess $41 million". What do I win?

You are bullish!!

Which thread was it? I can not find it but remember some discussion.

Yes, since I have not yet sold my apt. I have become very bullish!

https://streeteasy.com/talk/discussion/43019-impact-of-a-manhattan-luxury-housing-crashdecline

I would have thought a little less than $40mm and I am not overall bearish. A resale of almost $7k per sq ft despite a glut of over-priced ultra-luxury apartments seems pretty strong market to me but I will wait for more signs.

I honestly can't tell if you are being sarcastic, but the very fact that a smaller than expected decline is cause for celebration tells you how much the goal posts have moved for NY RE the past year.

Thoth, Not being sarcastic. That is why my heading “sky is not falling”. Everyone is too bearish. While I am bearish on ultra-luxury >4K per sq ft but I am bullish on “affordable” $1200-1700 per sq ft with 1700 reserved for full renovated properties in prime area.

But 300, asking prices for $1200-1700 per sq ft units are down, yes? So not sure why you remain bullish on a market that is declining as we speak. It is not a supply issue so obviously demand is down. Not sure what the cure for lower demand is except for lower prices.

Appreciate any wider data for decline in this segment. I see flat lining in last 2 years and a lack of bidding wars but prices are hardly down except for high $ properties say >4mm in $1200-1700 per square ft category. I use streeteasy condo index as a benchmark which barely shows any decline despite including high value properties.

https://streeteasy.com/blog/july-2018-market-reports/

https://streeteasy.com/blog/july-2018-market-reports/

This is what use as a data point.

I do not think historical sales data tells the real story. Based just on the report you referenced, The StreetEasy Price Index for Manhattan is down, asking prices are down and sales inventory is higher.

And the the new tax law according to most experts has had a negative impact on property values in the NYC metro area.

And every - and I mean every - broker I have talked to in the past 6 months thinks the overall market is down, not just luxury. And that's not just in Manhattan.

But some are waiting for 3rd and 4th Qtr. sales figures before offering their opinions. Fair enough so let's see what the next few months have in store.

Isn't better to look at the StreetEasy Price Index for coops so that any bias (either up or down) from newly built condos does not affect the results?

I do not know if there is one for coops.

For closed sales data, there is the StreetEasy Price Index for both condos and coops.

But see Other Sales Data – All Boroughs for seperate coop data:
https://streeteasy.com/blog/download-data/

Anyway, data is mixed in terms of trends so, again, I think we will need a few more months to see if a downward trend is still in the cards. I think it is as there appear to be many more negative trends than positive rends.

Does anyone think the upcoming midterm elections may play a factor in the direction of the housing markets?

In the very unlikely event the Democrats win big victories, take over both houses and impeach the President, I think you would see both the equity and Real Estate markets negatively impacted.

After November, if Democrats have enough votes to repeal the tax law, the equity markets will suffer greatly and possibly trigger the whole economy into recession. Impeachment might actually help the equity markets since tariffs and other issues affecting international relations will no longer be on the table.

But the big question to me is why, with the economy booming, is the NYC real estate market falling into the doldrums or worse.

And this is without any "event", which is almost always the cause of a change in market direction. So what's going to happen if/when we actually have an event?

I guess you could consider the tax law an event but the market was softening before the law was passed.

I think we're seeing a true correction. Less foreign interest, especially Chinese and wages can't support prices.

Wages have not supported prices for a long while but I think that reality is just now starting to sink in to many, even for those that can reasonably afford their homes.

Does anyone else think the events around immigration policy are relevant?

What's happening in Our Little World certainly is not indicative of the overall Market. However I can happily report activity is up post Labor Day. Typical trends for us such as clients that took a break for the summer are now back out and looking as evidenced by the emails I get looking for follow-up from listing agents.

The next couple of weeks will be very telling. An agent at Halsted has also been doing open house reports, essentially surveying agents that sign up. This has been going on since early summer I believe, we participate and it's very interesting to see the results every Monday. First weekend after Labor Day continued the trend of extremely slow activity. Looking forward to seeing the results today for the 16th. I'm expecting a pop, our open house was quite busy. if you want to see this report I'll be posting it on my blog today when I receive it, 'back to the old house' you can find a link to the blog on my website.

I gave a shout out to Noah last week for an update on what he is seeing. Not sure if he chimed in or not yet ?Would be great to see a little chart / report culled from the urban digs data!

Keith
The Burkhardt Group

Ximon & 30: Haven't we already had multiple smaller scale events occur? None of them are major shocks like the financial crisis, but all of them together are likely acting as a growing headwind for the market. If you believe the market was over-priced / irrational, just going back to normal would lead to a decline.

1. Withdrawal of foreign money: Seems like a lot of the price insensitive spenders are no longer available to power NY real estate

2. Loss of SALT deduction: I've heard this is devastating Westchester, so I'm assuming some impact here to Manhattan, although not as large.

3. Reduction of mortgage deduction: This hasn't had as big a impact as #2, but it certainly can't help.

4. Abatements coming off of newer construction: No more "greater fools" left in the market to misprice the abatement, so the price of the property has to come down to compensate for the increase monthlies going forward.

5. Increases in interest rates: Having a growing impact on affordability

thoth, I agree with pretty much everything you are saying as I have been saying pretty much the same things for the past year.

Some think we are nearing a crash. I think it's more of a correction without an obvious recession trigger like the 2008 financial crisis but rather a slow drip of negative events that affect affordability of course but, more importantly, market sentiment.

As for the financial markets, we are just about at the longest economic recovery in history so a correction is clearly on the horizon.

I think there is still some foreign money out there, parked in US accounts, that can be put to bear but many, if not most, smart investors are currently on the sidelines IMO waiting to see what the future may bring. All of this cash on hand will likely help return the resi market back to a normal state, whatever that means these days.

It seems that many buyers and most investors know where the market is headed. When sellers come to the same realization, we could be in for quite a run down the curve.

And I find it funny when some say that lower asking prices are simply a sign that the market is becoming more rational as two years ago, these asking prices were considered reasonable. Translation - the market is declining.

Ximon: Hah, yes - the spin there is enough to make someone dizzy.

Keith: Noah's thoughts are always valuable, but just looking at his free charts are pretty telling. Almost all the metrics are negative. These metrics for Manhattan are supposed to be up to date as of yesterday, with all percentages YoY:

Supply : + 18.2%
Days on Market: +16.4
Price / Sq Ft: -5.7%
Median Sales Price: -9.7%
Monthly Contract Activity: -16.2%
Resupply Pace: +225% (not a typo)
Monthly Closed Sales: -21.3%
Median Discount: +21.9%
Absorption Rate: +28.3%
Off Market: +56.7%
Sales Over Asking Price: -23.1%

I don't see any way to spin this in a positive way.

Agree there is little positive in the market, other than a fairly strong economy and historically low interest rates. I just don't see a crash coming based on the current metrics, more like a slow correction with different degrees of severity across the various markets.

I think it's a good time to be buying and a mediocre time to be selling. Specific advice to both sellers and buyers requires more of a conversation than a posting on streeteasy.

Keith
TBG

The SE Condo index for Manhattan is up less than 10% over the last 10 years. While some submarkets have had much higher price growth, I don't see any data showing the market as a whole is overpriced. Demand may ebb and flow based on expected appreciation, tax deductions and interest rates, but a large correction seems unlikely based on economic and market fundamentals.

"I think it's a good time to be buying and a mediocre time to be selling."

Keith, what if you are doing both? Which is a better financial strategy, to trade up or down?

I'm not anticipating a crash (I assume people mean a decline >30%?), unless there's some massive black swan event.

I do think the odds of another 10-20% decline from here to be extremely likely.

Thoth, Which price segment are you predicting to be 10-20 percent down?

Thoth, Which price segment are you predicting to be 10-20 percent down? If you are talking about properties priced at $5k+ per sq ft, it could easily happen as there is/was no basis for the asking prices in the first place relative to what it cost to build them.

Supply : + 18.2%
Days on Market: +16.4
Price / Sq Ft: -5.7%
Median Sales Price: -9.7%
Monthly Contract Activity: -16.2%
Resupply Pace: +225% (not a typo)
Monthly Closed Sales: -21.3%
Median Discount: +21.9%
Absorption Rate: +28.3%
Off Market: +56.7%
Sales Over Asking Price: -23.1%

thoth, if these stats were available by market segment, e.g. price level, it might be very telling indeed about exactly where the softness (and strengths) lie in the current market. Has anyone done that analysis?

By "Resupply Pace" do they mean "number of new listings minus number new contracts"?

@ximon trade up in quality. Whether that's a larger or smaller apartment, that will be according to your circumstances. Don't sell a quality apartment for a mediocre one. Location will always be king, and if you're really smart, buy in the next hot neighborhood ; )

As far as selling right now, it's a perfectly satisfactory Market. However you won't get what you would have in 2017, so price accordingly, be realistic.

Keith Burkhardt
TBG

I don't think it's a surprise that I agree with Keith except my advice is a little different because of our views on the severity of this downturn. While I agree with the "flight to quality", I think it could be the worst time to gamble thinking you can pick the next hot neighborhood (even when Walentas was right about his guess it took over 2 decades to pay off) and I would pick the most solid, old school pricey location you can find.

300: I'm thinking steeper the drop the higher the sq/ft, but I don't think any segment is going to be immune.

30yrs: Resupply pace = New Supply vs. Contracts signed in that month.

Ximon: There are ways to cut this data by neighborhood, but I don't see a way to do it by price point. Of course, Noah likely would be able to do this since he has all the raw data.