Talking Manhattan with Jay Glazer of Corcoran

Was this meant to be a link to the podcast? It appears to be a link to Jay's webpage.

Crap! Yes here is the corredct link - apologies

https://medium.com/@noahrosenblatt/talking-manhattan-jay-glazer-of-corcoran-4b835c72d582

Another very good interview. I think that he's offering very reasonable advice about how to think about pricing, even if it is somewhat challenging to act on.

The five stages:
1) denial,
2) anger,
3) bargaining,
4) depression, and
5) acceptance

Brokers are slightly ahead of sellers on this, but not by a lot.

Also, listening to the talk, these are not the types of discussions which occur over 2 or 3% - these are an indication of a greater than 10% bid/ask spread. Now, that doesn't necessarily mean that either those asks or bids were ever going to happen in a recent market (i.e. you may still have sellers with expectations higher than prices were at peak), but the difference does create market drag and if we are not clearing enough properties from inventory (even with record numbers being pulled from the market without selling), and we have the typical large numbers of units come on the market for the 2019 spring selling season, and rising interest rates dampen the number of new buyers (and yes that's a lot of "IF"s), we could see inventory growth plus DOM rise to levels where only extremely motivated sellers will be able to ink deals.

Noah,
It sounds like the DOM figure which you say just hit 90 is the average days on market for units which went into contract in the last X months?
What would the number be for DOM if you also included units which left the market because they were pulled?

Yes, DOM is based on listings in contract. I can use the search and report tool on www.urbandigs.com to answer your question. But first let me ask, off market over how long ago? 1 week? 1 month? 3 months?

I think an agent's perspective on the market depends on how aggressive they are in buying the listing and then blame the market being terrible as if the initial pricing was correct. It gives you a feel of state of their mind when you look at their current listings.

Noah,
Whatever the number that you use for listings leaving the market because they went into contract. In other words I'm looking to discern what that DOM figure of 90 days would be if we included all units leaving supply, not just those that left supply because they went under contract.

300,
I am pretty sure that I predicted in some thread here that we would be seeing the behavior you just described, and that some were actually going to be using that strategically (as opposed to one's who were merely using the same strategy of buying listings and waiting for the market to grow into them as they always had).

30, right I understand.. but I'm asking how far back to include off markets for that number? Dom uses pending sales, which is comprised of a 6 month window.. I checked off market for same 6 months, Dom was 71

Look at this listing for example. Not the mostly desirable apartment on lower fifth coop due to next door townhouse being 10 feet away. Priced 7 percent higher than later 2015 sale, while the market using Streeteasy index is barely up since. I am not even going into whether the owners overpaid at per 2015 market. Hardly a barometer of down market and difficulties of moving on lower fifth.
https://streeteasy.com/building/51-5th-avenue-new_york/2a

Or this one. Very nicely renovated with a roof top, but it seems that coop jacked up the maintenance to $8700 when they built up on the roof. $2.5 per sq ft and you do not get a doorman. This price segment is universally down due to new high-end supply.

https://streeteasy.com/building/142-5-avenue-new_york/ph

Thanks Noah. I am kind of surprised by that number.

Me too. Ill investigate

It's interesting to see the number of brokers/agents putting up videos on LinkedIn, doing other various media declaring the buyer's market has arrived. It seems in previous corrections most agents just sulked and kept quiet, essentially waiting for the market to turn upwards again. Especially since during those bullish times they were cheerleaders. I wonder if any of these agents ever cautioned buyers during 2006/2007 or 2014-2015, to be cautious?

In Noah's latest interview with Ryan Serhant, Ryan alludes to the intangible aspect of buying/owning; the emotional satisfaction derived from living in a place you own and love. I've always broken down a real estate transaction to 50% emotional and 50% financial. If the emotional component is not there during a strong bull market, you're probably better off renting. Otherwise you except you're buying into a strong market and be prepared for the inevitable other side of the cycle to manifest. And with the longview you should be okay. In a buyer's market like we have today we're seeing more people that were fence-sitters pull the trigger as they feel they're financially making a sound choice.

Keith Burkhardt
TBG

Keith, Great comment. I believe that in most cases (there are always exceptions like Nada), the richer you are, the more of a premium you are willing to pay for buying vs renting due to ability to customize your home, not being at the mercy of the landlord to move and other emotional factors. In addition, for many people buying a home forces discipline to save vs spending on vacations and fancy dinners.

Did I mention that it is also a verifieable display of wealth and security? In China, a well educated man with a good job in a big city has difficulty getting married if he / his family is not going to buy him an apartment. Of course, none of this going to change the supply situation of more than $3-4K plus per sq ft condos. The mid end of the market will keep moving due to a lack of new supply.

If you pay close attention to the Serhant interview he's saying that not only are prices down significantly across the entire price spectrum, but they will continue to go down at least in the short-term.

Another one of my popular (lol) predictions:
Serhant has 60 people on his team now. In two to three years it will be half that.

Excellent comment Keith. Agree with all of it. I do like the new wave of marketing professional agents are utilizing to get their messages across. Definitely bringing the streets to the consumer in a while new way . That's our goal with taking Manhattan, so glad people are liking it

I think tons of buyers are still waiting it out, to see if they can get a little more of a discount. The market does not operate in a vacuum though and great products in great locations with unique desirable features are still sometimes hard to find even with more options. Buyers with a genuine need to buy, if you see a good product now, make a play and price in that future uncertainty. Done.

Combo of real-time forces is just so buyer friendly right now

Real Estate is the only thing no one wants to buy when it's on sale. If Bloomingdale's put out a rack of Armani anything at 25% off people will slash each other's throats to get one (look at any of many Black Friday riot videos on YouTube). But Real Estate can come down in price and no one will touch it. As mentioned in the Serhant video (and I said on here a while back) when the water cooler conversation starts to be about people losing money on their homes all bets are off.

When comparing luxury products to luxury apartments, it becomes easier to understand why developers like Extell will try to hold out for the highest prices. This strategy makes it harder to market projects in a declining market but patience and access to plenty of capital will help them get through this cycle. But I think Extell is already strategizing about the next cycle. The only developer I can remember with a similar cache was Zeckendorf and maybe Rudin for rentals.

I think a problem with the overbuilding in the luxury market is that it's much harder to ride out a down market by renting units out. One reason is that the finishes in new rental projects has vastly improved in the last 20 years, so you don't have that uniqueness any longer. Secondly, at the huge numbers you would have to get to carry these units I don't think you can service the debt. It's one thing in a building like 1 Manhattan Square, which is mostly smallish 1 and 2 bedrooms between $1.2MM and $3MM, it's another in Central Park Tower.